Employment highlights of 2018 and looking ahead to 2019
Gig economy and worker status
We headlined last year’s highlights with the gig economy and worker status; this is a topic that has continued to be a feature of 2018 case law. In our last newsletter we reported on Addison Lee v Lange & Others in which the EAT upheld the employment tribunal’s finding that couriers working for Addison Lee were workers and time spent logged on was ‘working time’. In Pimlico Plumbers Ltd and Mullins v Smith the Supreme Court found that Mr Smith, a plumber who was self-employed for tax purposes, was a ‘worker’ on the facts.
However, in December the High Court rejected a judicial review challenge brought by a union on behalf of Deliveroo riders against a decision that the riders were not workers and could not therefore establish the right to collective bargaining arrangements. The contracts contained a clause enabling the right of substitution and so personal service was not required.
We have noticed that the courts are generally continuing to take a robust position on digital platforms and other forms of atypical or ‘gig economy’ working. Contracts that state that the individual is not an employee or worker but which belie the facts are rendered nugatory. The courts will look into every detail of the working relationship to establish its true nature. In September the Work and Pensions Committee launched an inquiry into the enforcement of gig economy tribunal rulings following on from complaints that firms were ignoring the judgments.
In October workers from a number of companies including Deliveroo and Uber Eats went on strike against poor working conditions. It seems clear that feelings of discontent will continue to run high.
In February the government published its response to the Matthew Taylor review which included its plan for taking forward its recommendations on employment policy and legislation. Alongside its response it published four consultations on 4 key areas: employment status, increasing transparency in the labour market, agency workers and enforcement of employment rights. These consultations are now closed and the government is ‘analysing the feedback’.
With specific reference to the consultation on employment status, the government is considering whether there may be alternative approaches to achieve certainty and clarity for employers when determining employment status with particular focus on the realities of the modern labour market.
Responses to the government consultations should be published in 2019 and it remains to be seen which of the matters consulted on will be taken forward by the government. In the meantime, firms that recruit individuals to work in the gig economy will be reviewing the ways in which they use these individuals’ services and considering whether these individuals should indeed be workers.
Update 17/12/18 - The Good Work Plan
On 17 December 2018 the government published its proposals to take forward some of the recommendations in the Taylor Review of Modern Working Practices (the Good Work Plan). At Emplaw, we have summarised these in an article entitled Your essential guide to The Good Work Plan: government proposals to implement the Taylor Review recommendations
There has been a continued focus this year on family friendly rights. The Parental Bereavement (Leave and Pay) Act 2018 received Royal Assent in September, giving a right to bereaved parents to take up to two weeks paid time off from work, subject to meeting qualifying conditions. The government published a consultation on the new right and published its response in November. Draft regulations are now being prepared which will provide the skin on the bones of the new right, which it is proposed will come into force in 2020.
Separately, the Shared Parental Leave and Pay (Extension) Bill 2017-19 was introduced to Parliament as a Private Members Bill under the Ten Minute Rule. The intention behind the Bill is to make provision about shared parental leave and pay for workers, including those who are self-employed. A mother could share her maternity allowance with her partner who is self employed.
The Bill is expected to have its second reading debate on 25 January 2019.
In a reflection of the changing tide, Uber and Uber Eats announced that their couriers would receive certain employment protections which include parental leave and bereavement pay.
On the other hand, the 2018 Modern Families Index highlighted the burden of increasing workloads on working parents. The UK continues to have a long hours culture which disadvantages working parents and damages family life. The Index noted a clear and growing ‘parenthood penalty’ and that both fathers as well as mothers are making career compromises.
Despite plans to increase statutory protections and benefits for working parents in 2019/20 it seems that the real issue facing these workers is more subtle. How to tackle the long hours culture will be a greater challenge; unless this is targeted as some of form of illegal discrimination or in breach of implied terms to look after a worker’s health and safety it will remain hard to persuade employers to change their practices.
