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Employment highlights of 2017 and looking ahead to 2018

Gig economy/Taylor review and worker status

Looking back

2017 has been a lively year in the courts for cases concerning individuals working in the gig economy. The term ‘gig economy’ encompasses a wide variety of atypical working forms. These include platform or online economy and the sharing or collaborative economy. There is no clear divide between these modes of working and it is often difficult to establish the precise manner in which an individual performs his work.
For employment law purposes, it is essential to determine whether an individual is working on a self-employed, employed or ‘worker’ basis. For this and related reasons, the government commissioned a review to be carried out by Lord Matthew Taylor to report on employment practices in the modern economy. The final report was published on 11 July 2017 and highlighted a number of issues arising from the new working practices. Issues included the problematic definition of worker: Taylor recommends the re-naming of individuals who are not employees as ‘dependent contractors’. Taylor also highlighted the over-reliance of zero hours contracts.
The mantle of the Taylor Review has been taken up by the Work and Pensions Committee and the Business, Energy and Industrial Strategy Committee who have joined together and produced a report called ‘A framework for modern employment’ which includes a draft Bill that it says would take forward the best of the Taylor Review recommendations.

Looking ahead

We must wait to see if the Committee’s recommendations will be adopted. Certainly the government’s proposals on how it intends to take forward the Taylor recommendations are still awaited. There are concerns that given the focus on Brexit there will be insufficient parliamentary time and energy to progress Taylor’s suggested reforms.

Worker status cases

Looking back 

There have been several interesting and high profile cases considering worker status of those working in the gig economy.

In February, in Pimlico Plumbers v Smith the Court of Appeal held that a plumber was a worker not a self-employed contractor. The Court of Appeal in this case emphasised the fact that personal service lay at the heart of the relationship.

In Uber BV v Aslam and others the EAT considered whether certain Uber drivers were workers for the purposes of various statutory employment rights such as holiday pay, national minimum wage and unlawful deductions from wages. The drivers needed to establish that there was a contract between the individual and the ‘employer’ under which the individual undertook to do work personally and the employer was not a client or customer of a business operated by the individual.
The EAT ruled that those conditions were satisfied on the facts of the case and that the drivers had established their case for worker status.
In particular the EAT found that the tribunal was entitled to reject the description of the relationship between Uber and the drivers in the written contractual documentation. The drivers were incorporated into Uber’s taxi business and subject to controls that indicated that they were not working in a business on their own account in a direct contractual relationship with the passenger each time they accepted a trip.

Meanwhile, in Independent Workers Union of Great Britain v RooFoods Ltd t/a Deliveroo the issue before the Central Arbitration Committee was whether a union could apply for statutory recognition in respect of a group of Deliveroo’s riders. To do this, the riders needed to be ‘workers’. The CAC examined all the terms of the working relationship between the parties. One of the terms was the right to substitute.

In this case the CAC held that the drivers were not workers and so the application for union recognition could not proceed. Key to this finding was that the substitution clause was not a sham. The CAC concluded that the right to substitute was genuine and they heard evidence of this being operated in practice: this was an insuperable difficulty for the union.

Other gig economy cases heard in 2017 include Dewhurst v CitySprint UK Ltd in which an employment tribunal held that a cycle courier was a worker. In this case the ET found that on the facts the substitution clause was not genuine. This, together with other factors of the working relationship (according to the purposive approach endorsed in the case of Autoclenz v Belcher) was indicative of a worker status. This case was appealed and the decision is awaited.

Looking ahead

Uber are appealing the decision that Mr Aslam and others were workers for the purposes of various employment rights. Those organisations that employ individuals on atypical working contracts should keep watch on any appeals.

In the Deliveroo case, there can be no appeal from a CAC decision but it can be challenged by way of judicial review although there is no indication yet that the union will do this.
The decision in the appeal of Dewhurst v CitySprint is awaited.

An appeal in Pimlico Plumbers v Smith is due to be heard in the Supreme Court next year:

A decision is also awaited from the Court of Appeal in Gilham v Ministry of Justice on the definition of worker in the case of a salaried district judge.

