Employment Review: December 2016
This month we consider a number of notable cases concerning (i) the recent developments in the Asda ‘equal pay’ case, (ii) the latest holiday pay decision on British Gas v Lock, and (iii) a high profile decision on the employment status of Uber drivers. Furthermore we outline and highlight the key messages which can be taken from the first annual anti-slavery report from the Independent Anti-Slavery Commissioner as a result of the implementation of the much publicised Modern Slavery Act 2015.
Asda store employees bring an equal pay claim and establish that they can compare themselves with distribution depot employees
The Equality Act 2010 (EQA) implements the principle that men and women should receive equal pay for equal work. Under the EQA, there are three categories of equal work: “like work”, “work rated as equivalent” and “work of equal value”.
Asda employs around 133,000 hourly paid store workers and around 11,600 hourly paid distribution workers. A group of primarily female employees working in Asda’s supermarket stores are arguing that their work is of equal value to the work carried out by their male colleagues in Asda’s distribution warehouses. In this much publicised case, it was considered whether the group of female employees who worked in Asda’s supermarket stores could compare themselves with employees working in Asda’s distribution warehouses who were predominantly men.
The tribunal concluded that the retail employees could compare themselves to their male counterparts in the distribution warehouses for the purposes of equal pay, on the basis that the retail store and depot workers’ terms of employment were broadly similar, they were all paid an hourly rate and had a similar staff handbook. This has open the floodgates for over 7,000 claims to proceed, the total value of which has been estimated at over £100 million.
It should be noted that the Employment Tribunal did not decide that the supermarket store workers should be paid equally to the depot workers, but rather considered the step before that question could be answered; i.e. whether the workers could even compare themselves to the depot workers for the purposes of equal pay legislation. The Employment Tribunal has still not made a determination on whether the jobs are of equal value in terms of their demands, and if they are, consideration will be given to whether there are any material factors (i.e. genuine reasons for the differences), such as different market rates in different industry sectors – so watch this space for that decision!
Brierley & Others v Asda Stores Limited ET/2406372/2008
Statutory holiday pay must include a representative element of results-based commission in Court of Appeal judgement
Under Article 7 of the Working Time Directive (2003/88/EC) (WTD), workers must have the right to a minimum of four weeks’ paid annual leave. The ECJ in this case has subsequently held that this means that workers are entitled to receive their ‘normal remuneration’ during periods of annual leave.
The WTD is implemented in to UK law through the Working Time Regulations (SI 1998/1833) (WTR) which allow for workers to take 5.6 weeks annual leave on a rate of a ‘week’s pay’ in accordance with the Employment Rights Act 1996 (ERA). The ERA sets out how holiday pay should be calculated for a worker who works normal hours (they will receive a week’s pay calculated on their weekly hours) and for a worker who does not work normal hours(who will be paid based on an average weekly remuneration calculated over 12 weeks).
The Claimant was paid a basic wage and top of this he received commission on his sales which formed around 60% of his wage. During a period of annual leave, he was paid his basic wage from previous sales that fell due during the period. However, he suffered a reduced income in the months following his return to work because he had not secured sales, and had therefore not generated commission, while he was on holiday. He brought a claim in the Employment Tribunal in view of this, arguing that his reduced income was a breach of the WTR.
The Tribunal referred the question to the ECJ who held that under Article 7 of the WTD, contractual commission must be included in statutory holiday pay, as it is part of the worker’s normal remuneration. It reasoned that if commission payments were not taken into account, the worker would be placed at a financial disadvantage, which might deter them from taking their holiday, contrary to the WTD’s purpose. Following the ECJ’s decision, the case was remitted back to the Tribunal to determine the extent to which the WTR could be read consistently with EU law. Both the Tribunal and the Employment Appeal Tribunal (EAT) found that the ‘week’s pay’ provisions of the ERA 1996 should be re-written for the purposes of the WTR 1998 so that commission and similar payments are included in statutory holiday pay. British Gas then appealed the decision to the Court of Appeal.
The Court of Appeal unanimously dismissed the appeal and upheld the EAT’s decision that the WTR should be interpreted to provide that results-based commission should be included in statutory holiday pay derived from the WTD.
The Court of Appeal’s decision unfortunately does not progress this long-running legal saga much further. Employers are still left to grapple with the same practical difficulties in calculating the commission element of statutory holiday pay, specifically what is the appropriate reference period in which to calculate statutory holiday? The ECJ left this issue for the domestic courts to determine and as of yet, no guidance in respect of this has been given. We understand that British Gas have sought leave to appeal to the Supreme Court so we will update you in due course if and when we know whether the matter will be progressing further.