There has been media furore over the use or, rather, misuse of non-disclosure agreements, particularly in light of the recent MeToo movement. During PMQs in October Theresa May noted that some companies were using NDAs unethically and stated that the government would bring forward measures which would be consulted on to improve regulation around NDAs.
In July, the Women and Equalities Committee (WEC) reported on Sexual harassment in the workplace which addressed the issues of NDAs which are used unethically in the context of harassment. In the report the WEC called for better control and regulation, including calling on the government to make it an offence for an employer or adviser to propose a confidentiality clause which prevents or limits a protected disclosure or disclosure about a criminal offence being made. They call for strong and appropriate sanctions against those who use NDAs unethically.
In our November newsletter we reported on the subsequent WEC inquiry into NDAs, specifically where harassment or other discrimination has been involved. The deadline for submissions to the inquiry has been extended to 31st January 2018 . Among the questions posed are:
- Should NDAs be banned or restricted in harassment or discrimination cases?
- How easy is it for employees and employers to access good quality legal advice on NDAs?
- Do some employers use NDAs repeatedly to deal with cases involving a single harasser and if so, is appropriate action being taken to deal with the behaviour?
The complex issues involved in NDAs and confidentiality issues were explored in ABC v Telegraph Media group Limited in which the Court of Appeal controversially granted an interim injunction to restrain a news paper from publishing details about the alleged bad behaviour of senior executive on the basis that the information had been obtained in breach of a NDA. The judge in this case referred to the WEC report ‘Sexual harassment in the workplace’ discussed above.
The concerns about the abuse of NDAs will continue to run throughout 2019. There is likely to be pressure upon the government to act upon the WEC recommendations and to tighten up regulation against their use. The use of NDAs is tied up with the complexities of the law surrounding confidentiality and privacy and drawing the line between what is protectable confidential information and what is not.
The Asher bakery ‘gay cake’ case had its dénouement in the Supreme Court (Lee v Ashers Baking Company Ltd & Ors, covered in our October newsletter) with the Supreme Court overturning the Northern Ireland Court of Appeal and ruling that the bakers’ refusal to bake a cake with the message ‘Support Gay Marriage’ did not breach the Equality Act. The rationale that the message of support for same sex marriage was not necessarily exclusively of benefit to the gay community but also to others who recognised the benefits of same sex marriage was not immediately obvious to all commentators. However even Peter Tatchell changed his views throughout the long running of this case and reasoned that no person should be forced to promote any political or religious message. Ashers did not refuse to serve the customer because he was gay but because they did not want to put a message they disagreed with on the cake.
In our November newsletter we considered a case in which calling a colleague a ‘fat ginger pikey’ was not harassment; in this case context was all. Whilst the term is on the face of it extremely offensive, evidence showed that the ‘victim’ had actively participated in offensive banter and was comfortable with the crude office culture.
Given the complexity of the legislation and the subtleties of more indirect forms of discrimination, we can expect to see the usual steady flow of discrimination cases in 2019. Certainly so far as harassment is concerned, there have been moves by the Women’s and Equalities Select committee to ensure greater protections. One example of this is the call by the WEC on regulators to place incentives on employers to tackle workplace sexual harassment.
The senior managers regime presently being rolled out across the financial services and insurance industries is intended to hold leaders responsible for the cultural values of their businesses, and for determining whether key staff are ‘fit and proper’ for their roles. The ‘fit and proper’ test does not explicitly require a history of sexual harassment issues to be considered but it considers aspects of the individual’s behaviours which may impact on fitness and propriety. Crucially, the WEC committee urged regulators to make it clear that sexual harassment by regulated persons is a breach of regulatory requirements by the individual and their organisation, that such breaches must be reported to the appropriate regulator, and that such breaches must be taken into account when considering the fitness and propriety (or equivalent) of regulated individuals and their employers. Perpetration of or failure to address sexual harassment in the workplace must be recognised as grounds for failing a ‘fit and proper person’ test or having professional credentials removed.
There have been some interesting case law developments over the past year on whistleblowing.
