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Employment Law Review of 2018 with Mark McAllister, LRA

Posted in : Supplementary Articles NI on 22 January 2019
Mark McAllister
Labour Relations Agency

Mark McAllister from the Labour Relations Agency and Scott Alexander from Legal Island discussed the top 10 employment cases of the year, including any updates since our Annual Review of Employment Law conferences in November.

10. Bellman v Northampton Recruitment (‘unofficial’ after parties may be an extension of the workplace and employers held vicariously liable for damages)

9. Roddis v Sheffield Hallam University (zero hour workers are already protected under the Part-time worker regulations, brought into effect in NI in 2000)

8. Kocur v Angard Staffing Solutions (Agency workers can argue for separate rights where they feel there is a detriment. The failure to allow agency workers the same amount of leave cannot be compensated by a higher hourly rate)

7. East Kent Hospitals University NHS Foundation Trust v Levy (there can be ambiguity in resignations)

6. Various Claimants v WM Morrisons Supermarkets (employers can be held liable for the criminal acts of disgruntled employees)

5. Jet2.com v Denby (What is meant by trade union membership? The claimant had been refused employment owing to his earlier trade union activities and was therefore afforded protection owing to his membership. N.B. This case is due for appeal to the CA in Feb 19)

4. IWGB v Roo Foods (Deliveroo) (This case looked specifically at the construction and practice of the substitution clause. Key aspect: Riders were not workers as they were able to sub-contract out their work. Differentiates them from Uber drivers who are workers as opposed to independent contractors)

3. Brazel v Harpur Trust (The EAT ruled that part-time workers may receive proportionately greater holidays than their full-time counterparts)

2. Kostal v Dunkley (Trade union related rights. Did the respondent contravene the inducement principle? If an employer circumvents the collective bargaining unit they will be in infringement of non-inducement clause. N.B The CA is due to hear the appeal in April 19)

1. Pimlico Plumbers v Smith and Anor (The tribunal was entitled to conclude the claimant was a limb (b) worker. He could not subcontract and was under tight control of Pimlico. The case highlights the tricky balancing act that takes place in several 'gig economy' cases when it comes to establishing worker/employee status)

Each case discussion covers:

  • A short discussion on the facts and background in the case
  • A short discussion on the decision and why it’s important to you
  • Recommended actions as a result of the decision


Scott: Good morning, everybody. Happy New Year. Just getting a little bit of feedback. Just proves it's live. This is what we like to do. Happy New Year. I'm Scott Alexander, I'm from Legal Island. I'm joined by Arnold, also at Legal Island in Antrim. And our special guest today is Mark McAllister, a senior officer from the Labour Relations Agency. Good morning, Mark.

Mark: Good morning, and happy New Year to you all.

Scott: We are, as you'll be able to see shortly, going to be dealing with a case law review. So any of you who were at the annual review of employment law, mostly you will have heard Mark. And as usual, he split the case law reviews from ten to one into two parts. And if you were around for his top five cases, you'll discover that it's the Pimlico case, the Pimlico Plumbers case, and his number ten was Bellman. It's a rather arbitrary list, I think, but we'll find out.

Mark: That is.

Scott: But everybody would have considered Pimlico Plumbers number one and Bellman number ten. So what we're going to do today is we're going to ask Mark to take us through to the cases, take a little bit of background, and why it's so potentially important for listeners. We're going to deal with that. We're also going to ask Mark his recommendations on what you should do now. So if you've got a bit of paper or an action plan or a little list of key points that you want to take away, that would be very handy as well.

At the end of this broadcast — we'll finish after 45 minutes — it will be available on the Legal Island website to subscribers and we'll have it not only recorded, but written, and you'll be able to read the transcription in right about a week or maybe two weeks by the time it comes back and we make a little bit of corrections. But you'll be able to listen back later on this afternoon.

There's also a chat box on your screen, so if you've got any questions and we want to ask them live to Mark, then send them in via the screen, the little chat box, and we will deal with those.

Bellman v Northampton Recruitment

So Mark, without further ado, let's deal with the first case that you have identified. It's Bellman v Northampton Recruitment, and it's about the unofficial after-parties that may become an extension of the workplace, and indeed employers may be held liable, vicariously liable, for any damages that occur at those after-party parties. So tell us a bit of background and why it's so important.

Mark: I suppose I had my tongue firmly placed in cheek here when I was looking at this, because it was around Christmas time and the question here, as you quite rightly point out, Scott, is whether or not it's just to hold an employer vicariously liable for the actions of an employee, in this particular context, the after-party party held just before Christmas.

I think it's important to point out that we need to look at the context of the case and the fact sensitivities of the case. And as well, any case involving potential vicarious liability, we need to look at it through the prism of the Mohamud v WM Morrison Supermarkets case back in 2017, where the key question is whether or not there's a sufficient connection between what the individual employee did and their field of activities.

