As the year draws to a close, it's a good time to take stock of some of the key employment law cases from the past 12 months.
Here, we consider the learning points from some of 2017's most important decisions affecting employment status, equality, unfair dismissal, employment contracts, holiday pay, whistleblowing and more.
- Employment status
- Pimlico plumbers are workers: in the case of Pimlico Plumbers Ltd and anor v Smith the Court of Appeal decided that self-employed plumbers were workers and also employees under the extended definition of employment in the Equality Act 2010. This meant that the plumbers would acquire various employment rights such as the right to the national minimum wage, paid holiday, rest breaks and pension contributions, as well as whistleblowing and discrimination protections. This decision is relevant to all employers who engage independent contractors. It would be wise to take steps to review such relationships to ensure that the contractual documentation and labels used accurately reflect the reality of the relationship on the ground. You can read our full report on the decision here. Pimlico Plumbers' appeal is due to be heard by the Supreme Court on 20 and 21 February 2018.
- Uber drivers are workers: in the case of Uber BV, Uber London Limited and Uber Britannia v Aslam & Ors the EAT upheld a previous Employment Tribunal decision that, when the Uber app is switched on, Uber drivers are workers for the purposes of their claims under the Employment Rights Act 1996, Working Time Regulations 1998 and National Minimum Wage Act 1998. The EAT found that the reality of the situation was that the drivers were incorporated into the Uber business of providing transportation services, subject to arrangements and controls that pointed away from their working in business on their own account in a direct contractual relationship with passengers each time they accepted a trip. The EAT also had no objection to the Tribunal's approach of requiring the drivers not only to be in the relevant territory, with the app switched on, but also “able and willing to accept assignments”, as that was consistent with Uber’s own description of a driver’s obligation when “on-duty”. So, although there may be a few gaps when the drivers did not have the Uber app switched on and were not workers, this was not fatal to the drivers' status as 'workers' when they did have the Uber app switched on. You can read our full report on the decision here. Uber has appealed the decision to the Court of Appeal. A hearing date has yet to be listed.
- Deliveroo riders are genuinely self-employed and are not workers: in the case of Independent Workers' Union of Great Britain v RooFoods Limited t/a Deliveroo the Central Arbitration Committee (CAC) considered an application for statutory trade union recognition. In doing so, the CAC had to consider whether delivery riders engaged by Deliveroo were workers for the purposes of TULCRA 1992. If they were not, the application would fail. The CAC concluded that the riders were not workers on the basis that there was a genuine, almost unfettered right of substitution. This meant that there was no requirement to perform the work personally and the worker test had not been satisfied. This decision bucks the trend seen in cases involving employers such as Uber, Pimlico Plumbers, Addison Lee, Excel and CitySprint, where ostensibly self-employed individuals were found to be workers. It seems clear that the differentiating factor in this case was the presence of a genuine and largely unfettered right of substitution. Whilst this created other risks for Deliveroo, it meant that the personal service requirement had not been met. You can read our full report on the decision here. Separately, multiple Employment Tribunal claims predicated on the riders having worker status under the Employment Rights Act 1996 have been brought against Deliveroo. An Employment Tribunal hearing to determine the claimants' employment status will be held in 2018.
- Recommendations on worker status from the Taylor Review on Working Practices: although not a Court of Tribunal decision, it's worth remembering that the recent Taylor Review of Modern Working Practices recommended that the Government prioritise replacing the existing worker status with a new status of "dependent contractor", which would carry with it a different threshold test. The Review recommended that much greater weight should be placed on the principle of control, than on the requirement for personal service. It went on to say that the absence of a requirement to work personally should not be an automatic barrier to accessing employment rights as a dependent contractor. The Review said this this would "make it harder for employers to hide behind substitution clauses". This recommended approach has been endorsed by the House of Commons Work and Pensions and Business, Energy and Industrial Strategy Select Committees in their joint report entitled "A framework for modern employment". You can read our reports on the Taylor review here and here and you can read our report on the Select Committees' joint report here.