Holiday pay

Looking back

The vexed issue of holiday pay has run and run. Most recently, the ECJ has ruled in King v Sash Window Workshop Ltd that under Article 7(1) of the Working Time Directive (WTD) Mr King was entitled to claim back pay for untaken holiday for the period that he worked as a commission-only salesman, under which arrangement he received no salary and no sickness or holiday pay. Whilst Mr King took some unpaid holiday leave, he had not taken around 24 weeks of holiday between 1999 and 2012.
The ECJ ruled that employers must provide adequate facilities for workers to take paid annual leave and if an employer does not pay annual leave, the worker can claim that they have been prevented from exercising their right to take it. In this case, the leave is carried forward. The ECJ further ruled that there should be no limit on the period for which a worker could claim retrospective holiday pay. However the judgment applies only to the four weeks of statutory holiday entitlement under the WTD.

Looking forward

This case will have significant consequences for employers, particularly in the gig economy. In respect of King v Sash, this case will now return to the Court of Appeal which will need to decide whether the Working Time Regulations can be interpreted in such a way as to be compatible with the ECJ’s judgment or whether words need to be read in to make it so. It is likely that now claimants will argue that the two year backstop for liability to pay holiday pay and the three-month rule in Bear Scotland will be ruled contrary to EU law because they prevent an adequate remedy being afforded for breach of workers’ rights. King v Sash therefore represents a significant milestone and it is possible that employers will not in the future be able to use the two-year backstop or 3-month rule to limit liability in holiday pay cases.

General Data Protection Regulation

Looking back

The EU General Data Protection Regulation (GDPR) came into force in May 2016 and is directly effective in all member states from 25 May 2018. The UK’s Data Protection Bill will replace the Data Protection Act 1998, implementing the requirements of the GDPR. The Information Commissioner’s Office has consulted on draft guidance on consent, with final guidance due in December 2017.
The GDPR deals with the maintenance and processing of personal data but there is more emphasis on transparency so that individuals know what personal data that concerns them is being kept and used. There is also an emphasis on accountability so that data controllers should be able to demonstrate compliance.

Looking ahead

The report stage debate on the Data Protection Bill is taking place from December 11th and the Bill will then go to the House of Commons. The Bill should become law by 25 May 2018 to ensure compliance with the GDPR. Employers will need to be ensuring that their systems and controls are compliant by this date to minimise the risk of claims (even class actions) against them. The Bill introduces new offences aimed at data controllers who deliberately destroy personal data to frustrate subject access requests and those who circumvent an organisation’s encryption mechanisms to identify personal data which had been anonymised.

Employment tribunals and refund of fees

Looking back

In R (Unison) v Lord Chancellor and another in July 2017 the Supreme Court finally reversed a run of decisions from the lower courts and found that the government’s scheme of charging employment and employment appeal tribunal fees was unlawful. The fees regime ended on 29 July 2017.
As a consequence of the decision, the Ministry of Justice and HMCTS has set up a refund scheme aimed at reimbursing tribunal fees that had been erroneously paid. In October, it was announced that interest will be paid at a rate of 0.5% until refund.

Looking ahead

It is likely that there will be significant increase in tribunal claims and appeals in the coming moths. What is more uncertain is how dramatic an increase this will be and how the tribunal system will manage the demand. There are other outstanding issues such as what will happen to claims that were struck out for non-payment of fees.

Gender pay gap reporting

Looking back

The Equality Act 2010 (Gender Pay Gap Regulations) Regulations 2017 came into force on 6 April 2017. The Regulations are accompanied by the Acas/GEO guidance which is not legally binding but it is unlikely that an employer will be criticised if it follows the guidance. It is pitched at a fairly high level and it is likely that the EHRC will have regard to the guidance when considering enforcement action.The Regulations require six calculations to be carried out, the results to be published on the employer’s website and a government website within 12 months.

Looking ahead

The first gender pay gap reports for private companies that fall within the scope of the Regulations must be published by 4 April 2018. Employers are likely to use the optional narrative to explain any discrepancies and to set out what actions they intend to take to address any pay gaps. Employers will also be considering when to report (although the April deadline is fast approaching). The guidance encourages employers to consider publishing as quickly as possible but timing will depend on an employer’s own circumstances. Employers may wish to take a more measured approach to publishing within the one-year timeframe so that they are confident that they have properly considered the impact of their pay gap analysis and have taken any remedial steps they consider appropriate. Delaying may also enable employers to consider the approach of other employers in the same industry have taken with their supporting statements.


