“All that glisters…” (in the gig economy)

WynLewis

 

… “is not [necessarily] gold”,

is something that employers, contractors and self-employed people will need to remember since it was decided recently that Pimlico Plumbers’ staff and Hermes’ couriers were all workers (not self-employed contractors) entitled to worker benefits.

“But what’s this all about?” you may be asking.

It’s to do with the situation when individuals who provide personal services, who have previously been excluded from employee status by being called “consultant” or “freelance”, are having their worker entitlements “upgraded” from few (or none) to better (or full) protection.

The winners are (1) oppressed individuals whose lot has been limited; and (2) HMRC, which will get more cash via PAYE.

The losers are (1) employers, for whom engaging staff will cost more; and (2) end-users, for whom services will cost more.

So if you thought Pimlico Plumbers were already expensive, don’t be surprised if they’ll be even more so in future.

Two case reported in June 2018 have again turned the spotlight on this issue:

Pimlico Plumbers’ operatives were treated as self-employed. This was because they could provide substitutes, could choose not to accept work and could offer themselves for assignments. So Pimlico was an operative’s client, not their employer.  This was even though they drove Pimlico vans, wore Pimlico clothing, were tracked, had Pimlico ID cards, were bound by post-termination restrictions, had fixed rates and were tightly controlled by HQ.  Then one operative claimed unfair dismissal, wrongful dismissal and compensation for discrimination.  The issue was this:  whether the control by Pimlico, as well as the extent to which its operatives provided personal services (as opposed independent services via the Pimlico brand) tipped the balance away from self-employed in favour of worker (but not employee) status.  The answer was:  it did.

Hermes’ courier operatives were treated similarly. An employment tribunal held that they had little autonomy, were controlled by Hermes, had an obligation to provide their services personally and couldn’t engage in a way that let them look after their own interests (Hermes’ interests came first) such as negotiating their rates.  The judgment will affect around 14,000 Hermes couriers and Hermes has decided not to appeal the decision.  So if you use couriers a lot, don’t be surprised if they get more expensive to fund Hermes’ increased worker costs.

One effect of these decisions may be that workers may eventually get holiday pay, sick pay, minimum wage, time-off and family-friendly rights, insured benefits, quasi-unfair dismissal rights and other termination (including redundancy pay) entitlements.  Many people will say:  “And why not?”.

The story continues, because (1) the 2017 Taylor Review, since subject to Government consultation, may result in a major re-think of employee, worker and self-employed status; and (2) the confusion and expense caused by worker status may increase if there is a shortage of personnel post-Brexit, where people will be more assertive about their status in a market where employers must vie more for the attentions of a smaller workforce.

Can you put a price on love?

JonathanGolden

 

Should you be entitled to damages when no loss has been suffered?

Sometimes an employee has clients who give their work to an employer only because a particular employee works there, and the employer will lose those clients’ custom once the employee leaves.

Sometimes that employee has post-termination restrictions that prevent them from still dealing with those loyal clients after leaving, but they continue to deal with them anyway.

Strictly speaking, the employer has suffered no loss (because the clients would have gone anyway) but there has still been a breach of contract by the employee.

The idea of Wrotham Park damages is to address that situation: where an employee breaches their restrictive covenants, but the employer suffers no loss because of this.

The problem is that this situation is, essentially, a licence to kill (or at least a licence to breach a contract) that sits uncomfortably with upholding a contract and the principle of fair play.

The Supreme Court decided that Spring 2018 was the right time to return to this thorny issue, known as Wrotham Park damages.

In Wrotham Park, the principle of a “hypothetical bargain” or “licence fee” damages was introduced, by which the courts awarded damages based on the price the employee would have negotiated to be released from their restrictions.

This unrealistic and hypothetical after-the-event situation made commercial sense, but was untested and seemed to break the principle that you have to suffer a loss before getting damages.

