Employment Review - January 2019

Welcome to the first employment bulletin of 2019

Whilst the headlines continue to be dominated by Brexit and its potential ramifications there are a number of hot topics that employers should be aware of as we embark on a new year. In this bulletin we cover new case law relating to employee status, age discrimination and pension scheme transitional provisions, holiday pay and short-time working, an employee's entitlement to a statement of employment particulars as well as discussing gender pay reporting and immigration.

• Court of Appeal rules that Uber drivers are workers

In the case of Uber BV and others v Aslam and others, the Court of Appeal has upheld the ruling that Uber drivers are workers and should receive entitlements such as holiday pay and the National Minimum Wage.

 

• Court of Appeal rules that pension scheme transitional provisions were age discriminatory

Employers who apply potentially age discriminatory practices need to demonstrate that they have a legitimate aim for the practice, that the means used to achieve that aim do meet it, and that there are not other, less discriminatory ways of doing so.

 

• Holiday pay and short-time working

The European Court of Justice (CJEU) has held that in the case of Hein v Albert Holzkamm GmbH, a worker's minimum holiday pay under EU law cannot be reduced to reflect short-time working.

 

• Does an employee have a right to a statement of employment particulars when employed for less than 2 months

The Employment Appeal Tribunal (EAT) ruled, in the case of Stefanko and others v Maritime Hotel Ltd that yes, if the employee has worked continuously for at least 1 month they will be entitled to a statement of employment particulars.

 

• Gender pay gap reporting: Preparing for 2019

Last year over 10,500 companies publicly reported their gender pay gap figures in line with the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. By the deadline of 4 April 2018 just over 94% of companies had reported with 100% compliance achieved by August 2018.

 

• How can employers support their European workers?

All European national workers will need to register on the new EU Settled Status Scheme. This is not contingent on whether we reach a negotiated deal with the European Union or not. The scheme is expected to open in the next few weeks.

 

• HR update seminars

Our Spring HR update seminar programme 'Performance Management' is now available, find out more and book your place now.

 

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Court of Appeal rules that Uber drivers are workers

In the case of Uber BV and others v Aslam and others, the Court of Appeal has upheld the ruling that Uber drivers are workers and should receive entitlements such as holiday pay and the National Minimum Wage. The court agreed with the previous judgments that Uber drivers should not be classed as self-employed. The essential question in relation to worker status was whether, as the drivers argued, Uber enters into contracts with the passengers to provide driving services which the drivers perform for it; or whether, as Uber argued, it acts only as an intermediary, providing booking and payment services, and the drivers drive the passengers as independent contractors. The written contractual terms provided by Uber state that Uber only act as an intermediary however the majority held that the written contractual terms do not reflect the practical reality of the relationships and can therefore be disregarded. The Court of Appeal agreed that Uber drivers are under a positive obligation to be available to accept passengers while the app is on, which amounts to “work”. In 2016, an employment tribunal ruled that they were workers, which therefore entitled them to basic employment rights. This was subsequently upheld by the employment appeal tribunal in 2017 and now the Court of Appeal, following two failed appeals by Uber. The Court of Appeal has given Uber permission to appeal to the Supreme Court.

Court of Appeal rules that pension scheme transitional provisions were age discriminatory

Employers who apply potentially age discriminatory practices need to demonstrate that they have a legitimate aim for the practice, that the means used to achieve that aim do meet it, and that there are not other, less discriminatory ways of doing so. In the case of Lord Chancellor and another v McCloud and others; Secretary of State for the Home Department and others v Sargeant and others, the Court of Appeal considered appeals concerning whether transitional provisions in judges' and firefighters' pension schemes were discriminatory on grounds of age, race or sex. There were two sets of Claimants, one of judges and another of firefighters, who were affected by recent government pension reforms. In both cases, the government allowed those members of the old pension scheme who were closest to retirement to remain members of that scheme, while the younger members were transferred to a new, less generous, scheme. The Court of Appeal held that a "visceral instinct" that "it felt right" to protect older workers was not enough to amount to a legitimate aim which could justify discrimination. In principle, discrimination against younger workers can be justified if there are financial difficulties for older workers as a result of having less time to prepare for the impact of the changes, but such a justification would have to be demonstrated by evidence.

Practical points

Although it is legitimate for the government to have moral and political aims in mind, it is not the case that such aims do not have to be supported by evidence. In practical terms, this decision means that respondents will need to consider presenting evidence to support the legitimacy of their asserted aims. Therefore, employers need to scrutinise any changes to pension provisions in case of potentially discriminatory practices, and consider how they justify them. As well as giving further consideration to any other potentially age discriminatory practices and ensuring that they have actual evidence of any asserted legitimate aims.

Holiday pay and short-time working

The European Court of Justice (CJEU) has held that in the case of Hein v Albert Holzkamm GmbH, a worker's minimum holiday pay under EU law cannot be reduced to reflect short-time working. This case is in relation to a construction worker in Germany working under a collective agreement which allowed for holiday pay to be calculated on the basis of a 13-week average pay (a long-standing provision of German law). After a 26-week lay-off, the worker's holiday pay was calculated under German law on the basis of average pay, excluding overtime and therefore it was lower than the worker's normal pay. The CJEU held that this breached EU law in respect of pay for the 4 weeks' paid leave guaranteed by EU law. Therefore, German legislation allowing for collective agreements to take into account reductions in earnings due to short-time working for calculating holiday pay was incompatible with EU law. When considering overtime, where it is exceptional and unforeseeable, it did not have to be taken into account in calculating minimum holiday pay. The CJEU also held that the right to accrue annual leave arises from actual work, so annual leave did not accrue during periods when no work was done. The CJEU held that, despite many years of German case law allowing this to be done, its ruling could not be limited to avoid retrospective effect due to any legitimate expectation of employers of legal certainty, as there would not be serious economic repercussions from the judgment.

