In Brief: Important Updates from June 2018

In light of recent developments in Reilly v Sandwell Metropolitan Borough Council and Quintiles Commercial UK Ltd v Barongo, we sought to reconsider British Home Stores v Burchell, a case that established the long-standing test to apply when deciding the fairness of a dismissal for misconduct, and ask whether the approach has been rendered obsolete.

We reviewed a number of interesting cases this month, including, Reading Borough Council v James & Ors in which the UKEAT ruled the right to equal pay is not curtailed by the promotion of a comparator; Pimlico Plumbers v Gary Smith, whereby, despite being VAT-registered and paying self-employed tax, Mr Smith, a freelance plumber, was deemed a ‘worker’ under s.230 (3) (b) of the Employment Rights Act 1996 entitling him to workers' rights such as holiday and sick pay; and Mrs M Warrington v Lloyd’s Pharmacy Limited, a claim for constructive dismissal in which the tribunal had to consider whether the grounds relied upon by the claimant, separately or cumulatively, amounted to a breach of the implied term of trust and confidence.

Also, in our new video series in partnership with A&L Goodbody, Jenny Moore, Solicitor in the Employment & Incentives team, discusses the damaging effect alcohol and drug misuse can have on a business; Rachel Richardson, Director in the Employment department at Tughans, outlines certain information that must be provided to representatives in a TUPE transfer situation; and we have many more articles that are available on the Northern Ireland Employment Law Hub, a service that is fully searchable, available 24/7 and has a useful browse by topic function. The hub offers in-depth articles written by expert legal practitioners and leading HR professionals, case law analysis and materials tailored specifically to how the law applies in Northern Ireland!

Burchell Test under Scrutiny?

In 1978, in British Home Stores v Burchell, the EAT outlined several factors that should be considered when deciding the fairness of a dismissal for misconduct. Forty years later a number of cases have brought the test under scrutiny, with some questioning the effectiveness of the test and whether it remains relevant.

The long-established Burchell test states an employer does not need to have conclusive proof of any misconduct, only a genuine and reasonable belief and must have conducted a reasonable investigation in order to uphold that belief. The Burchell approach affords employers latitude since they benefit from the “range of reasonable responses” and any modification to the test would almost certainly be to the disadvantage of employers.

The UKSC case of Reilly v Sandwell Metropolitan Borough Council [2018] UKSC 16 concerned the dismissal of a head teacher for failing to disclose a close friendship with a convicted sex offender. The judgment is of particular interest as it scrutinises the long-established Burchell test. Whilst Elias LJ described the Burchell approach as the “classic formulation of the employer’s obligation in misconduct cases,” Lady Hale and Lord Wilson questioned whether it remains the correct one, stopping short of deciding a point of law, thus creating potential uncertainty for employers with regard to how future unfair dismissal cases will be dealt with.

“There may be very good reasons why no-one has challenged the Burchell test before us. First, it has been applied by Employment Tribunals, in the thousands of cases which come before them, for 40 years now. It remains binding upon them and on the Employment Appeal Tribunal and Court of Appeal. Destabilising the position without a very good reason would be irresponsible. Second, Parliament has had the opportunity to clarify the approach which is intended, should it consider that Burchell is wrong, and it has not done so. Third, those who are experienced in the field, whether acting for employees or employers, may consider that the approach is correct and does not lead to injustice in practice.”

In Quintiles Commercial UK Ltd v Barongo UKEAT 0255_17_1603, allowing the appeal, the EAT concluded under s98 that a dismissal is not rendered automatically unfair if the conduct is categorised as something less than gross misconduct. It confirmed it is capable of being a fair dismissal provided it is for a reason relating to the employee’s conduct.

Quintiles, Reilly v Sandwell Metropolitan Borough Council and the case of Mbubaegbu v Homerton University Hospitals NHS Foundation Trust (concerning a series of conduct issues with no single act of misconduct) suggest a challenge to the Burchell approach is being accepted incrementally.

In an interesting article, James Medhurst, a solicitor specialising in employment tribunal litigation, comments on the relevance of Burchell forty years on. He points out that the world has changed a lot since 1978, stressing “the social media age has been a boon and a burden for investigators. There is more evidence to consider than ever before, which is helpful for the fortunate few with unlimited resources, but less so for everybody else.” James suggests unfair dismissal law could change dramatically in next few years, however is confident the unextravagant core of Burchell itself is likely to remain good law for many years to come.