Recently the Supreme Court, having reviewed this carefully, came to the conclusion that, generally, an employer can only claim for their financial loss.

The Supreme Court was also not prepared to move away from the idea that identifying the value of the loss is essential to an award of damages for breach of contract, but that if the breach by the employee can be shown to damage a valuable asset, or if a protected right is infringed, then “negotiating damages” can be used (an esoteric concept and one that’s likely to be limited to intellectual property and confidentiality rights being infringed by the departing employee).

As a result, an employer will either have to show loss of business or goodwill (which may be impossible) or seek damages based on the gain made by the departing employee by breaching their contract (restitutionary damages – another esoteric concept in employment law).

This leads us to questioning the price of love.

The reason is that, for the moment, an employee with a very loyal personal following can breach their restrictions and can still come out of the situation smelling of roses.

The solution for the employer is commercially romantic, rather than legal:   never allow any one person in your organisation to own the client – companies must ensure that their key clients are looked after by a team of staff interacting with the client at various levels within the organisation; and make your clients love your organisation, not individuals.

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“Mum’s the word…”

JonathanGolden

 

Silent Witness is a TV show where key characters actively search for forensic evidence.  But don’t take this approach in an Employment Tribunal!

I was recently part way through a case where one of my witnesses thought it might be a good idea to find some extra evidence overnight to assist the Judge.  He knew he wasn’t supposed to discuss the case with us or the other witnesses, but didn’t think that he also had to keep mum generally while under oath.  The other side found out what happened and, the next day, the witness received a royal rebuke from the Judge, who made it clear that, when giving evidence, a witness must not speak to anyone about a case.

This particular judge was benign by giving only a warning.  It could have been worse:  claims by a Ms. Chidzoy against the BBC for whistleblowing and sex discrimination were struck out entirely when it was found out she had discussed her case with a journalist during a break while  still giving evidence. The Employment Tribunal weren’t interested in what had been discussed; it was the mere fact that she had discussed her case was enough for it to conclude that her conduct was unreasonable.  And that was the end of that.

This is part of the wider issue that, when under oath, witnesses must do what a court or tribunal orders, and answer truthfully any questions put to them.  Not doing this is contempt of court.  In fact it was reported recently that a Mr. Atwal, a DJ from Birmingham, who had claimed that his career had been destroyed by medical treatment in 2008 and wanted damages of £837,109 for loss of future earnings and the need for care, was lying, as his music videos showed.  Having done so, he is now facing a possible 2 year jail sentence.  Another case in 2016 related to a juror who did some online research about a defendant and shared the results not evidence before the court) with other jury members, resulting in the case being abandoned; he was sentenced to 9 months’ jail, suspended for 12 months.

The reality is that, in any case, people have different versions of the same story.  A court or tribunal then has to decide who to believe.  There’s always a risk that a judge thinks that evidence given is a lie (i.e. contempt of court – which is itself punishable).  For this reason, judges will say they “prefer the evidence of A rather than B”, and if they feel B was being misleading, may add that they found B to an “unreliable witness”.  Elegant, but effective.

Getting back to the TV show, last minute forensics are not the way to succeed in litigation: cases are won by getting the evidence right long before going to court or tribunal, and then giving truthful evidence under oath and taking care not to speak about a case while under oath (which can make a weekend seem like a very long weekend).

Being a Silent Witness can be tough.

You’re paid how much?!

Anna Moyle

 

If you’re a woman reading this…

… could you use your time better if you stopped and instead flicked through the job vacancies at Channel 5, Unilever UK or Ocado?

Why do I ask this, and why them?

The answer is that they are 3 of the very few companies (just 14% of larger employers) that have a gender pay gap figure in favour of women.

April 2018 was the first time that large (250 employees or more) private and public sector employers were required to make public their gender pay gap figures.

By the time the deadline had passed at midnight on 4 April more than 10,000 employers had published this data.