- Equality
- Indirect discrimination: no need to establish the reason for the particular disadvantage: in the joined cases of Essop and ors v Home Office (UKBA) and Naeem v SoS for Justice the Supreme Court held that, in the context of an indirect discrimination claim, it was not necessary to be able to explain why a provision, criterion or practice (a PCP) disadvantages a particular group. However, an individual claimant must still be able to show that there is a causal link between the PCP and their own disadvantage, which is the same as the disadvantage caused to the group. Helpfully, the judgment emphasised that it is always open to an employer to show that a PCP is justified, noting: “The requirement to justify a PCP should not be seen as placing an unreasonable burden upon respondents. Nor should it be seen as casting some sort of shadow or stigma upon them. There is no shame in it. There may well be very good reasons for the PCP in question.” The Supreme Court also highlighted that employers would be wise to monitor how its policies and practices impact on various groups, and try to modify them if they do have a disparate impact.
- Discriminatory motives: where a decision-maker's decision is strongly influenced by someone acting with discriminatory motives, the decision may be viewed as a joint decision and may be discriminatory: in the case of Commissioner of Police of the Metropolis v Denby the EAT upheld an Employment Tribunal's decision that individuals who had heavily influenced the decisions of an official decision-maker should properly be regarded as joint-decision makers. That being the case, the motivations of all the joint decision-makers could be taken into account to determine whether the decisions were tainted by discrimination. In this case, the influencers were acting from discriminatory motives, meaning the decisions were discriminatory. The EAT noted that Employment Tribunals can assist claimants on the receiving end of opaque decisions by allowing them to amend their claims to identify any hidden joint decision-makers once their involvement is exposed. Employers should ensure that their decision-making processes are transparent and that those providing information or evidence to a decision maker do not stray into the territory of lobbying for a particular outcome. This should ensure that only the motivations of the official decision-maker will be taken into account when assessing whether the decision in question was discriminatory. You can read our full report on the decision here.
- Disability discrimination: a reduction in workload was a reasonable adjustment: in the case of Home Office (UK Visas & Immigration) v Kuranchie the EAT decided that an employer had breached the duty to make reasonable adjustments by not reducing a claimant's workload of its own volition to accommodate her dyslexia. The fact that this solution had not been suggested by the claimant was irrelevant when the adjustment had a real prospect of removing the disadvantage. This decision demonstrates that employers must apply a broad approach to the duty to make reasonable adjustments, having regard to the primary objective of the legislation which is to facilitate the employment of disabled employees on equal terms to non-disabled employees. The employer cannot discharge its duty to make reasonable adjustments by merely relying on suggestions made by an employee and/or Occupational Health. The duty to make reasonable adjustments rests with the employer and they must consider carefully what steps might be taken to remove the relevant disadvantage. The case did not address whether, had the employer reduced claimant's workload, it would have been required to maintain her salary at the same level as her colleagues. However, pay protection may be appropriate as part of a package of adjustments to encourage the full participation of disabled employees in the workplace. In the case of G4S Cash Solutions (UK) Limited v. Powell, the EAT found that pay protection to allow an employee to return to work in a less skilled role could be a reasonable adjustment in an appropriate case. You can read our full report on the decision here.
- Sex discrimination: failure to match shared parental pay with enhanced maternity pay was directly discriminatory against male employee: in the case of Ali v Capita Customer Management Ltd an Employment Tribunal held that an employer directly discriminated against a male employee by paying enhanced pay to women on maternity leave and statutory pay only to men on shared parental leave. The Employment Tribunal took the controversial step of allowing the claimant to compare himself to a woman on maternity leave, rather than confine him to a comparison with a woman on shared parental leave. They also held that, aside from the compulsory initial two-week period, the purpose of maternity leave was detached from pregnancy and childbirth and so the special treatment derogation did not apply. This decision conflicts with a previous Employment Tribunal decision on the same issue - Hextall v Chief Constable of Leicestershire Police. However, both Hextall and Ali are to be appealed and the EAT's decision will be binding. Ali will be heard by the EAT on 20 and 21 December 2017 and Hextall on 16 January 2018. Employers offering differential pay for maternity leave and shared parental leave should follow these appeals and give consideration to their response if the EAT upholds this decision. You can read our full report on the Ali decision here.