Looking back

There have been some interesting whistleblowing decisions in 2017. Most recently, in Royal Mail v Jhuti the Court of Appeal held that in determining the reason for a dismissal the employment tribunal is only obliged to consider the mental processes of the person authorised to (and who did) take the decision to dismiss (being the mind of the employer). The court felt bound by the decision Orr v Milton Keynes Council [2011] ICR 704 but suggested that, in cases of manipulation, the position might be different if it were the CEO who had deliberately manipulated the dismissal decision. In this case, Ms Jhuti’s line manager Mr Widmer (motivated by a protected disclosure made by Ms Jhuti) deliberately misled the investigating officer who dismissed Ms Jhuti for poor performance but the Court of Appeal agreed with the decision of the Court of Appeal that the dismissal was fair.

In Chesterton Global Ltd v Nurmohamed the issue before the Court of Appeal concerned the requirement that only disclosures which an individual reasonably believes are in the public interest can be the subject of a qualifying disclosure. The issue in this case was whether profitability was being artificially suppressed in a particular office in order to reduce the level of commission payable, allegedly in order to manipulate the accounts to the benefit of the shareholders. Mr Nurmohamed – and 100 other senior managers – were affected by the alleged wrongdoing. The Court of Appeal found that Mr Nurmohamed’s disclosures to his employer about this were capable of being in the public interest. Crucially, the court rejected a purely numbers based approach to the ‘public interest’ test and instead found that the correct approach is to view each case on its own merits and to be aware that personal and public interests are not mutually exclusive.

In Beatt v Croydon Health Services NHS Trust the Court of Appeal held that the test of whether disclosures are protected is objective: if the disclosure is protected and the principal reason for dismissal is the disclosure  then the dismissal is automatically unfair, regardless of the employer’s belief or otherwise about the protected status of the disclosure.

In International Petroleum v Osipov the EAT held that non-executive directors were jointly and severally liable for detriments including Mr Osipov’s dismissal for having made protected disclosures. Mr Osipov had brought claims against International Petroleum and two NEDs for having been subjected to detriments and having been dismissed for making protected disclosures. His claims were successful and the ET awarded him around £1,745,000 against International Petroleum and the two NEDs on a joint and several basis. International Petroleum and the two NEDs appealed. The NEDs appealed against the finding that they were jointly and severally liable.The EAT dismissed the appeal.

The starting point is that there are two parts to the statutory protection provided to whistleblowers: that contained in s.47B of Part V and that contained in s.103A of Part X ERA 1996. Section 47B  provides for the the right not to be subjected to any detriment by the employer on the ground that the worker has made a protected disclosure and s.47B(2) states that the section does not apply where  'the detriment in question amounts to dismissal'.Section 103A of Part X meanwhile provides for a dismissal to be unfair if the reason (or, if more than one, the principal reason) for the dismissal is that the employee made a protected disclosure. The NEDs argued that they could not be liable becuase individual responsibility only apples in detriment claims and detriment claims exclude dismissal.

The EAT held that the ET did not err in law by holding the two NEDs jointly and severally liable for all losses flowing from the detriments to which they subjected Mr Osipov. The EAT accepted that a basic award, as a claim for unfair dismissal under Part X, was payable only by the employer but the rest of the compensation awarded related to losses which flowed directly from Mr Osipov’s dismissal and the detriments to which he was subjected by the NEDs. The proper interpretation of s.47B(2) ERA and the words ‘within the meaning of Part X’ was key: these words meant that it was only detriments amounting to unfair dismissal claims that are excluded from the scope of the detriment provisions of ERA 1996. Where an employee or worker was not able to pursue an unfair dismissal claim under Part X, they could still complain of dismissal as part of their detriment claim.In this case, as Part X claims could not be brought against individual respondents, those individual respondants could be held liable under Part V. This is consistent with the rights of 'workers' as they can complain of dismissal as part of a detriment claim when of course they lack employment status to bring an unfair dismissal claim.