Nobody was surprised to learn that men are paid more than women.  The figures show that 3/4 of large employers pay their male employees more.  There is not a single sector where women can expect to be paid more than (or even the same as) men.

We’ve known for a long time that what women get paid, or rather don’t get paid, is an issue.  The Equal Pay Act was introduced in 1970 so has a claim as the oldest employment related legislation on the books (now incorporated into the Equality Act 2010).

But be careful before jumping to conclusions.  The aim of Equal Pay legislation is to ensure women are paid the same as men if they are carrying out work of equal value.  However the gender pay gap data does not measure this.  Instead, it reveals the salary gap between men and women based on median pay.

In other words if the men and women working at Ryan Air (a company that reported one of the largest gender pay differences) stood in separate lines in order of salary, the woman in the middle of her line earns 71.8% less than the man in the middle of his.

So the gender pay gap data says more about the preponderance of women in part time work and of men in more senior positions than it does about whether employers are breaking the law on equal pay.

So before you resign and apply to work at Unilever UK you need to factor in that their figures reflect the number of men in lower paid manufacturing jobs.  Ryan Air’s gender pay gap (albeit high even for the aviation industry) is also evidence of the fact that only 8 of its 554 highly paid pilots are women compared to 2/3 of its cabin staff.

Employers will have to publish the same information this time next year (and every year thereafter) so we should be able to monitor their progress, or lack of it.

However, 10% of large employers have still not complied with their obligations to publish data.  Commentators are also concerned that the ECHR does not have sufficient resources or powers to force reluctant employers to publish or punish them if they refuse (although its first investigation is apparently due to start in June 2018).

The system may not be perfect and the figures only reveal part of a complex picture, but no other country has initiated such a comprehensive data collection exercise on this issue.

The CEO of the Fawcett Society (which describes itself as the UK’s leading charity campaigning for gender equality and women’s rights) sees gender pay gap reporting as a “game changer” no less because it forces employers to look at themselves and understand their organisations and it prompts employees to ask some hard questions”.

The Equality Act in 2010 made it difficult for employers to enforce the (once common) contractual provisions designed to prevent employees from discussing pay.  With gender pay gap data easily accessible and the higher media profile being given to such issues, employers need to be prepared to have far more conversations with their (usually female) employees questioning their pay when compared with colleagues of the opposite sex.

Those conversations may not be easy for the employer. Just ask the BBC.

In the meantime the rest of us will be watching Ryan Air…

Modern Slavery – your employer obligations

WynLewis

 

Slavery exists…

… despite its abolition by the Slavery Abolition Act 1833 and other legislation in the 19th century (most of which has since been repealed and replaced with its modern equivalent in the form of the Human Rights Act 1998, which prohibits slavery).

Of course modern slavery is different from the type of slavery that was abolished more than 180 years ago: ownership of people as chattels is hardly a live issue in modern Britain, although detecting and preventing the exploitation of people as workplace commodities remains an issue that exercises many people in an increasingly connected world.

So why is this post relevant now?  It’s because, in March 2017, we’re approaching the first full year (ending on 31 March 2017) in respect of which the requirements of the Modern Slavery Act 2015 (the “MSA”) have to be met by large commercial organisations.

Is your organisation successful enough to have to care?  The MSA applies to organisations that carry on business in the UK and have a global turnover of more than £36m per annum.  It requires you to prepare, sign and publish prominently an annual slavery and human trafficking statement for each financial year ending on or after 31st March 2016, stating what you have done (or not) to ensure that human trafficking isn’t happening in your supply chains or business.

But (in the same way as with the Gender Gap Reporting Regulations – see my blog here) there’s no formal sanction for not making a statement.  That said, drivers such as CSR, reputation, brand and employer-of-choice are bound to result in organisations doing what is required by the MSA.  Also the Government can get an injunction requiring compliance and if this is ignored it can give rise to an unlimited fine for contempt of court, for which individual directors may be liable.

