Employment Law Update

Posted: October 14, 2014

Here are some recent important decisions of the Courts and Tribunals that highlight key developments in employment law, as well as some news of interest in the employment field generally.

 

 

CASE LAW UPDATE

Worker status – Employment Appeal Tribunal (EAT) finds subcontractor was a “worker” entitled to holiday pay

In Plastering Contractors Stanmore Ltd v Holden, PCS employed Mr Holden as a general labourer between 7 April 1997 and 7 February 2001. From 7 February 2001, it was agreed that in exchange for a one-off payment of £200, Mr Holden would become a self-employed contractor. PCS added Mr Holden to its database of labour-only subcontractors and referred him to construction sites. Mr Holden was paid depending on the amount and nature of work he undertook.

Mr Holden worked almost exclusively for PCS until May 2013 and when he stopped he brought a Tribunal claim for unpaid holiday pay, arguing that he was a worker and that PCS had failed to account for his holiday pay after his change to the labour-only subcontractor role. PCS disputed this and argued that Mr Holden H was not a worker because:

  • PCS was under no obligation to provide Mr Holden with work nor was he obliged to accept it (so there was no “mutuality of obligation”); and
  • Mr Holden was entitled to send a substitute (therefore there was no requirement for personal service).

The Employment Tribunal found that Mr Holden was a worker; PCS had regularly offered work to him for 16 years with an expectation of him turning up for work during working hours, therefore he had been integrated into the workforce.

The EAT agreed with the Tribunal’s finding and established that sufficient mutuality of obligation existed throughout each assignment. The EAT also ruled that there had been no error of law by the Employment Judge on whether Mr Holden had the right to send a substitute; there was no express provision about substitutes being permitted. In reality, Mr Holden had not marketed his services publicly and had been recruited by a former employer to work as part of its workforce on certain sites or to transfer goods between sites; thus the EAT found that the requirements of both integration and control had been met.

 

Employment status for purposes of anti-discrimination law – mutuality of obligation irrelevant to whether court interpreters were “in employment” and therefore entitled to protection from discrimination

Claimants seeking to bring discrimination claims arising from an employment relationship have to show they were “employees” as defined in the Equality Act 2010.

In Windle v Arada and another, Dr Windle and Mr Arada (both of whom brought discrimination claims under the Equality Act 2010) were interpreters working for, amongst others, the Courts and Tribunals Service. They were engaged personally to do work on a large number of short term contracts, typically for the duration of a hearing or a witness’ evidence. Between assignments there was no obligation to offer work, nor if offered was there an obligation to accept: there was, between assignments, no mutuality of obligation. The question arose as to whether they were “employees” for the purposes of the Equality Act 2010.

The Employment Tribunal found that the Claimants were not employees and so did not benefit from the protections of the Equality Act because of the lack of mutuality of obligation between assignments. The EAT found that the lack of mutuality of obligation was not a relevant factor in determining the question of employment for the purposes of the Equality Act and reversed the Tribunal’s decision, allowing the Claimants to proceed with their discrimination claims.

Significant numbers of people are engaged under contracts personally to do work that are not classified as employment contracts. The Claimants are examples, as are many people in the film, music and entertainment industries. This case provides guidance on what the Tribunal will (or will not) consider when assessing whether an individual is an “employee” under the Equality Act 2010.

 

TUPE – does the percentage of time an employee spends on an activity immediately before a service provision change establish assignment?

Not necessarily, held the EAT in Costain Ltd v Armitage and ERH.

The Claimant was a Project Manager at ERH managing telecommunications projects under two contracts for the same client (the Welsh Assembly). Only one contract provided guaranteed work: that transferred to Costain. Whilst Costain accepted that there was an organised grouping of employees to which the majority of employees were assigned, it distinguished the Claimant as an unassigned trouble-shooter. The Employment Tribunal found that the Claimant’s employment had transferred on the basis that “immediately before the transfer” 67% of his time was spent on the transferring activity.

The EAT disagreed with the Tribunal and found that a snapshot of “time spent” on the activity (taken immediately before the transfer) failed to provide any certainty as to whether there was deliberate planning of the Claimant’s work in line with the activity. Conversely, the fact that an employee is only spending a minority of his time on the activity immediately before transfer does not preclude assignment.

 

Application of UK employment law – US employee who worked 49% of his time in UK not protected by unfair dismissal or discrimination law

In Fuller v United Healthcare Services Inc and another, the EAT upheld a tribunal’s decision that a US citizen employed by a US company, who was required to spend around 49% of his time in the UK, fell outside the scope of the Employment Rights Act 1996 (ERA) and the Equality Act 2010 – the two primary pieces of UK legislation governing unfair dismissal an discrimination. Therefore he could not pursue unfair dismissal or discrimination claims in the Employment Tribunal.