I think since 2001, when the "close connection" test really started to grow legs, if you like, and now in 2018 we've seen the law on vicarious liability become so tenuous in terms of the links that employers are very worried about what they may be held liable for, whether it's people at Christmas functions or training schemes off-site or anything where there is an employer-sanctioned off-site activity.

Scott: In this particular case here, it was the owner, effectively, of the business punched another employee. Left him with brain damage . . .

Mark: That's right. Very serious case.

Scott: Aa very serious case. The employee was actually a friend of his and had been for years. So he sued the company, and the company, who was his employer, was held liable.

Mark: They were held liable, and effectively, what the court said in this particular case was there was a sufficient connection between the field of activities engaged in. So this individual, who was the de facto owner of the company, continued the party in the lobby of his own hotel, and effectively engaged in work-related conversations, and it was primarily just a continuation of what happened at the Christmas party.

Now, everyone accepts that the Christmas party is an extension of the workplace and that your behaviours are expected to be the same as you would be in your normal day-to-day workplace. The question then, whether or not it was fair to extend that further into this, and the court said yes, there was sufficient connection. There was a field of activities and the timeline was continuous to suggest that that thread of connectivity, if you like, wove its way through into the after-party party.

Scott: Well, let's take the after-party party, okay?

Mark: Okay.

Scott: I don’t know how you spell those words and put them together, but anyway, the after-party. So Legal Island had a Christmas party. We had it here. There was no alcohol. We had a murder mystery. That's fine. Everyone accepts it's in Legal Island's premises. A group of us went into Belfast and had a few drinks in a bar, where again, Legal Island provided a gin tree in this particular bar. I left, having had no drink, by the way, and drove home. But many others stayed. And they went on, I think they went on somewhere else and had other drinks.

It's that other part which would hitherto not have been part of the official thing. It would have been, hey, you might do something bad, but it's up to you. That could potentially — is it depending on who goes, or is it depending on whether you say there is a cut-off point?

Mark: Yeah, I think the important thing is to put parameters on all of this, to say, look, the Christmas function will be this, and that's it in terms of time and the connection. The fact sensitivities of this case mean that because the senior member of staff effectively summoned people to the after-party party and gave them a lecture in regard to work, that those fact sensitivities can't be ignored.

But the key issue being that employers need to just be aware, where there's even tacit endorsement of the after-event — the after-party party, if you like — then the question is does that create that tenuous connection where on the principles, for example, like social justice, would it be fair to extend vicarious liability? I think it's going to be difficult for employers to sort of say, cut and dry, this is where it ends, and your splinter groups, they go off and do their own thing, they're personally liable for whatever they do.

So context informs everything. Seniority, the nature of the discussion, whether or not people were effectively told to be at it all have ramifications. Those fact sensitivities cannot be ignored, but the key issue being whether or not the field of activities and the sufficient connection are there to say it's just to hold the employer vicariously liable.

Scott: So what should employers do? So you've got the situation here, where the Christmas party rules have changed, potentially. You could be held liable for something that goes on the whole night. So what do they do? Send something out to employees?

Mark: A lot of employers do, in early November, if you take the Christmas party season, for example, send out a behavioural memorandum to say this is when the party will be and the sort of parameters within which it operates. I think that's, the first protocol would be to revisit that document to see whether or not you make provision to say after a certain time, etc., you're on your own.

But how you stop people talking about work or how you stop senior people effectively telling people, "You must come along this," I think those nuances might be lost in a memorandum. It's changing the practice. Not to be "bah, humbug" about it, the easiest thing is for these events not to happen. But there has to be some limitations, because the employer is finding, post-Mohamud v Morrisons, that the link, this connectivity link, is hard to break.

Scott: Yeah. And one last point on this. Presumably, employees have more liability of risk here because the after-party, if it's an extension of the workplace, then if they end up in a fight, that's a fight within the workplace, effectively, and they could find themselves disciplined.

Mark: Indeed, and any behavioural memorandum that does go out should indicate that they will be subject to the same rules, so that's discipline and grievance will be equally applicable. The question is are they always going to be applicable to the after-event.

Scott: Okay. If you have any questions, anyone, send them through the little chat box and we can deal with Mark on that case or any of the other cases, or indeed, any employment law question you fancy throwing in, I'm sure we can deflect and have a go.

Mark: And ignore them.

Roddis v Sheffield Hallam University

Scott: Roddis is the next case, Roddis v Sheffield Hallam University. This is a zero-hours worker contract, and it's about including those in the part-time worker regulations, effectively. Now, the part-time worker regulations were brought in 2000...

Mark: They were.

Scott: So you're talking about a piece of legislation that's nearly 20 years old. And hey, presto, after 18 of those 20 years, we get some case law which says that zero-hour workers could all be part-timers. Well, there's a surprise. Tell us about this case.

Mark: Yeah, and that's exactly, the nub of the case is whether or not zero-hours contract are a definable type of contract, which was the argument put up. These were effectively associate lecturers on zero-hours contracts who were able to identify, thanks to the EAT's decision, permanent full-time lecturers as being comparators for the purposes of the part-time workers prevention of less-favourable treatment regulations, 2000, as you have indicated.

