“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.

Feeling furtive?

WynLewis

Private emails at work – the latest twist

Furtive” is how many employers feel when they look at the private emails of a staff member who is the subject of a disciplinary investigation.

The reason is the tension between an employer’s wish to check on what their employees are doing, and what those employees regard as their right to privacy,  even when using a work-related email account for private messaging.

This tension was illustrated by the recent case of – Barbulescu v Romania  which shows that the position is still not crystal clear.

The story went like this:

–  Mr Barbulescu was dismissed for personal internet use at work, contrary to the employer’s strict rule against any personal use of its systems;

–  as part of its investigation, the employer accessed intimate messages sent by the employee to his fiancée and to his brother;

–  these messages were printed by the employer and used in the disciplinary proceedings as well as in Mr Barbulescu’s subsequent court challenge;

–  the Romanian courts held that Mr Barbulescu’s dismissal was lawful (it found the employer was entitled to check that work was being done properly and that Mr Barbulescu had been given notice of the rule against personal use of company resources and that surveillance would occur);

–  the European Court of Human Rights also held that the monitoring of Mr Barbulescu’s internet usage and the use of the Yahoo! messages in disciplinary proceedings was a proportionate interference in his “Article 8” rights.

The media:

–  interpreted this as a further encroachment on to workplace rights; and

–  gave the (misleading) impression that the decision gave employers carte blanche to snoop on employees’ personal emails.

They were wrong.

In fact the legal position is like this:

–  Article 8(1) of the European Convention on Human Rights states that “everyone has a right to respect for his private and family life, his home and his correspondence“;

–  this is a right to communicate (which means by letter, email and phone call) without interception or screening by a third party and amounts to a reasonable expectation of privacy;

–  but that right (and that expectation) vanishes if interference (1) is in accordance with the law, (2) is necessary in a democratic society, and (3) is in the interests of national security, public safety or the economic well-being of the country; for the prevention of disorder or crime; for the protection of health or morals; or for the protection of the rights and freedoms of others;

–  so there’s a lot of scope for sensible and proportionate (and lawful) monitoring – and, provided that the safeguards in the various guidelines set out in the data protection codes of practice for monitoring are followed – there should be no problems;

–  this is why the law is framed as a right to respect for privacy, not a right to actual privacy;

–  and in this case, the interference with Mr Barbulescu’s Yahoo! emails was appropriate, given the need to balance an expectation of privacy against an employer’s wish to verify that employees are working during working hours.

But what about real life?

–  isn’t a blanket ban on all personal internet use at work excessive?

–  how can people juggle longer working hours with outside activities if there is no “down time” to deal with those outside activities?

–  smartphones make personal use of the employers’ systems less of a necessity (and make monitoring of their workplace activities by employers harder);

–  the BYOD trend is leading to an even greater blurring between the private and the professional in many workplaces.

Pulling this together:

–  you can monitor workplace communications;

–  but you have to do it in a reasonable and balanced way;

–  any monitoring is unlikely to be reasonable or balanced if you haven’t warned your employees in advance what you may be doing;

–  so it helps (a lot) to have a policy in place that says what you’re entitled to do and what you will do if a need to monitor arises.

Whether governments abide by the laws they impose on their individual and corporate citizens is, of course, a different issue.

Varying terms and conditions – A salutary lesson to all

CarolineLeaver

Re-Use Collections Limited (Re-Use) v Mr Keith Sendall (1) and May Glass Recycling Limited (May Glass) (2) deals with some important issues that employers need to know about:

What can be considered specific consideration (i.e. “value given by the employer”) for the purposes of accepting new terms and conditions?

Whether an employer can enforce restrictive covenants against a former employee where there has been no specific consideration given?

Re-Use is a glass recycling business and had originally been a family run business (set up in 1922 by Mr Sendall’s grandfather).  The business left family ownership and was transferred into the ownership of Re-Use.  Mr Sendall joined the family business in 1980 and remained an employee until his employment ended on 1st May 2013.   He was manager of the depot at Dagenham, Essex.

Mr Sendall become embroiled in legal action with his former employer, because whilst employed by Re-Use he had directly been involved in setting up a competing business (May Glass) in breach of his duty of fidelity and good faith to Re-Use.

This case deals with a number of legal issues, including whether Mr Sendall owed a fiduciary duty to Re-Use (which it was decided he did not).  But for the purposes of this commentary, I am focusing on whether the express restrictions – confidentiality and restrictions in relation to post-termination conduct, including non-solicitation and non-dealing with restricted clients and prospective clients – in Mr Sendall’s contract of employment, could be enforced against him.

Mr Sendall was given a new contract in October 2012 (five months before he resigned) which included a number of new restrictions on him.  Mr Sendall debated the changes but eventually signed and returned a copy of the contract of employment to Re-Use on 22nd February 2013.

This issue centred not on whether there had been acceptance of the terms, but on whether consideration had been given (i.e. what had the employer given to Mr Sendall in exchange for him agreeing to new terms and conditions).

When restrictions are entered into after the start of employment, this is a variation to the existing contractual relationship and requires express consideration (i.e. something of value) in order for the restrictions to be enforceable.