Practical points

Calculating holiday pay can be a complex task for employers, particularly where employees work irregular hours or shifts, or are subject to seasonal variations in the demand for work. The confusion is heightened by the recent indication by the government that the reference period for the calculation of holiday pay may be changed following the Taylor Review. Employers should take comprehensive legal advice if they are unsure if their calculation mechanisms are in compliance with national and European legislation to avoid any future claims for unlawful deductions.

Does an employee have a right to a statement of employment particulars when employed for less than 2 months?

The Claimants were all employed as waiting staff by the Maritime Hotel. They all had relatively short periods of employment of a few months. One Claimant, Ms Woronowicz, was only employed for 6 weeks. She succeeded in a claim for automatically unfair dismissal. She had complained of a failure to provide either a payslip or statement of employment particulars. The Employment Tribunal said that Ms Woronowicz was not entitled to compensation even though she hadn't received a statement because the employer had two months to provide this. The EAT reversed the decision. Section 2(6) ERA says that the right to a statement of employment particulars exists even if a person's employment ends before the 2 months are up. Ms Woronowicz was therefore entitled to one, and an increased award.

Practical points

Currently there is an exception to the right for employees who work for less than 1 month. That is due to be repealed by The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 with effect from 6th April 2020. From then every new employee will have the right from day one. Therefore, even before these changes take place, it is good practice to provide written particulars as soon as possible as this protects both employers and employees.

Gender pay gap reporting: Preparing for 2019

Last year over 10,500 companies publicly reported their gender pay gap figures in line with the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. By the deadline of 4 April 2018 just over 94% of companies had reported with 100% compliance achieved by August 2018. Those figures showed that women's mean hourly pay was 14.3% lower than men's and that only 12% of reporting companies had a pay gap in favour of women. Companies are likely to come under increased pressure to narrow this gap in 2019.In reality, numbers are not going to improve this year as most of the issues driving pay gaps require a longer term view. Each business' circumstances will be different but demonstrating a clear understanding of what is causing pay gaps and committing to actions that, over time, will reduce those gaps is a high priority. Businesses need to address traditional male and female role divisions, the lack of female representation at senior levels and why women tend to work in lower paid roles.

Practical points

Last year over 25% of reporting companies chose not to provide any form of narrative to explain their figures. Many others simply reported the required metrics with no explanation. This would have been an opportunity for employers to tell their own story rather than let others draw their own conclusions. Awareness of pay equality is increasingly impacting brand perception and the ability to attract, retain and drive employee engagement. Surveys are showing a large number of applicants are now looking at a company's gender pay gap as part of their pre-selection process before choosing to work for an employer. Creating a workforce that is flexible, diverse and inclusive is the goal. This year employers are coming to terms with the need for change and to set clear goals in order to demonstrate how diversity is a business necessity for them. The government has said it expects most employers to take five years to come to terms with the legislation and demonstrate real progress. Whilst not compulsory, employers should consider including some narrative to accompany their report to highlight the steps they are taking to close the gap.

How can employers support their European workers?

The EU Settlement Scheme

All European national workers will need to register on the new EU Settled Status Scheme. This is not contingent on whether we reach a negotiated deal with the European Union or not. The scheme is expected to open in the next few weeks. The first stage of the private testing scheme commenced on 28 August 2018. This first stage proved some of the functionality and processes of the scheme in a live environment, with over 1,000 cases submitted. Almost all applications were successful with status to enable the employees to continue to live and work lawfully in the UK being granted. The second phase of the private testing of the EU Settlement Scheme ran from 01 November 2018 to 21 December 2018 and was extended to employees in the higher education sector. By 13 December 2018 more than 15,500 applications had been made and more than 12,400 of these had been granted. This phase enabled the new system and applicant interaction to be tested at scale. 71% of the concluded applications were granted settled status, with the rest granted pre-settled status. Many received their decision within 24 hours. More than 90% of applicants successfully used the identity verification app (available on Android devices only) to prove their identity remotely. Some users reported difficulties with scanning documents and there is still uncertainty about the effectiveness of the scheme for more complex situations. Overall however, the Home Office has taken the two testing phases as a success and is ready to launch the scheme nationally. The scheme is due to be widened for public implementation from 21 January 2019 and expected to be fully opened to all EU nationals and their family members in the UK by March 2019. 

As an employer, what can you do to support your European workers? 

The duty to register on the Scheme falls to the employee. However, if an employee does not register by the 30 June 2021, they will no longer be able to remain in employment. Many employers are therefore taking a proactive approach and putting in place measures to support their European employees. Many universities, including the University of Leeds are running briefing sessions and workshops for their staff. The University has agreed to cover the cost of all applications to be made by their European employees. Within the hospitality sector, as seen in the media this week, businesses such as Carluccio's have announced that it will offer financial assistance to its 1,550 EU employees to allow them to remain in the UK after Brexit, becoming the first large restaurant chain to do so. Others are taking steps such as purchasing Android devices for staff to be able to use so that they may confirm their identity remotely using the identity verification app as part of the application process. Many other businesses are considering taking similar supportive action. From a business perspective, this is the ideal time to audit your personnel files in readiness for the new right to work checks which will result from the EU Settlement Scheme and to ensure that all those who need to register are aware of this requirement.

HR update seminars

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Book your place online.