Mr Fuller, a US citizen, was chief operating officer of Optuminsight, part of United Healthcare Services Inc (UHS Inc), which itself was part of United Health Group (UHG). He worked from his home in Texas. In January 2012 Mr Fuller became managing director of United Health UK, a subsidiary of UHG. He retained his previous role but shifted his focus to Optuminsight’s businesses in the UK and Middle East. A letter confirming Mr Fuller’s “international rotation assignment” stated that he would be based in the US but required to spend approximately 49% of his time in the UK.

The company took a two year lease on a London flat for Mr Fuller’s use, which was cheaper than paying for a hotel. They paid him a relocation allowance and agreed to pay for his partner to visit him in the UK twice a year.

On 31 October 2012, having returned to the US, Mr Fuller was told that his expatriate assignment was to be terminated. Mr Fuller then remained in the US. He failed to secure another role in UHG and was dismissed on 3 January 2013. He brought claims in the Employment Tribunal for unfair dismissal, whistle-blowing and sexual orientation discrimination.

The Employment Tribunal held that Mr Fuller fell outside the territorial scope of the ERA and the Equality Act so refused to allow his claims to proceed. With regard to the unfair dismissal claim the Judge accepted that, where somebody is ordinarily working in the UK at the time of dismissal, this is “the strongest possible indication that Parliament would intend him to be protected by unfair dismissal law”. Nevertheless, on the facts of the case there was an overwhelmingly strong connection with the US, rather than the UK. In reaching her decision, the Judge took into account the following:

  • Mr Fuller’s employment in London “did not constitute a true break with the substantive nature of his previous work, nor did it sever any of the continuities or realities of his existing US employment”. He maintained his home in Texas, was paid in US dollars and his US terms concerning pension, bonus, holidays and pay rises continued.
  • Mr Fuller’s contract stated that he would be US based but required to spend time in other places, including the UK and the UAE. The contract was current and reflected the reality of his situation.
  • UHS Inc informed Mr Fuller of his impending dismissal by telephone while he was in the US because they did not want him to receive bad news when he was away from home.
  • His rotation assignment with the UK aspect ended before the eventual end of his employment.

The Judge rejected Mr Fuller’s argument that it was in the public interest to broaden the territorial scope test and decided that there was no sufficiently close connection to the UK to enable Mr Fuller to pursue his discrimination claim.

Mr Fuller appealed to the EAT against the Tribunal’s findings on unfair dismissal and discrimination.

The EAT rejected Mr Fuller’s appeal. In the EAT’s view, the key question with regard to unfair dismissal under the ERA was whether Mr Fuller had given up his base in the US and moved to the UK. The Employment Judge made it clear that he had not, despite carrying out work in the UK and other countries. In relation to the whistle-blowing and discrimination claims, the EAT was not persuaded that the territorial scope test should be less stringent for whistleblowing or for discrimination.

Employers should be aware that tribunals will look at all of the circumstances surrounding an employee’s assignment, including the contract, when deciding whether there is a connection with one country or another. Just because an employee is physically present and working in Britain does not necessarily mean that he has severed his ties with his home country or that he is protected under British employment law. However, these matters will always be highly fact specific.

 

ALSO OF INTEREST

Gender equality – reports find lack of female representation in film and theatre industries

Two separate reports have highlighted the under representation of women in the theatre and film industries.

Tonic Theatre, a project set up to encourage gender equality in the theatre industry, found that women are underrepresented in all aspects of theatre. Their findings included:

  • women made up only 24% of writers of new plays
  • only 29% of plays currently in the West End are directed by women and a similar percentage of the actors are women.

A separate report by the United Nations found that in the film industry:

  • less than 33% of all speaking roles went to women
  • only 22.5% of employees involved in the making of fictional films are women.

 

BIS publish guidance on right to accompany pregnant women to antenatal appointments

Employees and agency workers now have a right to take unpaid time off to accompany a pregnant woman with whom they have a “qualifying relationship” to up to two antenatal appointments.

BIS has published a brief guide (link below) for employers on the new right which looks at who can take time off, how much time can be taken, the evidence an employer can request to verify entitlement as well as the protections that exist for those seeking to exercise the right:

BIS: Antenatal appointments: time off to accompany a pregnant woman

 

ACAS publishes guidance on managing bereavement in the workplace

Acas has published new guidance (link below) for employers on managing bereavement in the workplace. This guidance follows figures released earlier this year by the National Council for Palliative Care which revealed:

  • 87% of people agree that all employers should have a compassionate policy, which includes paid bereavement leave.
  • Almost a third of employees who had suffered bereavement in the past five years felt they were not treated compassionately by their employer.
  • 56% of employees would consider leaving their job if they suffered bereavement and if their employer did not provide adequate support.

ACAS: Managing bereavement in the workplace – a good practice guide (September 2014)