So at the heart of this is the question, are zero-hours contract staff part-timers? The definition under the legislation requires a valid comparator to be under the same type of contract. And the EAT said yes, this is the same type of contract. It's not necessarily about the hours. It's about the broad characteristics of the contract. So a full-time lecturer primarily lectures, an associate lecturer lectures.

And the logic of that, of the approach that the court took, was taken from another case back in 2006 called Matthews and others v Kent and Medway Towns Fire Authority, which was about retained fire fighters comparing themselves with whole-time, full-time fire fighters. So it's exactly the same principle.

So it's not an argument to say that zero-hours contractors are a breed apart. They have been defined in GB since 2014, but that's not to say that they can't be subsumed under the part-time workers definition of any other contract or the same type of contract. It's broad enough to allow zero-hours contractors to be, effectively use their part-time status.

Scott: Okay. So a number of years ago, Legal Island were helping to run for then DEL, Department for Employment and Learning, consultations over employee status. It was all pre-Taylor Report stuff. We came to the conclusion that zero-hour contracts are effectively casual contracts by any other name. It's just you don't have defined hours. So this case affects anyone who has part-time workers who don't have any defined hours, in effect.

Mark: In effect.

Scott: You could be held liable. There could be a risk if you have a comparable full-time employee there.

Mark: Yes.

Scott: So what should our listeners do now? Assess risk, or . . . ?

Mark: It is assess risk, because the question here fundamentally being asked is are all zero-hours contract workers effectively part-time workers, and thus protected by the regulations. Because the regulations provide for detriment or dismissal based on their part-time status, so it's a central core issue. And whether or not the employer can objectively justify whatever treatment they meet unto zero-hours contractors/part-time workers, can they objectively justify that treatment?

And so yes, there is a degree of risk assessment in this. The associate lecturers against lecturers case is an easy comparator to make because the broad characteristics of their job were about lecturing. And then the fire fighters case was broadly comparable because it was about fighting fires. So the central tenets and the broad characteristics of the contract were the relevant issues there, not the hours. People tend to get fixated about the hours or lack thereof or the unknown quantity of the hours. That's not the issue here. The issue with regard to part-timers is about whether or not it's the same type of contract. And the EAT said yes, it is.

Scott: And so for a number, maybe, of the listeners out there, that might include supply teachers, people who are brought in to grit roads, those types of things where you've got people on a bank system. The health service, for instance, would be wide open to this, where they have people on a list and they bring them in from time to time, but there's no guarantee of hours. Those people there are part-time workers and therefore, if they can find somebody, like whether you're a nurse or a care assistant or whatever, they've clearly got someone whose main job is to do that. So you would have to look deeper into the contracts to see do they only do one or two functions of that comparator.

Mark: Absolutely.

Scott: Or if they do broadly the same job, they're comparable, and they can say we want the same terms, the same breaks, the same everything.

Mark: Absolutely. And fundamentally, this has the potential — now, I say this very loosely — it has potential to sort of rewrite the rules with regard to how you contract staff and the work that those contracted staff do. Unless you're putting in the counter-argument that these individuals are clearly independent contractors, they don't have worker status, and that brings you into the whole ballgame with regard to Taylor and the litany of gig economy cases that we've seen go through the courts in the last 12 months.

Kocur v Angard Staffing Solutions

Scott: Okay. So we'll be coming back to one or two of those gig economy cases later, but for now, let's look at one which is not unrelated. Instead of zero-hour workers, it's agency workers, and it's Kocur v Angard Staffing Solutions. So this is where agency workers can argue for separate rights where they feel there's a detriment. Up until now you would have said, "Look, you broadly get the same as an agency worker," to your compared full-time retained worker, or whoever that happens to be. This case here seems to be saying you can split those elements up and the agency worker can cherry-pick, if you like, the ones where they feel there's detrimental treatment.

Mark: In essence, what the Agency Workers Regulations 2010 and 2011 in Northern Ireland didn't tell us was in terms of when you're conducting the comparator exercise, whether or not the agency worker can compare on a package basis, and the argument then being you get paid a higher hourly rate to compensate you for other terms of the contract that are less favourable to the full-time comparator.

The EAT has said for the first time, said no, that's not how the comparative exercise has to be done. It has to be done on a term-by-term basis. So where this individual is only getting a 30-minute paid lunch break as opposed to a full-timer getting an hour-long paid lunch break, and this individual is getting 28 days' leave as opposed to 30.5 for a full-time comparator, the argument then was that this individual should be able to, like you say, cherry-pick up, about their paid lunch and their annual leave, and say I should be entitled to the same thing as a full-time comparator.