The statements that are published will make for interesting reading.

I’ve prepared a more detailed analysis of the MSA on the Cube at Cubism Law, of which Golden Leaver is now a part.

BREXIT, strikes and industrial action ballots

WynLewis

 

Leaving the EU will be easier than going on strike…

From 1 March 2017 the Trade Union Act 2016 will impose new minimum voting requirements if a ballot in favour of a strike or other industrial action is to be lawful.

The background is that – despite the UK having signed up to several international conventions that protect the rights of employees to join unions and participate in industrial action – there is no right to strike or engage in industrial action.

Instead the mechanism is that, if industrial action ballot requirements are met, acts that would result in claims for damages against a union for inducing breach of an employment contract, or the lawful dismissal of employees for breach of contract in refusing to work, are protected.

The new minimum ballot requirements will be that:

  1. at least 50% of union members who are eligible to vote in a ballot must vote; and
  2. there need be no more than a simple majority of those who actually vote in a ballot for strike or industrial action to be lawful; but
  3. if a ballot for strike or other industrial action is in a sector that comprises “important public services” – the health service, teaching under-17s, the fire service, transport services, the nuclear industry and border security – then at least 40% of those eligible to vote in a ballot must also vote in favour of industrial action.

The “important public services” principle was in the 2015 Conservative Party manifesto’s aim to end “disruptive and undemocratic strike action” by introducing tougher thresholds when voting in a ballot for industrial action.

Applying the new post – 1 March 2017 industrial action voting rules for important public services to the (presumably?) important Brexit vote, in order for the Leave vote to have won:

–   under condition 1 above:  at least 50% of the 46,500,001 then eligible voters – so at least 23,250,001 – must have voted.  In the referendum, because 33,551,983 people voted, this threshold was passed easily;

–   under condition 2 above:  at least 50% of those who voted – at least 16,775,991 – must have voted Leave.  In the referendum, because 17,410,7423 people voted Leave, this threshold was also passed easily; but

–   under condition 3 above:  because of the (presumed) importance to the public of Brexit, at least 40% of those entitled to vote – so at least 18,600,001 – would have had to vote Leave.  In the referendum, only 17,410,742 voted for Leave, so the Leave vote would have failed.

So if the Trade Union Act 2017 principles had been applied to Brexit, the UK would not now be about to trigger legislation that will result in it leaving the EU.

The ironies are that the Brexit referendum methodology offered no proportionality of the type that characterises the new ballot requirements;  a strike ballot has a “use by” date, but the Brexit referendum doesn’t even have a “best before” date;  and whereas a failure to observe the new rules about voting for strike and other industrial action would render the trade union liable for damages and would make dismissals fair, there are no sanctions for the consequences to the UK electorate or to EU citizens settled in the UK, of leaving the EU.

What else does the Trade Union Act 2017 do?  It amends the Trade Union and Labour Relations (Consolidation) Act 1992 by increasing ballot thresholds; by introducing new information and timing requirements in relation to an industrial action ballot; by imposing requirements on unions for supervising picketing; and by anticipating (but introducing) regulations to abolish check-off of union subscriptions in the public sector.

Consequently it will be easier to leave the EU (affecting 64 million people) than it is to go on strike (affecting a much smaller cohort).

If you’re interested in more information then take this short cut to another blog about this in the Cube updates of  Cubism Law, of which Golden Leaver is now a part.

Got a Gender Pay Gap?

WynLewis

 

At last – something that’s NOT about Brexit:  the Gender Pay Gap Regulations

It’s time to stop ignoring what private sector organisations with 250 or more staff must do after the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 come into force on 6th April 2017.

Although the fact of a gender pay gap may not be rocket science, what’s interesting is that the gender pay gap isn’t a one-way gap.  Apparently it falls to about 9% for full time employees; it reverses to minus 6% for part time workers (where women tend to earn about 6% more than men); and it falls to quite a small % when men and women in their 20s and 30s are compared.  But remember that a gender pay gap isn’t an equal pay gap (which is unlawful if men and women are doing the same job).  Instead it’s an analysis of different rates of pay between men and women.