- Sex discrimination: an employer must conduct a specific risk assessment for a breastfeeding mother or risk a sex discrimination claim: in the case of Ramos v Servicio Galego de Saude the ECJ ruled that conducting a general risk assessment of the health and safety risks to pregnant workers and new and breastfeeding mothers was not sufficient to comply with the Pregnant Workers Directive. On top of this, the employer must conduct specific risk assessments for individual workers to identify any particular health and safety risks they may face. These risks will change at different stages of pregnancy and motherhood and may be different for different women performing the same job. A failure by an employer to conduct such a bespoke risk assessment may give rise to a direct sex discrimination claim. Where does this leave employers? Firstly, it is important to ensure that health and safety policies are appropriately drafted and clarify that specific risk assessments will be conducted for pregnant workers and new and breastfeeding mothers. Secondly, employers must ensure that those specific risk assessments are actually carried out - both upon notification of pregnancy and on the return to work (and at appropriate intervals thereafter if they continue to breastfeed for some time). You can read our full report on the decision here.
- Pregnancy and maternity discrimination: protection against dismissal crystallises from conception and before the employer is notified: in the case of Porras Guisado v Bankia SA and others the Advocate General considered the dismissal of a pregnant worker in line with the provisions in the Collective Redundancies Directive (CRD) and the Pregnant Workers Directive 92/85/EEC (PWD). The Advocate General concluded that a collective redundancy situation is not necessarily an "exceptional case" which can be used to justify the dismissal of a pregnant worker. Further, the PWD should protect workers against dismissal from the moment they are pregnant, even if they have not yet informed their employer of their pregnancy. It is important to note that this opinion may not be followed by the ECJ in their final judgment. Nonetheless, the AG's view that the PWD will be interpreted to protect workers against dismissal from the moment they are pregnant, even before they have notified their employer of their pregnancy, is significant. This clearly strikes a balance in favour of the pregnant worker. Employers may be concerned, therefore, that they could fall into the trap of unwittingly dismissing a pregnant worker. However, in this scenario, the employer would still have the opportunity to undo the damage provided they are made aware of the error soon after the dismissal occurs. For example, if the employer re-hired and/or reassigned the worker, they would be acting in accordance with Article 10 of the PWD. It may also be reassuring for employers to know that the dismissed worker has a duty to notify her employer about her pregnancy without unreasonable delay. You can read our full report on the decision here. The ECJ's decision on the case is expected shortly.
- Equal pay: female retail employees permitted to compare themselves to male distribution depot employees: in the case of Asda Stores Ltd v Brierley and others the EAT upheld a decision of the Employment Tribunal that 7,000 female retail workers working at supermarkets were entitled to compare themselves to male distribution workers working at depots. This comparison was permitted under the Equality Act 2010 as the workers could be said to have common terms. It was also permitted under Article 157 of the Treaty on the Functioning of the European Union given the presence of a single source responsible for the terms and conditions and any pay inequality. As the biggest equal pay claim in the private sector to date, it is likely to be in the minds of unions and employees, particularly those operating within the retail sector. However, it is important to remember that this decision is limited to one specific preliminary issue about appropriate comparators in equal value claims. It does not address the issue of whether the work of a female supermarket worker at Asda is of equal value to the work of a male distribution depot worker at Asda. Instead, it says that the female supermarket worker can use the male distribution depot worker as her comparator in an equal value claim. The complex question of whether their work is, in fact, of equal value is yet to be determined by an Employment Tribunal. However, Asda has appealed this preliminary issue to the Court of Appeal and the appeal due to be heard on 10 October 2018. Therefore, it is likely to be some time before we have final decision on the substantive claims. You can read our full report on the decision here.
- Unfair dismissal
- Dismissal decided by reference to history of expired warnings and future expectations was fair: in the case of Stratford v Auto Trail VR Ltd, the dismissal of an employee was held to be fair where the employer had made clear that its decision was driven by the overall disciplinary record of the employee, including expired warnings, and its reasonable belief that there would be future conduct issues. The EAT decided that an expired warning could be taken into account as part of the overall circumstances which dictate whether an employer acted reasonably in dismissing the employee. In this case, the employee's long list of previous misconduct issues and recently expired warning for misconduct, were relevant matters and the employer had been entitled to consider them. Whilst helpful, it's important to note that this case does not provide authority that employers can dismiss solely on the basis of an expired warning. Previous case law has made it clear that it is not permissible to use an expired disciplinary warning as a justification for treating a non-dismissible offence as a dismissible offence, and the EAT decision does not challenge that finding. Employers should still remain cautious about how they interpret and use previous disciplinary records. Well-drafted disciplinary policies and comprehensive procedures are essential in ensuring that proper process is followed and will assist in demonstrating that a dismissal is fair. You can read our full report on the decision here.