But the important thing to remember about the Kocur case is it was a non-Swedish derogation context case. So in other words, after the 12 weeks, they were able to make this comparative exercise. He wouldn't have been able to do that in a Swedish derogation context because it effectively says all rules with regard to pay and working time are off the table. This case is made more significant now in GB by virtue of the announcement last week to say that in April 2020, the Swedish derogation provision will be scrapped.

So come April 2020, this case will be given greater focus because after 12 weeks, people will be able to say, "I know I get paid £10.50 an hour as an agency staff member, and this individual, full-time comparator, gets £9.60. But that's to compensate me for the insecurity of being an agency staff. It's not to overcompensate me for me for having less favourable lunch breaks or less favourable annual leave provisions."

Scott: And of course, those Swedish derogation rules still apply in Northern Ireland and are likely to still apply, but because there's no Stormont executives there to bring in the legislation. It's unlikely, I suppose, that we're going to see new employment legislation brought in under the Bradley Act.

Mark: It's unlikely unless there has been some part, for example, early conciliation under the Employment Northern Ireland Act 2016, which nearly reached the point of the green light being given for it to be legislated for other parts, like regulation of zero-hours contracts, for example, and other component parts that didn't get that far, it's we're unlikely to see because it didn't get that political support just before the assembly dissolved.

Scott: It's particularly important in this case for people who have interest in GB as well because there will be many more workers who will be covered by that. But what that means is you could end up with a situation where agency workers get paid more than everybody else, but also have the same terms and conditions. But of course, the part-time worker and the agency worker regulations are one-way claims. The full-time employee can't complain about the situation, unlike the one who's suffering the detriment in the first place.

Mark: Indeed, indeed. It's one-way legislation.

East Kent Hospitals University NHS Foundation Trust v Levy

Scott: On to the next case, which is East Kent Hospitals University NHS Foundation Trust v Levy. It's about ambiguity in resignations, isn't it?

Mark: It is, it is. And I think the key issue is to reflect on that the context informs everything. So a letter given by the employee to the employer giving one month's notice was not automatically, and what the EAT said, it shouldn't be automatically assumed to be a letter of resignation. Context has to inform everything.

So in actual fact, what the letter was, it was an indication that the individual employee intended to take up another post in another department within the same trust. So it was an intention to leave the role, not the job. Because the employer hadn't done their due diligence with regard to checking that this is what the individual meant and follow up with termination forms and protocols associated with outstanding leave, etc., then when they argued that he was effectively resigned and dismissed, his argument was no, no, no, the context of what my letter of intention was to leave the role, not the post.

So then I think the salutary lesson to take out of this case is the word "notice" does not always automatically mean notice of intention to leave and resign. It could mean notice, in this case, to leave that particular post to take up another post.

Scott: So it's a kind of early-warning indication. So the lesson for employers here is if anyone resigns, just double-check that that's what they want to do.

Mark: Yes, because you don't want it coming out in an exit interview or in this particular case, you don't want it coming out when papers are lodged at a tribunal saying, "No, in actual fact, I've been dismissed. I didn't resign."

Various Claimants v WM Morrisons Supermarkets

Scott: The next case that we're going to deal with is Various Claimants v Wm Morrisons Supermarkets. We've mentioned this case before. It probably would have been my number one case. At the end of the year, it's probably going to be yours, when it goes on. This is about employers being held liable for criminal acts of disgruntled employees. In this case, it was an accountant who put up private information on all the employees in Morrisons, or 100,000 of them, anyway, on the internet. So tell us more.

Mark: It harked back to the Bellman case in the sense of Morrisons have been going through the wringer, really, through the courts in recent years. And because of the Mohamud case and the new set of rules on vicarious liability, of like this notion of this connectivity in the field of activities, Morrisons lost the case at the Court of Appeal, where this disgruntled employee had access to the information in his full-time job on an encrypted USB, but because he was disgruntled, took the information home on a personal USB, uploaded it onto his personal computer under a colleague's name, believe it or not, and downloaded the information on a Sunday afternoon to these file-sharing sites on the website and the question at the heart of it was, was it fair, was it just to hold Morrisons liable for this? In days gone by pre-Lester times 18 years ago, you clearly would have said this individual was on a frolic of his own. It took him outside the scope of his employment, and therefore personally liable. Now, through the lens or prism, if you like, of Mohamud v Morrisons, there was sufficient connection between the work that he was doing, because he had access to this information, and the field of activities to suggest that Morrisons hadn't done enough.

Morrisons couldn't argue that they'd complied with the Data Protection Act because the Data Protection Act doesn't address the issue of vicarious liability. The employees' complaints were not only was there a breach of data protection, but there was a common law misuse of personal information and an equity-based case for breach of confidence. This was the largest civil suit — class action, if you like — taken in this context for a data breach. And remember, all of this predates GDPR. If this case had have happened in a GDPR context, Morrisons may well have been out of business at this stage if they had been hit with a fine.