British Gas Trading Ltd v Lock and another  EWCA Civ 983
Uber drivers are no longer able to be classed as self-employed which could affect tens of thousands of UK workers in similar industries
Uber has created a system whereby customers use a smartphone app to order a taxi and pay the fare. Prospective passengers booked trips through the app. Upon receipt of a passenger request, Uber located a driver within its pool. Pool drivers supplied their own vehicles and were responsible for all running costs. The selected driver had 10 seconds to accept the booking through the app, failing which Uber assumed they were unavailable and located another driver. Once a driver accepted the booking, Uber placed the driver and passenger in direct contact through the app. The driver was not made aware of the destination until collecting the passenger. The app incorporated software linked to satellite navigation technology, which provided detailed directions to the destination.
Uber treats the taxi drivers as self-employed and a number of these drivers brought claims for (amongst other things) unlawful deductions from wages (through an alleged failure to pay the national minimum wage) and for a failure to provide paid leave. Several of the drivers were selected as test Claimants and as a preliminary issue the Tribunal had to determine whether the drivers were workers for the purpose of the ERA, WTR and the National Minimum Wage Act 1998 (NMWA). If they were genuinely self employed, claims under this legislation would not be able to be pursued.
Following the evidence, and in a landmark ruling the Tribunal held that the Uber drivers were workers for the purpose of the ERA, WTR and NMWA. In its judgment, the tribunal focussed how much control Uber had over its drivers (for example, Uber set the route that the driver was expected to follow and the drivers were expected to follow Uber’s strict terms of engagement), rather than the issue of mutuality of obligation.
This decision will not only affect Uber workers, but other large companies who operate similar ‘gig-economy’ type model of working. These companies will now likely face scrutiny over their procedures and the employment status of those who undertake work for them. Given that the decision was a first instance decision it is not binding on future cases. However, it is understood that Uber are intending to appeal the decision.
Mr Y Aslam, Mr J Farrar & Others v Uber
Anti-Slavery commissioner publishes first report on progress made in last year’s fight against modern slavery and sets priorities for 2017
Section 54 of the Modern Slavery Act 2015 (MSA) requires commercial organisations with a total turnover of not less than £36m (including the company’s turnover and the turnover of its subsidiaries) to prepare a slavery and human trafficking statement for each financial year that ends on or after 31 March 2016. There is no prescribed time limit in which to make the statement but the Home Office guidance states that a commercial organisation is expected to publish its slavery and human trafficking statement as soon as reasonably practicable after the end the financial year and is encouraged to report within six months of the financial year end to which the statement relates.
First Annual Report Published
The UK’s Independent Anti-Slavery Commissioner, Kevin Hyland OBE, has published his first annual report earlier this month, which covers progress made in the last year in the fight against modern slavery, and sets out the Commissioner’s priorities for 2017. Mr Hyland found that the police recording of slavery as criminal offences was an area for improvement and that only 28% of referrals in England and Wales were recorded as crimes in 2015/2016.
In terms of steps taken by the Commissioner, the Commissioner highlighted that he has approached companies whose supply chains could be tainted by slavery to offer assistance to them and ensure that they are responding to the issue of modern slavery appropriately. In addition, the Commissioner wrote to Kia and Volvo to ascertain what actions they were taking to eradicate slave labour from their supply chains, following the much publicised Al Jazeera investigation which uncovered the use of slave labour at car washes in Kent, which are used by dealerships for big names such as Volvo and Kia.
The priorities for 2017, according to the Commissioner, will be to continue to engage with businesses regarding their commitments to end modern slavery, and to make progress in becoming fully compliant with the reporting requirements under section 54 of the MSA. Furthermore, Mr Hyland plans to introduce a clearer system of scrutiny and comparison for the annual slavery and human trafficking statements. Mr Hyland suggests that this will hold companies to a new level of accountability as the public and their competitors will be able to compare a corporate response to the eradication of modern slavery.
Whilst this all sounds very encouraging, the reality is that the MSA does not really have any teeth. Compliance with the MSA can be enforced by the Secretary of State by bringing civil proceedings for an injunction requiring compliance, but there is no financial penalty or criminal liability associated with a breach. Having said that, however, non-compliance could lead to reputational concerns, bad publicity and / or ‘naming and shaming’ by pressure groups, and it is hoped that this will act as a sufficient incentive for companies to do more to eradicate slavery and human trafficking within their businesses and supply chains.
Independent Anti-Slavery Commissioner: Annual Report for the Period 1 August 2015 to 30 September 2016, 12 October 2016.
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