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Employment Case Law Update February 2021

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Read on for our monthly digest for employers on upcoming employment law changes and key employment cases that have recently been decided.

 

Employment status

Uber BV v Aslam & Others 

The Supreme Court has upheld earlier courts’ rulings in a landmark decision that confirms Uber drivers are ‘workers’ and not self-employed subcontractors.

The Court unanimously upheld a 2016 Employment Tribunal decision that said drivers are in a “position of subordination and dependancy to Uber“.

While the decision relates to a limited number of drivers who used the platform in 2016, it is set to impact the UK’s wider gig economy and the employment status and entitlements of so-called ‘gig workers’.

Background to the case

Uber BV v Aslam and Others was first heard by the Employment Tribunal in 2016, when two Uber drivers brought a claim against the company for failure to pay them minimum wage and to provide paid leave.

Uber defended the claim on the basis that the claimants were self-employed and not ‘workers’, and as such were not entitled to the enhanced protections under employment law.

The tribunal found in favour of the claimants.

The decision was subsequently upheld by the Employment Appeals Tribunal, the Court of Appeal and finally the Supreme Court.

Legal basis to determine worker status

The Supreme Court judges stated their decision was based on five key points:

  1. The fare price is calculated by the Uber app. Drivers have no control or authoity to charge more. Therefore Uber dictates how much the driver is paid.
  2. Uber’s contracts and terms of service are imposed on the drivers with no scope for negotiation or variation.
  3. Drivers’ choice of jobs are monitored by the app and ultimately constrained by Uber since penalties are imposed if too many jobs are declined.
  4. Uber exerts “significant control” in how the drivers provide their service, eg the passenger ratings system determines if the driver can continue to work for Uber.
  5. Direct interaction between drivers and passengers is purposefully restricted by Uber so as to prevent relationships beyond the individual ride.

 

In effect, when determining employment status, parties should look beyond the employment documentation to consider the reality of the working relationship and whether a “position of subordination and dependancy” applies.

On this analysis, the Supreme Court found against Uber and held that the claimant drivers were ‘workers’ from the moment they switched on their Uber app and were available for work, to the time when they switched their apps off.

Impact of the decision on Uber

As a result of the decision, the 25 claimant drivers have been deemed entitled to claim minimum wage for their entire working day while logged onto the app, and not just while they were engaged carrying passengers.

The employment tribunal is yet to determine how much compensation the drivers will be awarded. They are expected to be entitled to claim for up to two years’ backpay or £25,000, whichever is the larger, at the employment tribunal, and up to six years’ backpay in the county court.

They can also claim 5.6 weeks’ paid annual leave each year.

Importantly, the decision does not automatically afford worker status to all Uber drivers, but is expected to precipitate new claims on similar grounds.

In light of the decision, Uber must now consider its drivers as workers while switched onto the app, affording them entitlements such as national minimum wage, statutory minimum holiday pay and rest breaks, as well as maternity and paternity pay and statutory sick pay in some cases, and protections in areas such as discrimination and whistleblowing.

Impact of the decision on the gig economy

Although the Supreme Court decision only directly applies to the drivers who claimed against Uber in 2016, it sets a precedent for how the millions of gig economy workers are treated and protected in the UK.

Although the judgment does not automatically mean that everyone in the gig economy can be classed as a ‘worker’, it paves the way for similar legal challenges, and provides a precedent that is likely to affect other gig economy employers such as Addison Lee or Deliveroo who employ individuals on a job-by-job basis.

 

Public sector exit payment cap revoked

The statutory cap on public sector exit payments is being revoked only months after it was introduced.

The Restriction of Public Sector Exit Payments Regulations 2020 came into effect in November 2020, placing a £95,000 cap on public sector exit payments.

Following a review of the rules, the government has confirmed that the cap may have had “unintended consequences”, and recognised that regulations carried serious deficiencies.

The cap has now been disapplied with immediate effect following a Treasury Direction while the formal legal process of revocation takes place.

New guidance has been issued stating that it is HM Treasury’s expectation of employers that any employees affected by the cap are to be paid the sums they would have been paid had it not been for the regulations.

The guidance also directs employers to consider exit payments in terms of fairness and proportionality, and states that the treasury is expediting proposals to tackle unjustified exit payments.

 

Harassment

Allay v Gehlen

The Employment Appeals Tribunal has held that an employer cannot rely on “stale” equality and diversity training provided to the perpetrator of harassment and other employees as a ‘reasonable steps’ defence to racial harassment.

The claimant was subjected to racist comments on a regular basis at work. He was dismissed by the respondent after less than a year’s employment on the grounds of poor performance. The claimant then brought a claim for racial harassment by a fellow employee.

The employer defended the claim on the basis it had taken ‘reasonable steps’, as per s109(4) Equality Act 2010, to prevent the harassment. This was in the form of having an equal opportunity policy and an anti-bullying and harassment procedure, and that it had provided relevant training to the perpetrator of the harassment and to other employees.

The training, however, had taken place 2 years and 8 months before the claimant was dismissed.

The EAT upheld the tribunal’s decision and found in favour of the claimant. In rejecting the defence, it held the training had demonstrably become stale, given the racist comments were frequently made and passed off as “banter”, and that managers had failed to take action to deal with the conduct despite being aware of it.

In the circumstances, a reasonable step would have been to refresh the training, which the employer did do with the perpetrator after the harassment.

In practical terms, employers should note that the mere fact of having an equality and diversity policy and delivering inadequate training will not be enough to rely on a defence of having taken reasonable steps to prevent discrimination.

Training must be fit for purpose and effective, and delivered on a regular basis, or specific action should be taken to deliver refresher training if there is indication or reason that employees require further training.

 

Whistleblowing

Dobbie v Paula Felton t/a Feltons Solicitors

In Dobbie v Paula Felton t/a Feltons Solicitors, the EAT considered the proper test for determining whether a disclosure was ‘made in the public interest’, and as such acquired protection under whistleblowing law.

Mr Dobbie was a consultant solicitor at Fentons. The majority of his workload was for Client A. He raised concerns to his employer by email that Client A was being overcharged for other fee earner’s time.

Mr Dobbie’s consultancy agreement was terminated by the firm, the reasons given were that Mr Dobbie had insisted his fees double, and due to competence and handling of a claim for his parents.

Mr Dobbie then brought a whistleblowing claim against Fentons on the basis of the disclosures he had made regarding Client A’s billings.

At first instance, the tribunal held that Mr Dobbie had a reasonable belief the disclosures were of a failure to comply with a legal obligation (charging of clients), but not that he held a reasonable belief the disclosures were in the public interest.

On appeal, the EAT held that while the claimant’s initial intention of the disclosure had been private in nature, it still passed the test of being made in the public interest due to the nature of the disclosed wrongdoing and the identity of the wrongdoer. On the facts of the case, the EAT found that the disclosure was made in the public interest despite having a ‘private purpose’, and as such benefitted from statutory protections.

The decision is a reminder to employers that disclosures with seemingly narrow scope can, depending on the facts, still be deemed to meet the public interest test, in this case giving consideration to the regulatory duties placed on solicitors in relation to client billing.

 

Need assistance?

If you have a question about employment case law and the impact of tribunal and court decisions on your business, DavidsonMorris’ experienced employment lawyers can help. Working closely with our specialist human resource colleagues, we offer a holistic advisory and support service for employers encompassing both the legal and people risks of workforce management. Speak to our experts today for advice.

 

Last updated: 24 February 2021

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