So the key issue was whether or not it was, from a social justice perspective, it was fair to hold Morrisons liable. Court of Appeal said yes, this case was going to the Supreme Court. You're right, arguably, [there's 00:21:45] number one case. It will probably, I'll pre-emptively say, it'll be my number one case this year, 2019, if the case goes against Morrisons because if the Supreme Court says yes, it was right to hold you liable, effectively now, the control mechanisms, the risk assessments that an employer will have to do in the context of a data breach will be so much more stringent, it'll make GDPR look like a walk in the park.

Scott: So if we just take a step back, the previous case of Mohamud v Morrisons was where an employee came out of the filling station, pulled a man out of a car, a customer out of a car, and beat him up, and Morrisons were held liable for that. It seemed extreme at the time, but hey, it's sufficient connectivity, and that's fine.

In this case here, you've got another criminal act, where an office-based worker, disgruntled, puts stuff on the internet and the employees are damaged because of that and the employees can sue the employer as a result. On top of that, under the GDPR, because data protection — when we were chatting earlier you mentioned that, and you called it "the new oil." This is where the money is. And we saw yesterday the case against Google, where in France there was a €50 million fine against Google in France, which presumably they'll appeal.

But nonetheless, you can see the trend, that there are big dangers there. So employers are going to be held liable so long as there's a connection. It's almost impossible not, for instance, to give an accountant access to the payroll. It's almost impossible to have an employee who works in a forecourt not have the ability to leave the office and go into the forecourt. So what do they do?

Mark: It's a good question. I don't think you're ever going to be able to argue about breaking this sufficient connectivity argument. I think the argument for employers from a risk assessment perspective lies with the field of activities. So the things like the time line, the measures that already were in place to prevent these sorts of things happening, will all be taken into consideration.

I've spoken to a few IT professionals who would say in days gone by, if the organisation had ISO 27001, the IT Kitemark, that would be enough to placate the worries of, say, for example, insurance companies to say, "We're happy to insure you against data breaches because you have this Kitemark in place." Now, as a result of this, and especially if Morrisons loses at the Supreme Court, the question will be are these becoming uninsurable risks and does the employer need to do more?

Because the reality was this individual was able to download the information onto a private USB. So are we now entering into an era where organisations are going to have what's referred to as clean rooms or technical rooms where there are no USB ports, there are no personal devices allowed in and out of the room, there are limitations on what can be emailed, etc., as attachments. These are the extreme measures we're going to.

I think these were going to be around the corner with GDPR anyway. I think they've just been heightened as a result of the Morrisons data breach case.

Scott: It's getting a bit like Formula X with Coca-Cola, where nobody has the full formula, or something like that.

Mark: Sure.

Scott: You can only have a little bit here, and then one man goes in and deals with a little bit of data and then somebody goes in and deals with another.

Mark: Absolutely. It's a single point of failure argument. You'll always get that. That's certainly going to be part of it in an IT context because you've so many individuals who have access potentially to this information that it's now about putting new controls in place, even more stringent, and even more at the behest of insurance companies who are saying, what your general-purpose business insurance is no longer going to cover you for this.

Scott: Well, we'll fill the first question in. Thank you very much. Oh, stay anonymous, by the way. In relation to Bellman and Northampton Recruitment, would you recommend, Mark, training line managers around expectations on their behaviour — line managers, now — at work events and the after-parties or after-party parties, and how to handle team issues in these settings?

Mark: I don't think there'd be any harm in doing that. I don't think there's any harm in doing that. Many employers who have come to us, to the Labour Relations Agency, unfortunately, come after the event, and there's been a salutary lesson learned about fighting or inappropriate behaviour at one of these functions. They're mostly in the actual endorsed, tacitly endorsed Christmas function by the employer, not so much the after-party. I think you could probably cover both aspects in any training rather than have it specific to after-party party provisions. I think behavioural expectations of line managers…

Scott: It could be a training course or anything else. What do you do after the training course is finished and you're based in a hotel?

Mark: Absolutely, and I think it's important to sort of say where the limitations are. Line managers are always concerned that they never leave their line manager hat at home, even if in a social event. But if you take someone who's in a training course in London or whatever, you're still an ambassador for your employer even though you're off-site and you're maybe technically on your own time. You have to look at it in terms of how that can be viewed as an outsider looking in.

Scott: And the lesson of Bellman is the more senior the employee, the more likely it is, presumably, that the employer will be held vicariously liable, or it will be an extension of the workplace. Because if the big boss is saying, "Let's go for more drinks, let's go for more drinks," it's clearly an extension, if you look at that one.

Mark: Yes, because Bellman would suggest that people felt obliged to do it because of the seniority of the individual. How far down the line that extends, we don't know, and we're not scaremongering here. There are fact sensitivities attached to this case. But nonetheless, it still opens the potential for vicarious liability.

Scott: Okay, thank you for that question. If you have anything else, send them in. If we can't deal with them here, we'll pass them on to Mark and we'll get something out in writing to everybody later on.

Jet2.com v Denby

Jet2 v Denby. This is a trade union membership case and a sneaky route, I suppose. This is about trade union recognition rather than employment law as such, so tell us about that.