Three pieces of data have to be collected.  These are (1) the employer’s gender pay gap % as at 5th April in a particular year; (2) the organisation’s gender pay bonus gap over the last 12 months; and (3) the proportion of male and female staff who received a bonus in the same 12 month period.  This data then has to be available on the employer website for 3 years and on a government website.  Explanations for the reasons for any gap or of work being done to close the gap are encouraged.

Pay includes the gross monthly (if paid per month) or weekly (if paid per week) amount of basic pay, bonuses, allowances, holiday pay and shift premiums, but excludes overtime, expenses, benefits in kind, the value of salary sacrifices and payments made on termination of employment.

There are no sanctions (not yet) for not complying with the reporting obligations.  But there will probably be some effect on employers who routinely tender for public sector work and need to comply with procurement requirements that may favour tenderers with a smaller gender pay gap.  There may also be forum shopping by employees who choose to work for “employers of choice” that make a virtue of equal pay and of diminishing any gender pay gap: the name and shame game.

Some people think that, for the time being, the benefits of these regulations will be felt more by statisticians and accountants than the individuals who are at the lower end of any gender pay gap.

If you’re interested in more information then take this short cut to another blog about this in the Cube updates of  Cubism Law, of which Golden Leaver is now a part.

 

BREXIT = Bregulatory Meltdown?

WynLewis

 

We’re in a post-BREXIT employment law New World Order…

For some time now, the Government has been operating what’s known as the “one in, two out” regime when introducing new regulations.  People often think this means that for every new regulation to become law, two regulations must be abolished.

It’s not as simple as that.

In practice it means that, where there’s a need for a new regulation, and where there’s a cost to business of complying with that new regulation, the Government has to remove or modify existing regulation(s) to the value of £2 of savings for every £1 of cost imposed.

The regime came about as a result of businesses complaining about the time and cost of complying with the complexity and number of new regulations.  But, whilst the regime could mean the introduction of more (less costly) regulations, it’s resulted in fewer regulations overall.

So imagine the joy that businesses and Government might experience when EU-derived legislation and associated regulations melt away post-BREXIT!

Or not.

This is the thing:  much of the UK’s legislation, though deriving from EU directives, works well and matches current social trends and is likely to remain in place and/or influence our home-grown laws for some time to come.  So getting rid of this “good stuff” would be a retrograde step from the perspective of having a better society.  There’s also a certain amount of EU legislation that was already law in the UK before it became subsumed into EU law at a later date.  So we would probably want to retain that anyway.

In reality the range of EU-derived employment legislation is broad and includes agency regulations, collective consultation, discrimination, diversity and equality rights, family leave, TUPE and working time (including minimum holiday entitlements – the UK’s entitlement is actually more generous than required by EU law).  And although many aspects of these laws are unpopular, some of them have brought certainty (the service provision changes under TUPE) and a better deal socially (note that shared parental leave is a local, not an EU provision).

But what if, post-BREXIT, the Government imposed (even more of) a shock on business of having to deal with a sudden, fundamental change in the law by repealing everything EU-related…?  It would be too much.  Also we all (probably) recognise that, in order to access a free(ish) market, there will be a need to preserve certain minimum employment protection regimes.

So instead, the Government will take a drip-feed approach.  For that reason, the quantity of employment law likely to vanish is small; but our labour laws may approach Canada, Australia and New Zealand – independent trading nations we will now have to model ourselves on.

What are the candidates for being kicked out or changed?  Here are some that might be considered:

–       the right to accrue holiday when off sick?  Kick out entirely.

–       the whole of the agency worker regulations?  Kick out entirely.

–       the ban on capping bonuses in the financial sector?  Kick out or modify.