- Dismissal where the employer took into account previous episodes of misconduct which had not been treated as disciplinary matters was fair: in the case of NHS 24 v Pillar the EAT overturned a decision of the Employment Tribunal that a misconduct dismissal had been unfair on the ground that the investigation report contained details of past misconduct offences that had been dealt with by way of remedial training. Given that the Employment Tribunal had found the dismissing officer's decision to dismiss had fallen within the band of reasonable responses, it was perverse to say that the dismissal was unfair because the investigation report contained too much background information. There was a distinction to be made between: (i) relying on the past conduct as a principal reason determining the dismissal; and (ii) including the information in the investigation report on the basis that it was relevant background. It was accepted that it would be unfair for an employer to rely on an expired disciplinary warning when determining whether to dismiss an employer, since the expiry of the warning would have created an expectation that the conduct would not factor in a future decision to dismiss. However, simply taking the information about past conduct into account as a relevant background was permissible. You can read our full report on the decision here.
- Dismissal fair despite failures to set out reasons for dismissing internal appeal and provide witness evidence explaining the appeal decision: in the case of Elmore v The Governors of Darland High School and another the EAT upheld an Employment Tribunal's decision that a capability dismissal was fair in circumstances where: (i) the appeal conclusion letter did not set out the reasons for rejecting the employee's appeal; and (ii) no member of the appeal panel gave witness evidence at the hearing of the unfair dismissal claim. In this case, the absence of reasons and witness evidence was not fatal to fairness. However, this decision hinged on the fact that the appeal was a simple re-hearing of the capability stage and it could be shown that the overall process followed by the employer was fair. Whilst it is standard practice for appeal letters to set out the reasons for dismissing an appeal, this case demonstrates that a failure to do so will not always mean the dismissal unfair. However, employers should be careful not take this as carte blanche to short circuit an appeal process and provide abbreviated appeal letters. Furthermore, employers should usually expect to call at least one member of an appeal panel to give evidence at a relevant hearing. You can read our full report on the decision here.
- Employment contracts
- Mobility clause was too widely drafted meaning that employees had not behaved unreasonably in refusing to move and subsequent dismissals were unfair: in the case of Kellogg Brown & Root (UK) Ltd v (1) Fitton & (2) Ewer the employer succeeded in an argument that two employees who refused to move offices upon a workplace closure were dismissed by reason of conduct and not redundancy. However, the dismissals were ultimately held to be unfair. Although the contract contained a mobility clause which purported to allow the employer to relocate employees, it was too widely drafted. This meant that the instruction to relocate was unreasonable and the claimants' refusal to move was reasonable. This case reminds employers to be cautious about taking the black letter of the contract at face value. Unlike in many areas of law, in employment law contractual terms are always supplemented by the implied term of mutual trust and confidence. With mobility clauses, this means employers must assess the impact on the workforce of exercising the clause and seek to mitigate this impact. Employers should ensure contractual terms are as clear and specific as possible. Although it may feel attractive to draft a mobility clause widely, as the employer did here, where it is so wide as to be uncertain and/or unreasonable the Employment Tribunal will resist enforcing it. You can read our full report on the decision here.
- No implied term that requirement to repay a company loan was waived in a voluntary redundancy situation: in the case of Ali v Petroleum Company of Trinidad and Tobago the Privy Council held that an employee who took voluntary redundancy was still required to repay a company loan when he fell short of the length of service requirement for repayment to be waived: there was no implied term that repayment wasn't required in these circumstances. This decision suggests that, in the absence of any express terms, employees in voluntary redundancy situations will be required to repay any loans or other debts to their employer, but that employees who are made compulsorily redundant may not. To avoid disputes ending up in court, it is always best to include express wording in the terms of any conditional loan agreements to address what should happen regarding repayment in the event that any of the conditions are not met, such as employment terminating before an agreed term. As the terms of the repayment loan in this case are similar to many other conditional loan arrangements (such as enhanced maternity pay schemes or study loans), employers should check whether express terms have been included in those agreements to deal with situations like early termination of employment and how that might affect repayment. You can read our full report on this decision here.
