Should the terms of the employment contract be ignored when looking at employment status?

In the leading case on employment status, Uber BV and others v Aslam (2021), the Supreme Court warned against treating the terms of the contract as the starting point in determining whether an individual is a worker or an employee. This is because contract terms don’t necessarily reflect reality and are open to abuse.

However, in the recent case of Dr Mark Ter-Berg v Simply Smile Manor House Ltd and others the Employment Appeal Tribunal clarified that the written contract can still be taken into account as long as it is not:

• looked at in isolation;
• treated as conclusive in relation to the issue of employment status; and
• allowed to create a presumption of employment status that is not supported by the facts and circumstances of the case. 

The case itself concerned a dentist who sold three dental practices. He agreed to stay working for the new owners for a period following the sale on what was stated to be a self-employed basis. Written terms were entered-into covering this which included a right of substitution. When Dr Ter-Berg’s contract was terminated he claimed unfair dismissal.

The tribunal concluded that Dr Ter-Berg was self-employed and expressly stated that they had looked at the written terms when coming to this decision. The EAT held that the tribunal had been entitled to look at the written terms having first found that there was insufficient evidence to establish an employment relationship and being satisfied that the substitution clause in the agreement was genuine. 

This is an important reminder that written terms setting-out self-employed status are not meaningless. They remain an important piece of the jigsaw to be considered when looking at employment status. What Uber clarified was that those terms should not be treated as a starting point or be allowed to peddle a false reality.

Tim Lang

EU Law to remain on the statute books unless specifically revoked

The government has announced in a written statement to parliament that it is abandoning the sunset clause in the Retained EU Law (Revocation and Reform) Bill.

As the Bill was originally drafted, almost all EU law would automatically be revoked at the end of 2023, unless a statutory instrument was passed to preserve it. That position is now being reversed, so that EU law will remain binding in the UK unless it is expressly repealed.  The Bill will be amended to contain a list of the retained EU laws that the government intends to revoke on 31 December 2023 - but anything not on that list will remain valid.  The list has been published and does not include any of the significant employment legislation. The only ones with relevance which are currently on the list for revocation on 31 December 2023 are:

• The Community Drivers’ Hours and Working Time (Road Tankers) (Temporary Exception) (Amendment) Regulations 2006
• The Posted Workers (Enforcement of Employment Rights) Regulations 2016; and
• The Posted Workers (Agency Workers) Regulations 2020

However, from 1  January 2024, UK courts will no longer be bound by decisions of the Court of Justice of the European Union, and will no longer be able to give those decisions priority over what UK legislation says.  The most important impact is that – unless the government does something – it is very likely that the caselaw on holiday pay which has arisen over the last ten years will cease to be binding, and employers will no longer need to factor in commission and overtime when calculating holiday pay (unless your employment contracts require you to do so).  We will keep you updated.

Different causation tests apply to unfair dismissal and discrimination

A recent Employment Appeal Tribunal decision reminds employers of the different tests which should be applied where a dismissal is alleged to be unfair and also discriminatory. In unfair dismissal cases a tribunal will look to find the ‘principal reason’ for dismissal and will then go on to assess the fairness of the dismissal in the context of that reason. However, when looking at whether the act of dismissal is discriminatory a tribunal should look more widely at the surrounding circumstances and at all reasons influencing the dismissal, not just the ‘principal’ one.

In the case of Gibbons v Nationwide Building Society, Miss Gibbons was a disabled employee working at the Wandsworth branch of Nationwide Building Society. She was dismissed. The tribunal found that there were two reasons for her dismissal: the breakdown of her relationship with her colleagues at Wandsworth and the fact that, because of her disability, she asserted that she could not work anywhere other than the Wandsworth branch. The tribunal found that the principal reason for dismissal was the breakdown in her relationship with her colleagues.

They separately considered whether dismissing Miss Gibbons amounted to discrimination arising from disability or harassment. They held that it did not, because the principal reason for dismissal had been found to be the breakdown in her relationship with her colleagues, not something arising from her disability.

The EAT held that the tribunal had approached the discrimination claim incorrectly. It should not have limited itself to the principal reason for dismissal. It should have considered whether something arising in consequence of disability was a material contributing or effective cause of the dismissal and, for harassment, whether the decision to dismiss ‘related to’ her disability. These are both wider tests.

Applying these tests would have brought in to play the secondary reason for dismissal which the tribunal had identified: the fact that Miss Gibbons said she could only work at the Wandsworth branch because of her disability. The tribunal had erred in taking no account of this when considering whether the dismissal was an act of harassment and/or amounted to discrimination arising from a disability.

Departmental mergers – an obvious redundancy situation?

The Employment Rights Act 1996 sets out that one of the situations where a redundancy situation will exist is where the requirements of the employer for employees to carry out work of a particular kind have ceased or diminished. This can be shown by a reduction in the number of employees or in the total working hours.

Employers will often seek to make costs savings by merging teams and departments. Does this give rise to a redundancy situation?

In Campbell v Tesco Personal Finance, the Employment Appeal Tribunal disagreed with the tribunal’s initial assessment that a merger of three departments into two created a genuine redundancy situation for the managers in the merged team.

Mrs Campbell was employed as a risk manager on part time hours within one of three teams. The employer decided to consolidate the three teams together into two. Mrs Campbell was told that she and another manager were at risk of redundancy as the roles were being merged. Under the new structure there would be one new position of Lead Risk Manager and a post of Risk Manager. Mrs Campbell came second on a scoring matrix for the post of Lead Risk Manager and was subsequently dismissed on grounds of redundancy.