In Timis v Osipov the Court of Appeal held that an individual worker could be liable for dismissal under the whistleblowing provisions in ERA 1996 where detriment amounts to dismissal. On the facts in this case two directors were found to be jointly and severally liable, with the company, to compensate the whistleblower for the losses suffered as a result of his dismissal in an amount quantified at £2,003,972.35. It had previously been thought that individuals could not be held accountable under this legislation. This decision caused some shock waves; the whistleblowing provisions make an employer vicariously liable for the actions of its employees, even if these acts were not sanctioned by the employer. This means an employee can claim automatic unfair dismissal and additionally, a vicarious liability claim against the employer and the employee who dismissed the whistleblower. Employers should be ensuring that protective measures are in place in order to satisfy the ‘reasonable steps’ defence; not least a robust whistleblowing policy and appropriate training. The risk of uncapped damages should act as a sufficient spur to employers to ensure that they put appropriate processes and steps are in place.
In Kilraine v London Borough of Wandsworth the Court of Appeal disagreed with the EAT in Cavendish Munroe Professional Risks Management Ltd v Geduld which held that to qualify as a protected disclosure, ‘information’ must be disclosed, not simply an allegation or a concern. Mr Kilraine had argued that the guidance was incorrect and that ‘information’ could include statements that might be characterised as allegations. The Court agreed that section 43(B)(1) should not be glossed in such a way as to introduce a rigid dichotomy between ‘information’ and ‘allegations’.
Grammatically, the word "information" has to be read with the qualifying phrase, "which tends to show [etc]". In order for a statement or disclosure to be a qualifying disclosure according to this language, it has to have a sufficient factual content and specificity such as is capable of tending to show one of the matters listed in the legislation.
Meanwhile the FCA published its findings of a review of banks whistleblowing arrangements following the introduction of the whistleblowing regulatory rules in 2016. The FCA provided examples of good practice and set out areas for improvement. Whilst these apply in light of the specific whistleblowing rules for certain regulated financial institutions, they may be of general interest in light of the exposure for companies after the decision in Osipov.
It will be interesting to see whether there is an increase in claims brought by dismissed whistleblowers under the Osipov ruling. Employers should be tightening up their whistleblowing policies and procedures and ensure that all managers and relevant staff are adequately trained in order to ensure the best chance of a ‘reasonable steps’ defence.
There has been a raft of corporate governance measures this year. These include the Companies (Miscellaneous Reporting) Regulations 2018 which amend the Companies Act 2006 and the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. The changes will apply to financial years starting on or after 1 January 2019 (so first reporting will start in 2020).
Most significant among the measures is the CEO pay ratio, which requires quoted companies with more than 250 employees to publish the ratio total CEO pay to median UK employee’s pay and to 25th and 75th percentile of employee’s pay, explain the changes in ratio and put them into context. The 2018 Regulations also require a statement of engagement with employees which requires companies with more than 250 employees to include in their directors’ report a statement describing the company’s action to provide employees with information of concern to them, consult employees on a regular basis, encourage employees’ involvement in the company’s performance and a summary of how directors have engaged with employees.
The Wates voluntary principles of corporate governance were launched in December 2018 and will apply alongside the 2018 Regulations from 1 January 2019. These principles apply to large private companies on a ‘apply and explain’ basis.
Hence, there are robust government and other initiatives in the pipeline aimed at strengthening corporate governance procedures and processes within companies, not just for listed companies (who should comply with the corporate governance code). These reporting obligations for affected companies will require compliant reporting from 2020 and will require stronger engagement with employees and other stakeholders.
Transfers of undertakings
There have been some interesting TUPE cases this year. In Colino Siguenza the ECJ ruled that there had been a TUPE transfer even after a 5-month break after employees had been dismissed. The decision builds on other cases which address the issue of gaps in time between the cessation and resumption of activities.
