Employment Review: March 2017

This month we consider a number of notable cases concerning (i) the test for ‘worker’ status, (ii) the implications of merely asserting disability in a harassment claim, (iii) the latest holiday pay decision in British Gas v Lock, and (iv) a high profile ruling by the ECJ on the prohibition against wearing Islamic headscarves. We also provide a timely reminder of the new provisions of the Trade Union Act 2016 which came into force on 1 March 2017.

Employment status: plumber was a worker, not a self employed contractor

In Pimlico Plumbers Ltd and Mullins v Smith, the Court of Appeal has upheld an employment tribunal’s decision that a plumber was a worker and not truly self employed.

Pimlico Plumbers (PP) engaged Mr Smith as a plumber for approximately five years and terminated the relationship shortly after Mr Smith suffered a heart attack. Mr Smith subsequently issued proceedings claiming unfair dismissal, wrongful dismissal, entitlement to pay during medical suspension, holiday pay, unlawful deductions from wages and disability discrimination.

Mr Smith was registered for VAT and filed tax returns on the basis that he was self employed and the contractual agreement stated that Mr Smith was an independent contractor, subject to restrictive covenants, working a minimum of 40 hours a week, under no obligation to accept work, and PP was not obliged to offer him any work.

The Court of Appeal upheld the employment tribunal’s decision that Mr Smith was a worker, not a self employed contractor and the judgment commented that the test for determining whether an individual is a worker or self employed does not involve any one deciding factor.

PP has indicated that it may appeal to the Supreme Court however in the absence of a successful appeal, the case will return to the employment tribunal to consider whether Mr Smith suffered disability discrimination and whether PP failed to pay holiday pay and made unauthorised deductions from wages. As Mr Smith failed to establish that he worked under a contract of employment (i.e. that he is an ‘employee’), he is not eligible to pursue his other claims.

Comment

This case comes at a time of significant interest in worker status and the gig economy, following the recent employment tribunal decisions in Aslam v Uber BV and Dewhurst v Citysprint UK Ltd and in light of the ongoing Taylor review into modern working practices.

As with so many worker status decisions, the Court of Appeal’s decision is fact sensitive. However, the case illustrates that courts will continue to critically examine the relationship to determine whether employers are attempting to sidestep the established principles of employment law.

Therefore, businesses categorising an individual in a particular way should carefully consider all aspects of the working relationship. The starting point in determining the status of an individual will be the written contractual agreement but day to day arrangements will also be deciding factors.

Harassment related to disability: assertion of disability insufficient

In the case of Peninsula Business Service v Baker the EAT considered whether the employment tribunal had erred when it held that an employee had been subjected to disability harassment and victimisation after his employer instructed enquiry agents to put him under covert surveillance.

Mr Baker informed his employer that he had dyslexia and psychologist and occupational health reports substantiated this claim. As the employer’s director of legal services believed that during the time Mr Baker was being paid by the company, he was either working elsewhere or was simply not carrying out his duties, she instructed agents to undertake covert surveillance of Mr Baker. The surveillance report showed Baker was not devoting all his time to his work for the employer and after being invited to a disciplinary hearing, Mr Baker brought claims for disability harassment and victimisation.

The EAT held Mr Baker could not succeed in a claim of disability harassment where he only asserted he had a disability (in this case dyslexia) but he had not shown that he was a disabled person as defined by the Equality Act 2010.

The EAT also held that the tribunal had erred when it found that the employer had victimised Mr Baker as it had not made the findings of fact which were necessary to support that conclusion and as a result Mr Baker’s claims for victimisation also failed.

Comment

This case illustrates the difficulty presented by the statutory definition of disability in the Equality Act 2010 in relation to alleged discrimination due to a perceived protected characteristic and also raises questions about an employer’s knowledge both with regard to decision making employees and in relation to its position as principal when instructing agents.

It also highlights that claimants should properly particularise their claims by identifying those of the employees who are alleged to have been involved in decision making. In this case, the decision to instruct surveillance agents was the decision of employer’s director of legal services and the tribunal therefore needed to make findings about what she knew about the protected acts relied on and whether they were the reason she ordered the surveillance.