Mark: It's a circuitous route.

Scott: Circuitous route.

Mark: Yeah. Well, it's well-established law. It's trite to say, it's unlawful to refuse a person employment because he is or she is or is not a member of a trade union. The provision with regard to prohibiting discrimination for trade union activities only applies to existing employees. Now in this case, Mr. Denby was a prospective employee. He had worked for Jet2 before, but worked for another few airlines and then came back and reapplied.

And effectively, the argument that was put, and the EAT accepted it, was the reason that he wasn't appointed to Jet2 was due to his trade union membership. The argument then that came back was well, look, membership is just you're a member or you're not a member. It's a very binary construct. The EAT said no, it's not. The interpretation of the word "membership" should be broad enough to encapsulate activities associated with it.

In this particular case, where Mr. Denby had been advocating trade union representation, specifically BALPA, the pilots' trade union, in the workplace. And this was an activity which was incidental to membership, and the EAT said that's broad enough, the term "membership" is broad enough to cover activities which are incidental, too. And so his argument, even though he wasn't an existing employee, his argument was successful to say he didn't get employed because of his trade union membership. It's quite an interesting take on the word "membership" because it's broader than we'd normally expect.

Scott: So he didn't have to be on a blacklist. There is blacklisting legislation in Northern Ireland and GB, where you're not allowed to discriminate, effectively, against people on this list because they're trade union activists. But that wasn't the case in this case. It was because he'd previously been an activist. Then his protections continued when he reapplied for a job.

Mark: Absolutely. And that's the essence of it, because in order to be protected by blacklisting, which would have had the same effect, the blacklist has to exist. It has to be compiled and disseminated and he has to be on it. He wasn't. The employer knew of his trade union activist roles in the past, and that was the basis of the decision. So it is, it's a de facto blacklisting without the presence of a blacklist, and that's how the EAT interpreted the word "membership," as a non-binary construct.

Scott: Okay. So it's due for appeal, this case, in February. We'll wait a month and see how it goes.

Mark: It's worth coming back. We don't see trade union cases coming through that often, but 2018, there were a lot of cases, and they're worth looking at because many organisations in Northern Ireland have trade union presence.

IWGB v Roo Foods (Deliveroo)

Scott: Well, let's continue with the trade union presence here, and this is the Independent Workers of Great Britain v RooFoods. This is a Deliveroo case, where the trade union was looking for recognition, and it's the one case that doesn't seem to have gone the way of the workers.

Mark: No, indeed. In 2018 there were about 10 what we call gig economy cases taken at various levels throughout the tribunal and the EAT and GB. And effectively, you're right. What happened in this particular case was that this case was taken through the Central Arbitration Committee, which is equivalent to the Industrial Court in GB. And effectively, the argument was we want to have collective bargaining rights for delivery riders because we are "workers."

The argument that was put forward here was well, no, you're not workers because there is a very clear and arguably watertight clause in your contract that gives the individual an almost unfettered right of substitution, which effectively meant that a delivery cyclist could subcontract out all, part, or some of his or her work to someone else without penalty and without informing Deliveroo that they were doing it.

And that particular, and the operation of that clause — which was only brought into effect in 2017, it has to be said — effectively meant the delivery cyclists were independent contractors, not workers, and if they weren't workers, they couldn't get collective bargaining recognition to form a trade union because they didn't have worker status.

The other cases that all went towards, in favour of the workers were primarily based about the misclassification of individuals as independent contractors, were all of them workers and through a variety of tests, these individuals were found to be workers. So cases like Uber, which is a full-time profile one, but other cases like City Sprint and Hermes, Addison Lee, and all of those courier-based companies effectively lost the argument that their drivers, their delivery people were workers and not independent contractors.

Scott: Now, there's a number of people listening may well use contractors for some kind of basis. Might be delivery, it may be supplies, maybe in the back end of things. So what should they be doing here? Is it looking at the construction of the contract? Because presumably in this particular case here, Deliveroo lost control.

So if you're one of the Deliveroo cyclists and you didn't fancy going in that day, you could have got me to cycle. I don't like to cycle, by the way, so it would be a really silly move. I've never had a bike in my life. But anyway, you could have gone to me or Arnold here, and you could have said, "Here, you deliver pizzas today." But Deliveroo presumably have no control over whether you get a quality cyclist or a safe one or whatever, unless there's something in the contract that…

Mark: That's right. You relinquish that degree of control, and the price of that is that the individual is classified clearly as an independent contractor, because the fact that it was virtually an unfettered right of substitution meant that that was a de facto ability to subcontract the work without informing Deliveroo and without penalty for doing it. Many of these other clauses will have the ability to maybe swap a shift, which is not the same as unfettered subcontracting.