Re-Use’s position was that consideration had been given since the new terms were introduced as part of a package under which benefits were conferred upon Mr Sendall, including a pay rise. Alternatively,  they argued that continuing to employ Mr Sendall after the contract was produced was good consideration.

The Court rejected Re-Use’s position on the following grounds:

  1. When the Court looked at the ‘package of benefits’ in detail it materialised that Mr Sendall had already enjoyed these benefits before the introduction of the new contract terms, or in the case of the life assurance cover being increased from 2x to 4x salary the Court found no evidence to link this change to the introduction of the new contract.
  2. Mr Sendall had received an increase in salary in January 2013 but on the evidence there was nothing to show that the salary increase was linked to entering the new contract (there were pay increases at that time company-wide rather than only for those entering the new contracts) and there was nothing to make it clear that the pay increase was conditional on accepting the new terms.
  3. Finally, in relation to the continuing employment point, the Court found that there was no evidence to link a continued willingness to employ Mr Sendall with his willingness to sign the contract of employment.  In particular, there was no evidence (expressly or implicitly) to show that a refusal to sign would or might lead to dismissal or another lesser sanction.

The Court found that no consideration had been given and the post-termination restrictions were unenforceable.  This could be potentially very damaging for many employers in similar situations.

So what do employers need to consider when introducing new restrictions during employment?

  1. Give consideration for the restrictions and ensure that this consideration is ‘new’ consideration and not just rehashing an employee’s existing benefits.
  2. The consideration needs to have value to the employee if it is going to incentivise them to accept the new terms – for example, a one off cash payment or John Lewis gift vouchers.
  3. You need to make clear in correspondence dealing with the introduction of the new changes that the consideration being offered is in return for the acceptance of the new terms and conditions.  Make the link.
  4. You need to ensure that the contractual documentation and letters dealing with the proposed changes support the business’s position and do not undermine it.  In this case, the new contract referred to the old salary rather than the new increased salary that the employee was supposed to be receiving in return for accepting the new terms. Another error was to refer in the pay increase letter (sent in December 2012) that aside from the salary increase all other terms and conditions remained the same.
  5. Finally, if you are going to look to rely on the ‘continued employment is good consideration’ defence then make sure that somewhere in the documentation you refer to the consequences of not accepting the new terms i.e. if you do not accept the terms, then your employment may be brought to an end.

Whilst these may seem to be “techie” points, this is the latest in a line of cases dealing with variations.  See our December blog here dealing with another case.

 

Things that come in threes

WynLewis

Buses often come in threes. The same principle now seems to apply to TUPE cases. Here are some recent examples of TUPE in triplicate, to ease you from late Summer into early Autumn.

TUPE: can you resign and successfully claim constructive dismissal, or that you have been dismissed, if your travelling time increases after a TUPE transfer?

“It depends” is the answer.

It’s a “yes” if you rely on the 2012 case of Musse v. Abellio, when a relocation of 6 miles (Westbourne Park – north of the Thames, to Battersea – south of the Thames) because a TUPE transfer was a substantial and materially detrimental change in some bus drivers’ working conditions.

It’s a “no” if you rely on the 2014 case of Cetinsoy v. London United Busways, when a relocation of only 3½ miles (Westbourne Park to Stamford Brook – both north of the Thames) and an extra 30 to 60 minutes’ travelling time each day in London following a TUPE transfer wasn’t a substantial and materially detrimental change to some bus drivers’ working conditions.

Why do you care? Because Regulation 4(9) of TUPE 2006 deems an employee’s resignation to be a dismissal where it’s in response to a substantial change to the employee’s working conditions to their material detriment – which brings the risk of significant compensation payments.

So do these cases make things easier for employers? No. The reason is that each situation will be fact-specific. But the cases may indicate a hardening of attitudes towards employees who might use a change of workplace as a device to obtain compensation where none should be available; or a reinforcement of the idea that moving jobs within the Circle Line isn’t really a big deal.

TUPE: does TUPE “bite” when you take over the employees, or at some other time?

The answer is that it becomes effective when a transferee takes over responsibility for the business or for the outsourced service, not when a transferee takes over responsibility for the employees in the business (the responsibility for which transfers automatically when the business gets taken over).

In Housing Maintenance Solutions v. McAteer, the issue was whether there had been a TUPE transfer when HMS (which was a new organisation) was preparing to take on the activities that had previously been carried out by a company called Kinetic, or whether the TUPE transfer took place when HMS actually took over Kinetic’s activities (because, during that prep stage, HMS had contracted with some of Kinetic’s former employees as project managers). The answer was only when HMS actually took over responsibility for the work that had previously been done by Kinetic.

And your “takeaways” are? Don’t forget (despite the “E” in “TUPE”) that the trigger for TUPE is the transfer of a business or activity, not on who employs people in that business or activity.

TUPE: how many fingers do you need to count when TUPE doesn’t apply?

The answer is: “not many”.

Two important exceptions to TUPE applying when there is a service provision change (known as an SPC) are (1) when the activities carried out by the contractors before and after an SPC are for different clients; and (2) when a new contractor carries out a one-off or a short term contract.