Looking ahead

There are a number of whistleblowing cases due to be heard – or for decisions to be published – in 2018, most notably Kilraine v London Borough of Lambeth. In Kilraine the EAT considered whether a disclosure was simply an allegation and not a disclosure of information as required by law.
The appeal in Roberts v Wilsons solicitors is also due to be heard by the Court of Appeal. In this case the EAT held that a LLP member who is a worker could claim compensation for post-termination losses even if he had been lawfully expelled as a member if he is able to show that the losses flowed from unlawful detrimental treatment.


Looking back

In Naeem v Secretary of State for Justice and Essop v Home Office (linked cases based on different facts) the Supreme Court ruled that claimants do not have to prove the cause of group disadvantage in indirect discrimination cases, only that disadvantage exists. The Supreme Court said that there was no need for someone claiming indirect discrimination to show that any disadvantage was related to the protected characteristic. The simple fact that the PCP disadvantaged the group and the individual was sufficient. It was always open to an employer to show that the PCP was justified. This decision strengthens employees’ ability to bring claims of indirect discrimination in certain cases, particularly where it is unclear precisely why a particular group is disadvantaged by an employer’s practices.#

In discrimination claims, the Tribunal asks itself first whether the Claimant has proven sufficient facts so that the Respondent could have committed a discriminatory act. If such facts have been proved, the burden shifts of the Respondent to disprove the case, again, on the balance of probabilities (Equality Act 2010 s.136).

On 10 August 2017 the Employment Appeal Tribunal handed down what was seen as a significant decision regarding the burden of proof in discrimination cases: The decision in Mr I Efobi v Royal Mail Group Limited  challenged the traditional view that the Tribunal asks itself first whether the Claimant has proven sufficient facts so that the Respondent could have committed a discriminatory and then, if such facts have been proved, the burden shifts of the Respondent to disprove the case, on the balance of probabilities (Equality Act 2010 s.136). In Efobi, it was suggested  that section 136 did not impose any burden on the Claimant; instead, the tribunal must consider all the evidence, at the end of the hearing.However, normality was restored in the Court of Appeal decision in November in the case of Ajayi Ayodele v (1) Citylink Limited (2) Paul Napier.

On Decmber 11th, the Court of Appeal upheld the appeal in Gallop v Newport City Council . In this case the ET held, in a disability dicrimination claim, that the employer was entitled to rely on OH's opinion that the claimant was not a 'disabled person' and so did not have the requisite knowledge. The EAT agreed and the claimant appealed.The  Court of Appeal held  that the question for the ET was not what OH's opinion on the matter was but whether, at the times material to the discrimination claims, the respondent had actual or constructive knowledge of the facts constituting the claimant's disability.

 Disability employment gap: consultation on a Green Paper seeking views on the employment of disabled employees closed in February and the government’s response was published in November

Looking ahead

Consultation on extending discrimination to include caste closed on 18 September 2017 and the government’s response is awaited.

Extension of the SMCR

Looking back

From March 2016 the senior managers and certification regime came into force for deposit takers (banks, building societies and credit unions) certain PRA-regulated investment banks a streamlined version came into force for Solvency II insurers and reinsurers.
The FCA and PRA have published consultation papers proposing an extension of the SMCR across the financial services sector and for insurers/ reinsurers.

Looking ahead

Consultation closed on 3 November 2017. Policy statements on the extended regime are expected late summer/ early autumn 2018 with implementation to be announced (but likely to be late 2018/ early 2019).

What else to look out for

A number of other important developments are expected in 2018. These include:
• The Immigration Bill 2017: the Immigration Bill is due to have its first reading in January 2018. This Bill will establish a new national policy on immigration and enable the government to repeal EU law on immigration
• Grandparental leave: legislation is expected in 2018 to extend shared parental leave and pay to working grandparents
• Corporate governance: the Financial Reporting Council has just published consultation on a revised corporate governance code. Consultation closes on 28 February 2018
• Dress codes: government guidance on dress codes is awaited
• Equal pay: Asda has applied for permission to appeal against an EAT decision that a predominantly female group of supermarket workers could compare themselves with a predominantly male group of distribution depot workers in an equal value claim