- Notice to terminate employment takes effect when employee personally takes delivery of the notice letter: in the case of Newcastle upon Tyne NHS Foundation Trust v Haywood the Court of Appeal struggled to decide the rules around when notice to terminate an employee's employment takes effect under the contract. They concluded that notice is served only when the employee, personally, has taken delivery of the letter containing notice. Here, the employee was away on holiday and didn't receive the letter until her return. The Court decided that notice was served on her return, notwithstanding that it had also been emailed to her and posted in a letter collected by her father-in-law in her absence. However, there was no requirement that the employee must have read the letter before the notice became effective. Employers should include express guidance in the notice clauses of employee contracts, specifying when the notice will take effect and how it can be served. The Court was clear that its conclusions were reached in the absence of express terms in the claimant's contract about this. In particular, in today's business world, it would be sensible to include an express term that notice can be served over email. You can read our full report on the decision here. The employer's appeal was heard by the Supreme Court in 20 November 2017 and judgment is awaited.
- Holiday pay
- Should results-based commission be included in holiday pay? In October 2016, in the case of Lock v British Gas Trading Ltd, the Court of Appeal decided that the Working Time Regulations 1998 (WTR) could be interpreted to include results-based commission payments in holiday pay. The Court of Appeal indicated that it had "wavered" in reaching its decision. It was, therefore, widely expected that a further appeal would be heard by the Supreme Court. However, on 28 February 2017 the Supreme Court refused British Gas' application for permission to appeal. The consequence of the refusal was that the Court of Appeal's decision stood and sums in respect of results-based commission may have to be included in the calculation of holiday pay for the first 4 weeks of holiday under the WTR. Although this development meant that the principle was settled, two important practical questions remain unanswered: (i) what is the correct reference period to be used when including results-based commission payments in holiday pay?; and (ii) when will a payment be considered sufficiently regular to warrant inclusion in holiday pay? Some employers may feel these uncertainties justify a continuation of a "wait and see" approach. However, where an employer decides to take this approach it would prudent to make provision to cover the cost of making adjustments in future. You can read our full report on the decision here.
- Voluntary overtime payments must be included in holiday pay: in the case of Dudley Metropolitan Borough Council v Willetts and others the EAT upheld an Employment Tribunal decision that voluntary overtime, stand-by and call out payments must be reflected in holiday pay, provided such payments amount to "normal remuneration". Importantly, the EAT held that the worker does not have to be contractually obliged to carry out the work in order for the related payment to be included in holiday pay. This is the first binding decision on the inclusion of voluntary overtime payments in holiday pay. However, as highlighted above, uncertainties remain as to how such an adjustment should be effected in practice. First, what reference period should be used? In the absence of any guidance from the Tribunals or the Government, employers will have to make their own judgement on what reference period to use. In this context, it is worth noting that the recently-published Taylor Review recommended the use of longer reference periods for workers with irregular hours. However, it is unclear if, or when, this proposal will be taken forward. Second, when is payment to be considered sufficiently regular to warrant inclusion? The EAT Judge suggested a payment once every four or five weeks would meet the threshold if paid over a sufficient period of time. But how irregular does a payment have to be to fall out of scope (e.g. is once a year, every year, regular or irregular)? Again, employers will have to make their own judgement on whether a payment is in or out of scope. You can read our full report on the decision here.
- Worker entitled to payment in lieu of accrued leave for whole period that the right to take paid leave was denied, potentially up to 13 years: in the case of King v The Sash Window Workshop the ECJ ruled that workers who are denied the right to take paid annual leave are entitled to bring claims in respect of accrued but untaken leave. There is no requirement on them to take the leave on an unpaid basis in order to bring a claim. Further, the right to paid annual leave for such workers accrues and carries over without limitation. In this case, it meant the worker could potentially recover a payment in lieu of 13 years' worth of untaken holiday. This case has important implications for employers who have not yet adjusted holiday pay to include variable payments such as overtime and commission. It is also of concern to employers who engage individuals on a self-employed basis but who could be deemed to be "workers" for employment law purposes. You can read our full report on the decision here. The case will return to the Court of Appeal in 2018.