In the case of Ndeze v. Horizon Security Services, Mr Ndeze had been employed by PCS to provide security services to Workspace (in its capacity as the manager of the Alpha Business Centre) until PCS had ended his employment due to the planned demolition of the business centre. He claimed that he should have transferred to Horizon when they (not PCS) were appointed by Waltham Forest County Council (the ultimate owner of the business centre) to provide security for a period of 6 to 9 months while the business centre was run down before being demolished.

But there had been a change of client (Workspace to Waltham Forest) and a change of provider (PCS to Horizon) for a relatively short period. So the generic “before and after should be more-or-less-the-same” test was well short of being satisfied. Consequently there was no TUPE transfer.

Expect more fun TUPE cases over the next few months.

 

Employment Tribunals -1 : UK Government – nil

CarolineLeaver

It is unusual for a case by an Employment Tribunal to be reported, since published decisions tend to be by the higher courts.  However Tirkey v Chandok and another has been widely reported as pre-empting a proposed change to legislation that is not expected to be made until after public consultation is completed in 2015.

The reason for reporting this particular decision was that the Tribunal decided to include “caste” in the definition of race in the Equality Act 2010 (the Act).  As drafted, the Act does not refer to caste, but the definition of “race” is non-exhaustive and includes “colour; nationality; ethnic or national origin”.  The use of “includes”, rather than “means”, itself means that there is scope for other attributes to be covered by “race”.  One such attribute could be caste.

The caste system is a traditional social stratification, emanating from the Hindu tradition, which encompasses various “classes”, each of which is associated with a traditional occupation and ranked accordingly on a perceived scale of ritual purity.  Caste status is immutable and hereditary, and is often linked to matters such as geographic origin and language. It is associated primarily with South Asia, particularly India.

The nature of caste means that there is an inherent risk of someone from one caste being treated less favourably than someone from another caste.

This case involved a domestic live-in servant who was employed by a couple to work for them originally in India, and then in the UK.  She is part of the Adivasi caste, which is known as a “servant caste” and she brought numerous claims against the couple alleging poor treatment, including being required to work 7 days a week (6am to 12.30am), that she was not allowed to sit on the same furniture as the family, and was made to use separate crockery and cutlery, because higher caste people would not touch plates and cups that she had used.  She claimed that the reason why she was recruited and treated in the manner alleged was that her employers concluded that she was of a lower status to them, and that this view was tainted by caste considerations.

The Employment Tribunal decided that the existing race discrimination provisions in the Act did cover caste, because “ethnic origin” for the purposes of the Act is a wide concept. This was despite an earlier Tribunal decision in which a caste discrimination claim was rejected, partly on the basis that the government had not yet activated the power in the Act to provide expressly for caste to amount to an aspect of race.

As the formal introduction of caste discrimination is delayed until after consultation has been completed (and in theory, there is a risk that the proposal to include caste as an element of race may not happen), this is a useful case. However, as it is only an Employment Tribunal decision, there is scope that it will be appealed, or not followed by a different Tribunal.

Companions at disciplinary and grievance meetings – another fine mess?

WynLewis

Once again, the Employment Appeal Tribunal has managed to issue a judgment that many people think fails to reflect the reality of managing workers in the real world.

The judgment deals with who an employer must permit a worker to bring as a companion to a formal disciplinary or grievance hearing.

The Employment Rights Act 1999 provides that a worker may ask to bring:

  • a colleague
  • a trade union representative, or
  • a trade union official

to such a hearing; and sets out what that companion can (and can’t) do and that a failure to permit this can result in an employer having to pay compensation of up to 2 weeks’ pay.

This has worked well in practice:  people have tended to approach the issue sensibly by not inviting, or by refusing to permit a worker’s chosen companion who might be disruptive, or be involved or implicated in the investigation, or have an ulterior motive, or be inappropriate for another reason.

However in Toal v. GB Oils the EAT decided that the choice of companion is entirely up to the employee – even though this is contrary to the ACAS Code of Practice on Disciplinary and Grievance Procedures , which states:  “… it would not normally be reasonable for workers to insist on being accompanied by a companion whose presence would prejudice the hearing nor would it be reasonable for a worker to ask to be accompanied by a companion from a remote geographical location if someone suitable and willing was available on site“.

The point is that, while the worker must be reasonable in asking for a companion, the choice of companion – so long as they fall into one of the 3 categories mentioned above – does not have to be reasonable, because if it did, then it would create an additional complication of having to decide on whether an employer was reasonable in refusing someone.

So what is to be done from now on?

It seems there is a choice:

  • an employer must permit as a companion anyone (however unreasonable) whom the worker wishes, but manage the process very tightly; or
  • an employer may still require the worker to choose a different companion – which might run the risk of an award of compensation (see above) or, if the outcome of the hearing is dismissal, to a finding of a procedurally unfair dismissal (though the compensation ought not to be significant for this type of transgression – in fact the EAT suggested only £2 or so).

Whether this twist will have any effect in practice remains to be seen; hopefully most workers and employers are likely to adopt a pragmatic approach.