–       no cap on discrimination compensation?  Kick out and mirror the unfair dismissal cap.

–       no cap on whistle blowing compensation?  Kick out and mirror the unfair dismissal cap.

–       the right to carry over unused holiday entitlement for 18 months?  Kick out or modify.

–       ban harmonising terms and conditions after a TUPE transfer?  Modify to allow this.

Whatever happens, it won’t be immediate.  The two-year post-Article 50 negotiation period is probably only the beginning of the period before laws and regulations start to be changed – and even then the new BREXIT regime is likely to look pretty similar to the current regime.

So keep calm and carry on…

…but remember as well the effect on employment rights of not having free movement of people to do your work – have a look at my earlier BREXIT blog on this here.

 

Bothered by BREXIT

WynLewis

BREXIT – more about the labourers than the law?

Like it or not, we have to think about what employment law changes might occur over the next 2 years if UK voters decide, on 23 June 2016,  to “leave” rather than “remain”, when answering the question:  “Should the UK remain a member of the European Union or leave the European Union?”.

However just saying:  “The following laws don’t apply any more” isn’t a practical option.

The reasons are that unpicking 40+ years of jointly developed EU and UK legislation would be much more difficult than the development of UK legislation since joining the EU in 1973.

Why would it be difficult?

–  the 100s of EU-influenced primary UK legislation (e.g. the Equality Act 2010) could remain in place and could just be interpreted differently;

–  but  the 1000s of EU-required secondary regulations (e.g. the Transfer of Undertakings (Protection of Employment) Regulations 2006) were created by the European Communities Act 1972 to apply EU law locally – so repealing that Act would result in a vacuum with no UK legislation at all – the hook on which the regulations hang wouldn’t exist any more.

Preserving the existing legislation (but just interpreting it differently so as to sit more comfortably within a UK domestic business environment) seems the likely option.

However the fact that the Supreme Court:

–  would have to get out of the habit of referring things to the European Court of Justice if a decision were on the “difficult” side; and

–  would no longer have to make UK legislation conform with the spirit and intention of EU legislation or EU cases (but would still have to conform to international business partner requirements – see the recent data protection Safe Harbour problems for how even the employment-law “lite” US has to do that),

there would still be a recipe for chaos.

In that context, any changes might be minimal in practice, given that:

–  most of the EU laws we engage with have become workplace norms that seem to work in practice (possibly excluding shared parental leave and the question of agency workers…);

–  many UK entitlements already exceed EU minima, and

–  social conventions and expectations have changed immeasurably since EU employment law began its influence.

There are also two other factors:

–  first, from the moment a decision is taken to leave the EU, the answer “EU law requires it” will cease to be an acceptable response to queries about why something is or isn’t being done – so there will be a need for government to develop more cogent policy positions;

–  secondly, because the UK will still want to be a competitive and desirable place to live and work and will not want to be left behind by EU developments, there will still need to be a UK-specific (but EU sympathetic) approach to employment law and HR issues.  Otherwise (despite the UK potentially developing a less restrictive employment regime) EU multinationals might choose to headquarter or develop their businesses elsewhere; and UK multinationals might not be welcome in other host countries.

So – back to the original question – what (if anything) might change in employment law?

My prediction is:  initially, not much at all; later on, perhaps a gradual re-evaluation.  Even then, it’s sensible not to expect much change, because the UK’s habit of gold plating EU regulations was driven by the UK’s innate appetite for over-regulation, and if we look further afield to Australia (which is not beholden to Brussels, but is dependant on business standards), we find that much of its legislation is aligned with European concepts anyway.

But forget about the laws:  what about the labourers?   It’s possible that the much more relevant problem would be the effect of a BREXIT on the free movement of workers within the EU:  if the UK imposes barriers to this, many UK employers will find themselves having no, or a much reduced staff and will have to move into the sponsored work-permit regime (with the complexities that involves).