Right to Equal Pay Not Curtailed by Promotion of Comparator

Reading Borough Council v James & Ors [2018] UKEAT 0222_17_0706 considered the temporal scope of a pay comparison in proceedings based on equal pay for work of equal value brought under the Equal Pay Act 1970. The EAT held a group of female employees' contractual right to equal pay under S.66 of the Equality Act 2010 was not affected by the promotion of their comparator.

It concluded the fact that there were other comparators available did not and could not undermine the claimants’ entitlement to equal pay. Once the claimants’ pay was elevated by application of the sex equality clause it remained at that level irrespective of what happened to the comparator's pay. The EAT ruled there is no temporal limitation and the accrued contractual right continues until it is validly varied or terminated.

In Northern Ireland, the Equal Pay Act (NI) 1970 requires employers to pay men and women equal pay for equal work. It prohibits sex discrimination between employees in respect of their contractual pay and terms and conditions of employment.

Pimlico Plumbers: Worker or Independent Contractor?

The Supreme Court has ruled a freelance plumber was a ‘worker’ under s230 (3) (b) of the Employment Rights Act in Pimlico Plumbers v Gary Smith. Despite being VAT-registered and paying self-employed tax, he was entitled to workers' rights such as holiday and sick pay. Lord Wilson said Pimlico had a large degree of control over Smith’s “appearance and the cleanliness of his uniform” and his ability to compete with the company when he ceased to carry out jobs for it.

Many factors pointed to Mr Smith being a worker: “Its tight control over him was reflected in its requirements that he should wear the branded Pimlico uniform; drive its branded van, to which Pimlico applied a tracker; carry its identity card; and closely follow the administrative instructions of its control room. The severe terms as to when and how much it was obliged to pay him, on which it relied, betrayed a grip on his economy inconsistent with his being a truly independent contractor. The contract made references to “wages”, “gross misconduct” and “dismissal”.”

The case highlights the tricky balancing act in cases of a similar nature, especially those within the 'gig economy', when it comes to establishing worker/employee status.

You can read the full UKSC decision here, or watch the Supreme Court's summary presentation on YouTube.

Pimlico Plumbers boss Charlie Mullins branded the judges' decision "terrible.”

"I'm very disappointed and I think it's a disgraceful decision today. We had five judges in the top court in the country and an opportunity to bring our employment law into the 21st century and unfortunately they missed the point. I think they bottled it, basically.

"Gary Smith knew he was a subcontractor and he had been very happy for six years and all of a sudden due to his illness he wanted to claim workers' rights - basically wanted to have his cake and eat it."

When asked if he would now have to rewrite workers' contracts, Mr Mullins replied: "We changed the contracts seven years ago when we found a couple of loopholes in them; we've changed that and our contracts now are watertight, like our plumbing service."

He alleged Mr Smith had received £500,000 over three years and was also happy to receive the tax breaks associated with self-employment until his health deteriorated:

Jacqueline McGuigan, solicitor at TMP solicitors which represented Smith, said the judgment goes a long way in clarifying what a worker looks like.

“I see this judgment as a victory, not only for common sense but for all the workers in the UK being denied basic employment rights. It provides much-needed clarity on employment status. Good employers have nothing to fear from this judgment.

“Whilst I have every faith in the courts making the right decisions, I think Parliament needs to step in and legislate to make it easier for workers to enforce legal rights and harder for rogue employers to evade them.”

Constructive Dismissal Victory

In the case of Mrs M Warrington v Lloyd’s Pharmacy Limited [2018] 3400423/2017an employee overheard her manager saying getting rid of her was a work in progress.The tribunal had to consider whether the grounds relied upon by the claimant, separately or cumulatively, amounted to a breach of the implied term of trust and confidence.

The tribunal held the remark “getting rid of Mel is a work in progress” substantially undermined the employment relationship, amounting to a fundamental breach of the implied term, and thus a fundamental breach of the contract.

“[The comment] was a major contribution to a breach of the implied term, if not a breach in itself… The claimant had a reasonable belief that Mrs Ahmed wanted her out of the business, and was working towards achieving that… this was sufficient to severely damage the relationship of trust and confidence between the parties.”