- Whistleblowing
- Reasonable belief in breach of legal obligation required: in the case of Eiger Securities v Korshunova, the EAT held that an Employment Tribunal had erred in finding that the claimant reasonably believed her employer had breached a legal obligation for the purposes of the protected disclosure test. The correct approach would have been to identify the legal obligation relied upon by the claimant. In order to satisfy the test it was not necessary for the claimant to be able to point with precision to a specific obligation, but there had to be more than just a belief that the employer's actions were generally wrong. The case is a helpful reminder that in order to demonstrate a reasonable belief in the breach of a legal obligation claimants must do more than simply believe the employer's actions are wrong. Protected disclosures must be made in such a way as to allow an Employment Tribunal to identify a specific legal obligation. This may scupper litigants in person who do not have nuanced knowledge of case law and may well not take this principle into account when pleading their cases. Respondents should, therefore, ensure that this requirement is considered when drafting their defence. You can read our full report on the decision here.
- Employer's belief that a disclosure was a qualifying disclosure was irrelevant: in the case of Beatt v Croydon Health Services NHS Trust the Court of Appeal held that a claimant's disclosures were protected disclosures, despite the fact that the employer viewed his allegations to be unfounded and part of a malicious campaign against a colleague (for which he was ultimately dismissed). The Court of Appeal held the test for whether allegations amount to qualifying disclosures is objective. It was irrelevant that the employer genuinely believed the disclosures were not qualifying disclosures. The Court went on to find that the disclosures were the principal reason for the dismissal of the employee. The Court cautioned that: "… employers should proceed to the dismissal of a whistleblower only where they are confident as they reasonably can be that the disclosures in question are not protected".
- Guidance on the public interest test: in the case of Chesterton Global Ltd and anor v Nurmohamed the Court of Appeal provided welcome guidance on the meaning of the public interest test which was first introduced in June 2013 with a view to taking the legislation back to its original purpose of encouraging disclosures to be made in the public interest. Prior to the amendment, there had been concerns amongst practitioners that whistleblowing complaints were being used as a means of advancing private disputes about individual employment contracts rather than matters of public concern. The Court of Appeal said it was necessary to look at all the surrounding circumstances rather than numbers alone and/or whether people outside the workplace were affected. The following factors were relevant: (i) the numbers in the group whose interests the disclosure served; (ii) the nature of the interests affected and the extent to which they are affected by the wrongdoing disclosed; (iii) the nature of the wrongdoing disclosed – disclosure of deliberate wrongdoing is more likely to be in the public interest; and (iv) the identity of the alleged wrongdoer (e.g. its size and public prominence). This case demonstrates that the public interest test does not represent a significant hurdle for claimants and that there are no absolute rules, particularly in circumstances where the reasonable belief of the worker making the disclosure is what matters. You can read our full report on the decision here.
- Non-executive directors jointly and severally liable with employer for post-dismissal losses: in the case of International Petroleum Limited and others v Osipov the EAT held that two non-executive directors were liable for dismissal-related detriments and were jointly and severally liable with the employer for post-dismissal losses in excess of £1.7 million. This was particularly significant given that the employing company was insolvent by the time of the judgment. Before the EAT, the non-executive directors had argued that claims for detriment amounting to dismissal could only be brought against the employer. However, the EAT found that there was nothing to exclude an individual's liability for detriments which amounted to the termination of the employment relationship. The EAT recognised that an instruction or a recommendation to terminate the employment contract could be the most serious type of detriment, causing the most substantial losses. This decision increases the likelihood of individuals being joined to such complaints, particularly as the threshold for proving detriment claims is lower (requiring the detriment to have a material impact rather than to be the reason or principal reason for dismissal). Furthermore, an employer can potentially be held to be vicariously liable for such detriments. Therefore, even if an automatic unfair dismissal claim against the employer fails, the employer remains exposed if the claimant succeeds on a dismissal-related detriment claim. Indeed, this outcome was seen in the recent case of Royal Mail Group v Jhuti. An appeal is Osipov will be heard by the Court of Appeal on 31 July 2018. An application for permission to appeal to the Supreme Court in Jhuti has yet to be determined. You can read our full report on the Osipov decision here.