In Tabberer and others v Mears Ltd and others the EAT held that the cessation of a travel time allowance (which was originally given to electricians to compensate for the loss of a productivity bonus) when the business transferred was not in breach of regulation 4(4) of the TUPE Regulations. This was because the reason for the cessation of the benefit was not the transfer itself but the fact that the allowance was outdated and most employees had not in any event submitted claim forms for the allowance. TUPE was not the sole or principal reason for the change.
The TUPE Regulations will continue to be a minefield for employers. As case law evolves so the strict letter of the legislation is interpreted in ever more subtle ways. One might have originally thought that a break of five months between cessation and resumption in activities would have broken the link for employment purposes but case law suggests the contrary, assuming the right factual matrix.
We mention above, in the context of whistleblowing, a company’s exposure to claims based on acts committed by its employees.
In Bellman v Northampton Recruitment Limited the Court of Appeal overturned a High Court decision that the company was not liable for the assault of its sales director by the drunken managing director at a gathering after the office Christmas party. The Court of Appeal followed the line of reasoning in Mohamud v WM Morrison Supermarkets Plc and held that the managing director’s wide remit of responsibilities and the fact that the unscheduled drinking session after the party was linked to the office function (particularly as the assailant was railing about work when the assault happened) meant that there was sufficient connection between the job and the assault for the actions to have been ‘in the course of employment’. This case makes clear that ‘close connection’ for the purposes of determining whether an act was committed in the course of employment has a wide application. It reinforces the need for employers to ensure that there are strict systems and controls in place to ensure that such risks are minimised and the chances of poor behaviours are kept low.
With the season of Christmas parties upon us, we may be expecting some more legal analysis of ‘close connection’ and ‘in the course of employment’. This is always a tricky area; where to draw the line between what happens outside the workplace and what is ruled to be in the course of employment is not always clear. We can expect this issue to provide a rich seam of case law in the year ahead.
The senior managers and certification regime (SMCR) was introduced for banks, building societies and larger insurers in 2016; however it was always the intention to extend the regime across the regulated sector.
In the summer of 2018 the regulators (the FCA and the PRA) published policy statements setting out their intentions to extend the regime to nearly all financial institutions (in December 2019) and insurers/ reinsurers (December 2018).
This will be an enormous change for these firms. Firms previously outside of the SMCR will now have to assess certification staff as fit and proper; a process which has implications across the employment life cycle. The requirement to obtain and provide regulatory references will mean that dismissals are more likely to result in unfair dismissal claims (a regulatory reference will disclose conduct breaches and other matters which may affect a fitness and propriety assessment and therefore an individual without a clean record is unlikely to work in the sector again).
The employment implications of the extended regime are significant and will mean that human resources and in house legal departments of regulated firms will need to get up to speed with the implications as well as the detail of the regime.
The SMCR will be extended to nearly all financial institutions on 9 December 2019. Details of transitional arrangements are expected to be published in the new year. Meanwhile insurers became subject to the full SMCR on 10 December 2019 although they will have 12 months from commencement to complete the initial certification process.
The year has, of course, been dominated by Brexit!
Most recently, the ECJ has followed the Attorney General’s advice and has ruled in Wightman and others v Secretary of state for Exiting the European Union that the UK can unilaterally revoke the Article 50 withdrawal notice by notice in writing to the European Council. Meanwhile, within the last few months the government has been busy preparing for the possibilities of a no-deal Brexit. This month it published a policy paper on the rights of EU citizens in the event that there is a no-deal Brexit (a prospect that appears increasingly likely). For its part, last month the European Commission proposed reciprocal visa free travel after the UK has left the UK (if indeed it does).
The government has also published legislation that will transpose EU legislation into domestic legislation in advance of March 2019. If the UK leaves the EU it remains to be seen whether and to what extent the UK will choose to fall in line with any future EU legislation.
At the time of writing, all bets are off. Theresa May has delayed a vote on the deal she brought back from Brussels, kicking into the New Year any certainty about whether the deal as it stands would be accepted (almost certainly impossible), whether any concessions might be made by the EU, whether we will have a no deal exit or indeed, whether there will be a second referendum with ‘Remain’ on the ballot paper.