So you're right. I think what employers need to do is look at the actual paper. And we've been saying this from the days of Autoclenz v Belcher, which is a lead authority on this, that tends to be a lead authority in this area, is does the paper reflect the practice? Because if your contract is a very finely worded, albeit choreographed document that doesn't reflect the practice, the tribunals now must, as a result of Autoclenz v Belcher, lift the veil of the contract and say let's see what happens in practice. And this is where many of these organisations are finding that they have misclassified the individuals, because the paper doesn't reflect the practice.

Scott: Now, this one was a Central Arbitration Committee. In effect, if it had been in Northern Ireland, it would have been taken to the Industrial Court. It wasn't like the others that have gone through tribunals or civil courts. There is another case that came up here. Again, it's part-time workers. They've come up a lot. These cases, most of the cases this year are about worker status or part-time status or agency status.

Brazel v Harpur Trust

We have another one, which is Brazel v Harpur Trust. This is another Employment Appeals Tribunal, so it's an English case. It's not setting precedent here, but it will be taken into account. It's about part-time workers may receive proportionately greater holidays. Again, it's a reflection of what we've been chatting about today, that the individual part-timers can end up better off proportionately than the full-time workers, and there's nothing the full-time workers could do about that, so what about this case? What's important?

Mark: The focal point here is about how you calculate in a zero-hours term time-only context what holiday pay is, how is it calculated. And this has been an ongoing bugbear for the 20 years there's been Working Time Regulations have been in place. If you want to give that Brexiteer a reason why you want to leave the European Union, look at the Working Time Regulations. It is because it is a minefield, especially with regard to paid holidays. Every year seems to throw up a new case.

And you're quite right here. At the heart of this case, the employer provision of paying 12.07% of annual earnings as a basis of the holiday pay was deemed to be inappropriate. The argument that the term-time teacher said effectively was oh no, I should be paid in accordance to the domestic legislation that says in the 12 weeks in the run-up to when I'm taking my leave, you backdate that and you calculate the holiday pay based on that.

So rather than, in this particular case, her receiving the 12.07%, she would have received 17.5% by comparison. And the employer tried to argue well, no, that would mean that you'd be getting paid more for holiday than a full-time comparator. The EAT said that doesn't matter. The legislation wasn't designed to prevent part-timers or zero-hours workers or whatever receiving a windfall by virtue of how the domestic legislation is calculated.

So the 12.07% route, it has to be said, is used by many employers. And it's because there was a lacuna or a gap in the legislation about what a week's leave was under the Working Time Regulations compared to a week's pay under the domestic legislation, that clash between domestic and European legislation caused all sorts of problems.

So you have many employers in the last 20 years who have been coming up with various ingenious methods of determining pay for the purposes of the Working Time Regulations. And sometimes it's dictated by how frequently some people are working and their work pattern. So a lot of employers are still using rolled-up holiday pay. A lot of employers are still using 12.07% of annual earnings. A lot of employers are using different term-time, only pay comparator, entitlement calculations.

We saw just before the end of the year a settlement by Greenwich Royal Council where there were 23 different variations, potentially, of how zero-hours workers who were working term-time only could have their holiday entitlement — that's the days rather than the pay — calculated.

If you take into the mix that and voluntary overtime, what's irregularly achieved and regularly worked, you can see that the case law is so volatile in this area that pay, overtime, entitlement, term time-only context has just made this a nightmare for employers to try and actually work out what is a holiday entitlement and how should we pay them.

Scott: So anyone out there that's got part-time workers . . .

Mark: Term-time only and zero hours particularly, yeah.

Scott: Or anyone that is doing lots of overtime, start recalculating. And again, it goes back to the same principle, that a part-timer can be better off. The legislation was brought in to stop detriment. It wasn't there to stop somebody being better off. And the fact is that if a full-time worker ends up comparatively worse off, if you like, there's nothing much they can do about that. It's the part-time workers and the zero-hour workers and the agency workers that were given protection under the legislation.

Mark: Absolutely. That's what it was designed to do.

Kostal v Dunkley

Scott: Okay, two cases to go. Kostal v Dunkley. This is another trade union rights, and it's due to be heard or the appeal is due to come up in April. So tell us about this case.

Mark: This is interesting because in industrial relations, certainly in the Labour Relations Agency, you can see where the potential for this sort of thing to happen. It happens all the time, where effectively a pay deal is put to the trade union. Trade union don't endorse it or put it to the membership and the membership don't endorse it and the employer gets frustrated at that and effectively, in this particular case, circumvents the collective bargaining machinery, approaches the employees directly to say you should accept this offer, and in this case, put the threat of the Christmas bonuses maybe not being paid along with it.

And the question here, of the crux, even though it was a one-off offer with an inducement, which was effectively saying, "Or else the Christmas bonus goes out the window," it was enough to be deemed to be an inducement under the legislation, and therefore the circumvention of the collective bargaining machinery was deemed to be an infringement of the law. And that law was effectively designed to prevent employees having being made subject to an offer to sacrifice some core trade union-related rights.

Scott: And what should employers do, other than not do it?