The case highlights the importance of the implied term of trust and confidence, alongside the benefits of having a good workplace culture. It is also a reminder for employers to follow their own internal management processes, as had they done so, the manager’s regrettable remark, in itself, may not have been sufficient to lead to a finding of unfair dismissal. Managers should deal with issues immediately, in line with the requisite policies and procedures, and this should be done in a timely manner, before matters escalate.

Alcohol and Drug Misuse at Work

Alcohol and drug misuse in the workplace is a sensitive and complex issue which many employers struggle to confront. While recent reports suggest that drinking cultures across both private and public sectors are stronger than ever, with an increasingly high proportion of workers drinking above recommended guidelines, many companies feel ill-equipped to address the problem.

In a brand new video series in partnership with A&L Goodbody, Jenny Moore, Solicitor in the Employment & Incentives team, discusses the damaging effect alcohol and drug misuse can have on a business, for example, on absenteeism, productivity, morale and reputation.

First Tuesday Q&A: Sleepover Staff and the NMW; Sickness and Annual Leave; Sensitive Data under GDPR; and Resignation on Maternity

In this month’s First Tuesday Q&A, Chris Fullerton of Arthur Cox offered comprehensive legal advice on a number of employment law issues, including national minimum wage claims from sleepover staff in light of the Focus Care case; sickness whilst on annual leave and holiday entitlement; requests for medical data post-GDPR; and the accrual of annual leave and benefits whilst on maternity leave.

Commercial Law for Employers: Equal Treatment (Age and Religion)

In this month’s ‘Commercial Law for Employers’ article, Kevin McVeigh, Partner and Head of the Corporate and Commercial Department in EDG Solicitors, considered two equal treatment cases.

Kevin considered the case of Georg Stollwitzer v ÖBB Personenverkehr AG Case C-482/16 concerning age discrimination and Directive 2000/78/EC. The decision is noteworthy as upholds the right of members states to introduce laws which seek to eliminate age discrimination even if this results inadvertently in a disadvantage to certain workers.

Kevin also considered the case of Vera Egenberger v Evangelisches Werk für Diakonie und Entwicklung eV Case C-414/16 in which the claimant, of no denomination, argued taking religion into account in the recruitment procedure was discriminatory. The CJEU had to consider whether the rejection of her application amounted to a difference of treatment on grounds of religion within the meaning of Article 4(2) of Directive 2000/78.
https://www.legal-island.com/articles/uk/features/commercial-law/2018/jun/commercial-law-for-employers-equal-treatment-age-and-religion/

Provision of Information to Employees in a TUPE Transfer

This month’s problem concerns:

I am an HR Manager of a business which is to be sold and I believe that the provisions of TUPE will apply to the sale. I know that I have to inform the affected employees (there are 12), but how far do I have to go? Can I just tell them the date of the transfer, or should I provide more specific information?

In this month's ‘How Do I Handle It?’ article Rachel Richardson, Director in the employment law department at Tughans, referred to Regulation 13(2) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 which sets out certain information that must be provided to the appropriate representatives in a transfer situation.

Belfast Firm Pays £25,000 in Settlement of Pregnancy Discrimination Case

“Before I told them of my pregnancy I felt I was a respected member of their staff and that my work was appreciated. Afterwards, I felt isolated, excluded, side-lined and ignored. When I returned to work after the birth of my child, to be confronted with a proposal to terminate my employment, I was shocked and upset.”
https://www.equalityni.org/Footer-Links/News/Individuals/Belfast-firm-pays-£25k-in-settlement-of-pregnancy

News Story of the Month…

An HR and compliance officer was among staff at a recruitment agency who posed as workers to opt them out of the workplace pension. Lisa Neal, a 33-year-old from Derbyshire, was one of five senior employees at Workchain who were encouraged by owners and directors to mislead the National Employment Savings Trust to get temporary workers out of the retirement scheme. The senior staff members used the passcodes of 67 workers to log into NEST’s online portal and opt them out of their pension. More from People Management.

The story stresses how automatic enrolment is not optional, it is required by law, and demonstrates that the courts are prepared to prosecute those who try to avoid their pension responsibilities.