Supreme Court refuses the British Gas holiday pay challenge

The Supreme Court has refused to allow British Gas permission to appeal in the highly publicised holiday pay case, Lock v British Gas. British Gas must now compensate Mr Lock for his inability to earn commission when on holiday and the case will go back to the employment tribunal to calculate the amount Mr Lock is owed.

In October 2016 the Court of Appeal found in favour of Mr Lock and held he is entitled to receive his “normal pay” when on holiday and should not be otherwise disadvantaged by taking a holiday. Mr Lock’s commission scheme entitled him to be paid according to the outcome of his own work (i.e. “results based” commission) and it was clear Mr Lock suffered a loss when taking a holiday.

British Gas sought to appeal against this decision to the Supreme Court, but its application failed with the Supreme Court failing to grant permission to appeal. As a result, the decision of the Court of Appeal is now binding.

Comment

The Court of Appeal made it clear that its judgment applies to “results based” commission and it does not mean that all commission schemes have to be included.

Also, the decision only relates to the four weeks of annual leave in regulation 13 of the Working Time Regulations and not the extra 1.6 weeks under regulation 13A, or any additional contractual holiday entitlement and any claims brought on or after 1 July 2015 are limited to deductions where the relevant date of payment fell within two years before presentation of the claim.

Where workers are entitled to “results based” commission, the amount they receive for their holiday should be based on both their basic pay and any commission they earn. However ascertaining loss will not be as straightforward in cases where, for instance, the worker receives a single “results based” commission annually or where the scheme involves discretionary assessments based on a particular level of turnover, individual performance and/or team performance.

Prohibition against wearing Islamic headscarves

Two separate cases involving employers objecting to employees wearing Islamic headscarves at work came before the European Court of Justice (ECJ).

In Achbita and anor v G4S Secure Solutions NV the ECJ ruled that a prohibition on a Muslim woman wearing an Islamic headscarf in the workplace did not amount to direct discrimination on grounds of religion as all employees were prohibited from wearing symbols of political, philosophical and religious belief.

The ECJ’s ruling was prompted by the case of a receptionist who was dismissed for wearing a headscarf to work at the company in Belgium. The company’s policy did not constitute direct discrimination because it referred to the wearing of visible signs of political, philosophical or religious beliefs and therefore covered any manifestation of such beliefs without distinction.

However, the ECJ also held that such a rule may give rise to indirect discrimination, although it might be justified by a legitimate aim such as the employer’s pursuit of neutrality. Interestingly the ECJ commented that the Belgian court ruling on the case should also ascertain whether it could have been possible to offer Ms Achbita a post not involving any visual contact with customers, instead of dismissing her.

In Bougnaoui and anor v Micropole SA the ECJ held that if there is no general policy applying to all employees and instead the employer relies on a customer’s unwillingness to be served by an employee wearing an Islamic headscarf as a reason to dismiss that employee, such treatment is discriminatory and cannot be defended on the basis of a ‘genuine and determining occupational requirement’ under the EU Equal Treatment Framework Directive.

Comment

The ECJ’s ruling clarifies what is and is not permitted in respect of dress codes and manifestations of religion and both cases will now be referred to their respective national courts to be decided.

It also highlights the importance of dress codes and equality and diversity policies which are carefully considered so as not to fall foul of discrimination laws and thereby avoid potential liability and reputational damage. If in any doubt, employers should seek further legal guidance on this issue.

Trade Union Act 2016

1 March 2017 was an important milestone date with the new provisions officially coming into force under the Trade Union Act.

The main provisions include:

• Ballots: for a ballot to support industrial action, at least 50% of those entitled to vote must do so (section 2).
• Ballots in “important public services” (including health, education, transport, border security and fire sectors): for those in “important public services” at least 40% of those entitled to vote must vote ‘yes’ to action (section 3).
• Information requirements in relation to voting papers (including a summary of the matter(s) in issue in the trade dispute, the type of action proposed and the period in which any action is expected to take place) and information provided to members on the result of a ballot (sections 5 and 6).
• Notice requirements: two weeks’ notice to be given to employers of industrial action (increased from 7 days) although, an employer may still agree to accept 7 days notice (section 8).
• Expiry of mandate for industrial action: a ballot in favour of industrial action will now remain valid for a period of 6 months from the date of the ballot or a longer period not exceeding 9 months if the union and employer agree (section 9).
• Union supervision of picketing (section 10).

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