Mark: Well, yeah, it's don't get frustrated that the outcome of your pay bargaining, if your pay round come up towards April and so people will probably be in the middle of their pay rounds now, in the early stages of it. So if it goes out to a vote with members and it doesn't go their way, employers shouldn't get frustrated and feel the need to bypass the past the trade union collective bargaining machinery and make direct offers to employees.

Because even though it's a one-off and it didn't dismantle the collective bargaining machinery, it was enough to warrant an inducement. So that now defined per employee over between a half-thousand pounds, which collectively came to around £425,000. So it's a salutary lesson not to get frustrated about how your pay negotiations are going and don't circumvent your collective bargaining machinery and bypass the union.

Scott: So you better go off to the Labour Relations Agency and seeking some kind of conciliation, Mark…so hopefully, yes, for the LRA.

Pimlico Plumbers v Smith and Anor

Our last case, just before we close, is your number one case, which is Pimlico Plumbers Ltd and another (Appellants) v Smith (Respondent). And this is to do with, obviously, fairly well-paid gig economy workers, which caused a bit of a stramash, as they say.

Mark: I said many practitioners were unsurprised at the outcome. This was the highest-profile gig economy case because it went to the Supreme Court. You're quite right. The Pimlico Plumbers are not people who are living on the National Minimum Wage. These guys are not breadline employees. But at the heart of it, things like four weeks' paid holiday and their right to it could fundamentally rewrite the business model under which they were operating.

The argument, again, and it's back to this issue about paper against practice, the argument that the employer said was well, these guys are independent contractors, they're not workers. But the reality was, as established by Mr. Smith in this case, that the principle was that he was always going to be what's referred to as a "limb b worker," and he would have been entitled to those four weeks' paid holiday.

The interesting thing was it cross-cuts a lot of the other gig economy cases because it simply wasn't just about control. It was how integrated the workers were into the workplace.

Scott: So they were. They drove Pimlico vans, and they wore Pimlico uniforms.

Mark: They had branded vans. They wore uniforms. They had to contact the control room. They were tightly controlled with regard to what sort of payment and provisions that could be placed, which that sort of betrayed that, the freedom the contract as such, an independent contractor would have.

Scott: And even substitution was very limited. It’s another qualified guide, basically.

Mark: It was. And effectively what was, it was a shift swap, because it wasn't about, unlike the delivery cyclists, it wasn't an unfettered right of substitution. This was just about reorganising maybe somebody else to come, but didn't break the personal service requirement, which meant that Pimlico Plumbers were clearly workers.

The dominant feature of that was that it was a contract of personal service and because of that tight control — the uniform, the van, the tracker, the identity card, the admin functions, the control room, payment restrictions, the contract itself talked about wages and gross misconduct and dismissal, and they even had a raft of post-termination restrictive covenants in it — all pointed towards at the very least, worker status, if not employee. So when the result came out from the Supreme Court, not that many practitioners were surprised. But it was number one because it was certainly the highest-profile gig economy case, and it was indicative of how the superior courts were filling the policy vacuum with regard to this type of modern employment practice, with the government are preoccupied with Brexit.

Scott: So a final lesson for employers on this one?

Mark: Make sure the paper reflects the practice. Don't choreograph or construct a document that's designed to effectively misclassify the individual because effectively, the law, as a result of Autoclenz v Belcher, the tribunals and courts must, I repeat, must look at the practice, not simply what the parties agreed in paper.

Scott: And not the sign that they're doing that on employee status. They would do that with any contract and any contractual argument. They'd look behind it to see what actually happens in practice.

Mark: Absolutely. Absolutely.

Scott: Okay, thank you very much, everybody. We're about to close now. If you do have any other questions, you want to send them to me, scott@legal-island.com. If there are any other webinars you think we'd like to cover, that's grand. Of course, we'll be back on the first of February with Seamus McGranaghan from O'Reilly Stewart. So if there are any questions you want on that one, you can log on, go to the events page of Legal Island.

Just before we go, of course, you can see up on your screen that there's a little ad there for a thing that the LRA's doing up in Derry-Londonderry with Invest Northern Ireland and the Council up there. It's a breakfast employment networking event, so you can come along and fact-find about how they can do. We spoke earlier about how you go to the LRA if you're having a collective dispute and you've got concerns about that. You can obviously go there for individual things. There's mediation, there's setting up contracts. There are all kinds of advice and services you can get from them.

So if you've got any employees or you're up there and you're looking to expand or you know any businesses up there, try and get them along. So the 30th of January, it's in Ebrington Square, which is a lovely spot, just next to the Peace Bridge. So hopefully you can get along to that, and you can log on through the LRA website or the eventbrite.co.uk.

So thank you very much for listening. You can catch us again shortly. Bye-bye.

Mark: Bye.

This article is correct at 22/01/2019

The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.

Mark McAllister
Labour Relations Agency

The main content of this article was provided by Mark McAllister. Contact telephone number is 028 9033 7403 or email Mark.McAllister@lra.org.uk

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