- Other key developments
- Employment Tribunal fees: Tribunal fees system struck down as unlawful: in the case of R (on the application of Unison) v Lord Chancellor the Supreme Court, in a landmark judgment, ruled that the fees system operating in the Employment Tribunals and the EAT was unlawful under both domestic and EU law because it had the effect of preventing access to justice. The consequence was that the fees system was rescinded with immediate effect and all fees paid between 29 July 2013 and 26 July 2017 were to be refunded by the Government (at a cost of around £30 million). A reimbursement scheme has since been rolled out and both claimants and respondents who paid fees under the system can apply for a refund. This includes any fees paid by way of a costs order, but it does not extend to any fees paid as part of a settlement agreement. At the time of writing, the Ministry of Justice has reported that under £2 million worth of fees have been refunded to date. As expected, the number of claims lodged with the Employment Tribunal has significantly increased since the abolition of the fees system. The latest Tribunal quarterly statistics (covering July – September 2017) indicate that the number of claims lodged by single claimants has increased by 64% when compared with the same period one year earlier. You can read our full report on the decision here.
- TUPE: employee liability information (ELI) extends beyond contractual particulars of employment: in the case of Born London Ltd v Spire Production Services Ltd the EAT decided that information about the employment particulars of the transferring employees is not confined to contractual employment particulars. The decision highlights that transferor employers need to take a broad approach to the provision of employment particulars, to cover both contractual and non-contractual entitlements. Upon receipt of the ELI, the transferee employer will need to assess the information and may need to undertake further due diligence to obtain comfort as to the correct nature of the entitlements. The transferee may also be able to rely on contractual warranties and/or indemnities from the transferor regarding the contractual status of the employees' entitlements. However, these solutions may not be readily available to a transferee in a second generation outsourcing situation. This, in turn, can be problematic for the client looking to reassign the contract, since the incoming contractor may insist on relevant indemnities to be given directly by the client. In these situations, the best approach for clients is to ensure such issues are addressed in the original outsourcing agreement. The original outsourcing agreement should ensure that the contractor: (i) is obliged to comply with an incoming contractor's due diligence questions; and (ii) provides warranties and/or indemnities to the client in respect of any inaccurate ELI information which, at least, mirror the warranties and/or indemnities that the client will provide to the incoming contractor. You can read our full report on the decision here.
- Collective redundancy consultation: the territorial scope of TULRCA 1992: in the case of Seahorse Maritime Ltd v Nautilus International (a trade union) the EAT held that the Lawson v Serco principles which apply to determining the territorial scope of rights under the Employment Rights Act 1996, also apply to the territorial scope of rights to a protective award for failure to consult under s.188 of TULRCA 1992. In this case it meant that seafarers employed under employment contracts governed by English law and living on ships stationed in the UK were international commuters who had a "sufficiently strong connection" to the UK to be able to bring claims before the Employment Tribunal. In practice, this means that employers will be obliged to carry out a collective consultation exercise if, at any one establishment anywhere in the world, it is proposing to dismiss as redundant 20 or more employees within a period of 90 days, who each individually have a sufficiently strong connection with the United Kingdom. The decision has been appealed and is due to be heard by the Court of Appeal on 11 and 12 April 2018.
- Restrictive covenants: non-compete covenant void for preventing the employee from holding minor shareholdings in competing businesses: in the case of Egon Zehnder Ltd v Tillman the Court of Appeal held that a 6-month non-compete covenant was invalid because it prohibited the employee from holding a minor shareholding in a competing business for investment purposes. This meant that the covenant was impermissibly wide and unenforceable. Turning to the question of severance, the Court held it was only able to sever separate covenants, which was not the case here. It was not prepared to rewrite the covenant to make it work. This decision reminds us that careful drafting is of the utmost importance when it comes to restrictive covenants. Employers should check their restrictive covenant wording to ensure it is tailored to the individual concerned and not impermissibly wide. The language used should be carefully thought through, as broad terms such as "interested in" will be interpreted widely and mean the covenant may fail. Non-compete covenants should also include an appropriately worded carve out permitting minimal shareholding in other companies. You can read our full report on the decision here.
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