The EAT did not consider that the reduction in the number of teams was sufficient to establish that there was a redundancy situation. It held that “the fact that 3 risk teams became 2 does not, of itself, assist in answering the question whether the requirements of the [employer] for employees to carry out risk management work had ceased or diminished”. Indeed, there had been no finding that the employer’s requirements for employees to carry out risk management work had reduced. The addition of a leadership element to one of two risk manager positions in the new structure was not evidence of a reduced need for employees. The same number of employees were required before and after the restructure. The work had not reduced and the same number of employees were required to do it. Accordingly the dismissal did not fall within the definition of ‘redundancy’.

The decision highlights the importance of considering whether a restructure will actually reduce the number or requirement for employees to carry out work of a particular kind. The fact that departments merge will not necessarily answer that question if the same number of employees are required both before and after to carry out the same number of hours work.

What should happen where an employer refuses a tribunal order to re-instate an employee following an unfair dismissal?

In the case of Duxbury v University of Huddersfield, the tribunal found that the Claimant had been unfairly dismissed from his position as a senior lecturer. It made an order for re-instatement and for full compensation for the Claimant’s losses up to the date of re-instatement – an award that went above the statutory cap which otherwise limits compensatory awards for unfair dismissal to a regulated set amount or, if lower, 1 year’s pay.

The Respondent refused to re-instate. In so doing, it became liable to pay an additional award of between 26 and 52 weeks’ pay on top of any compensatory award. The tribunal ordered this to be paid and also kept in place their original compensatory sum (which was higher than the cap). The Employment Appeal Tribunal held they were wrong to have done this. The complex legal provisions meant that it was only open to the tribunal to disapply the cap in these circumstances if the total of the compensatory award and the additional award for failure to re-instate came out as lower than the compensatory award which would have been payable had re-instatement taken place. In this case, the total figure came out as higher so there was no ability to dis-apply the cap.

It is clearly sensible that an employer should not be rewarded for failure to re-instate by being required to pay a lower compensatory sum. However, what the tribunal had done in this case went beyond this. Having established that the Respondent was going to have to pay the Claimant more if it failed to re-instate it could not then increase the sum payable by disapplying the statutory cap on the compensatory award.

Challenging validity of Employment tribunal proceedings due to ACAS certificate

Claimants must include an ACAS Early Conciliation reference number on their Employment Tribunal claim form. If multiple employees are claiming on the same form, one Early Conciliation number can cover a number of claims.

A large number of female employees working in supermarkets brought equal pay claims against their employers on the basis that they were paid less than those employed in distribution centres who were predominantly male. As a preliminary issue in the case of Sainsburys Supermarkets v Clark it was argued that the claims should be dismissed because the claim form did not include the ACAS reference number for each individual claimant.

The challenge to the proceedings was dismissed by the Employment Appeal Tribunal. It was described as a highly technical application “lacking any substantive merit”. Whilst a claim form must contain the name and address of each claimant and each respondent, it is sufficient for it to contain the number of an EC certificate on which the name of one of the prospective claimants appeared. There was no need to list each and every number.

The decision highlights that employment tribunals are reluctant to place artificial barriers in the way of genuine claims.

National Minimum Wage and deductions

In Augustine v Data Cars Ltd the EAT held that the test for whether an expense should be treated as a reduction for the purposes of national minimum wage (NMW) calculations is whether the expense was incurred ‘in connection with’ employment. 

Deductions by an employer will usually reduce the amount of the worker's total pay for the purposes of the NMW, unless the deduction is for:

• tax or national insurance; 
• something a worker has done, which their contract says they’re liable for (for example, damage to a vehicle through reckless driving); 
• repayment of a loan; 
• an employer’s mistaken overpayment; or
• accommodation provided by the employer at or below the allowable limit. 

HMRC regard any deductions ‘in connection with’ an obligation imposed by the employer as unlawfully reducing pay for NMW purposes. The worker must still be left with at least the NMW after the deduction has been taken into account. This would include, for example, deductions for: 

• uniform;
• employer-provided tools or equipment; and
• the cost of mandatory training.

If it finds that employers have paid less than NMW then, as well as requiring repayment of arrears, HMRC can now impose a penalty of up to 200% of any underpayments, as well as publicly ‘naming and shaming’ the employer. 
Non-compliance can have a significant financial and reputational cost, in addition to taking up management time.

And Finally...

Furniture suppliers Furniture at Work have carried out research using LinkedIn data to determine the most common careers for people with certain names in the UK. The results make for interesting reading. According to the research, people with the most popular boy’s name, Liam, are more likely to end up working in the construction industry, while the most common choice for people called Olivia, the most popular girl’s name, is a career in advertising.  People named Amelia and Luna are expected to have careers in hospitality, while people named Charlotte and Evelyn are most likely to go on to work in hospitals and health care.  Boys with the name Mateo are most likely to grow up to work in technology, information and media, and people named Levi are likely to have careers in retail. 

Alarmingly, according to the research, no-one with the top 10 boys’ or girls’ names in the UK will end up working as a lawyer or HR professional. Worrying times for HR departments and legal firms alike – perhaps we should take-account of this no doubt ‘scientific and robust’ research in our succession-planning!