Newsletter June 2016


With what might be regarded as a tinge of nostalgia, I start June’s Newsletter with a case being considered in the European Court regarding the racial implications of dress codes. There are also some significant tax developments and a further report about the fairness of charging fees for access to the employment tribunal system.

How leaving the EU will impact employment rights has been the subject of speculation, amongst politicians as well as employment lawyers. As I have said previously I do not expect wholesale change but there could well be some adjustments once the disengagement process has been completed, for example in relation to agency workers, redundancy consultation and working time. I will track and report on any proposals.

Darryl Evans
T: +44 (0)7771 725341

Banning Muslim head scarves

The Advocate General, legal adviser to the European Court of Justice (ECJ), has given an opinion that a dress code banning employees from wearing any visible religious, political or philosophical symbols in the workplace did not amount to direct discrimination when applied to prevent a Muslim employee from wearing an Islamic headscarf.

The A-G concluded that the ban in question, introduced by a Belgian employer, affected all employees equally and that it was not based on stereotypes or prejudice against one or more particular religion or against religious beliefs as a whole.

Even if it did amount to direct discrimination, the A-G’s view was that the headscarf ban could be regarded as a genuine, determining occupational requirement since the employer wanted to demonstrate religious and ideological neutrality. Such a policy was a legitimate commercial choice, given the company’s broad range of clients in the public and private sectors. The imposition of the dress code was both appropriate and necessary for achieving this objective, which could not be achieved by more lenient means.

The A-G noted that, unlike other protected characteristics, such as gender or race, an individual can make choices as regards religious practice and may therefore be expected to moderate the exercise of the religion in the workplace, albeit that the degree of moderation will depend on the particular circumstances.

Since the dress code was capable of putting individuals of certain religions or beliefs (in this case, female Muslims) at a particular disadvantage it may constitute indirect discrimination. However, the factors considered in relation to the occupational requirement exception would apply equally to the issue of justification of indirect discrimination. These included the size and conspicuousness of the religious symbol, the nature of the employee's activity, the context in which she has to perform that activity, and the national identity of the member state.

The A-G’s opinion is not binding on the ECJ, but it is normally followed. The assessment here is interesting legally and, although the ECJ and the A-G are non-political, interesting in policy terms as well. (Achbita and Centrum voor gelijkheid van kansen en voor racismebestrijding v G4S Secure Solutions NV C-157/15.)

Abuse of migrant workers not discrimination

Staying in the same territory, the Supreme Court has considered whether the abuse of migrant domestic workers, owing to their vulnerable immigration status, amounts to unlawful discrimination.

Two Nigerians, both in the UK under domestic migrant visas, were mistreated and abused by their (also Nigerian) employers. After escaping, they won claims under the minimum wage and similar legislation. They also alleged discrimination under the Equality Act, asserting they had been directly or indirectly discriminated against on grounds of their nationality.

The Supreme Court disagreed. It was not direct discrimination because the mistreatment was not due to nationality but to their status as migrants which made them particularly vulnerable and reliant on their employment to remain in UK. Their nationality and their migrant/immigration status were connected but severable things. Nor was it indirect discrimination, because there was no ‘provision, criterion or practice’ applied by the employers.

Baroness Hale, who clearly was understandably sympathetic to the claimants, commented that Parliament might consider whether employment tribunals should have the power to award compensation under the Modern Slavery Act in such circumstances. (Taiwo v Olaigbe and Onu v Akwiwu 2016 UKSC 31.)

Expectation can be a PCP for discrimination purposes

A person is discriminated against if, owing to a protected characteristic such as race, gender, age or, as in this case, disability, he or she is put at a disadvantage by a provision, criterion or practice (PCP) which the employer cannot justify.

In Carreras v United First Partnership Research (UKEAT/0266/15) the Employment Appeals Tribunal (EAT) tells us that an expectation can be a PCP.

After an accident rendering him clearly disabled, Mr Carreras initially worked reduced hours but after a while requests were made for him to work late, which then became an assumption that he would do so on one or two nights a week. The employer would ask him which nights he would be working late rather than whether he was prepared to work any at all. When he objected, there was a heated exchange between him and one of the owners of the business in which he was told that if he did not like it he could leave. He duly did, by resigning, and brought claims of disability discrimination (for failure to make reasonable adjustments) and constructive dismissal.

The expectation that he should work late was sufficient to constitute a PCP. The phrase ‘provision, criterion or practice’ is to be widely construed and need not involve an absolute requirement.

Service provision change

For there to be a TUPE transfer as the result of a service provision change there must have been, prior to the change, an organised grouping of employees, the principal purpose of which was to carry out the relevant activities for the relevant client.

In Amaryllis Ltd v McLeod (UKEAT/0273/15) the EAT decided that the principal purpose must be assessed immediately before the change of provider and not by looking historically.

Millbrook Furnishings Ltd renovated furniture for the Ministry of Defence (MoD) for many years. In 2014 it was unsuccessful in a retender for the services which were instead awarded to Amaryllis.

Millbrook's employees were spending almost 70% of their time on the MoD renovations contract, although none were dedicated to the MoD work.

The tribunal Judge looked back at how the relevant department at Millbrook had been set up in the first place, which was with the specific purpose of servicing the MoD contracts. Although that department now serviced other customers, the MoD was still the largest customer. Based on these factors, TUPE applied.

The EAT said this was the wrong approach. It was not sufficient that a department carries out significant work for a client. It must be organised for the principal purpose of carrying out that work. The relevant time to assess that is immediately before the transfer, not by looking back.

These cases are decided on their facts at it becomes increasingly clear that the simple use of the proportion of time spent by staff on a particular contract is not the correct test.

The Acas code does not apply to ill-health dismissals

That is the conclusion in Holmes v QinetiQ (UKEAT/0206/15).

Mr Holmes was dismissed owing to his ill health. It was accepted that the dismissal was unfair because QinetiQ had failed to obtain an up to date occupational health report. When it came to working out compensation, Mr Holmes maintained that the Acas Code of Practice on disciplinary and grievance procedures applied and that, due to QinetiQ’s unreasonable failure to follow the Code, he was entitled to an uplift in his award (which could have been up to 25%).

The EAT said that the Acas Code applies to all cases where an employee's alleged act or omissions involve culpable conduct or performance requiring correction or punishment – so misconduct or poor performance. It could not see how ill health fell into this category because it did not involve any culpability on the part of the employee.

IR35 in the public sector

HMRC has issued a significant consultation document concerning where individuals offer services to public sector bodies through an intermediary, such as their own limited companies.

The proposal is that it should become the public body's responsibility to operate the IR35 regime. In other words, the public body as user of the services must assess whether IR35 applies to the contractor and his/her company, and if it concludes that it does it must deduct and remit the income tax. This is intended to crack down on what is seen as widespread abuse of the IR35 system and resultant non-payment of tax.

These proposals will not affect the operation of IR35 in the private sector, but they could be a portent of things to come. Contractors will regard them with dismay as it is easy to see the service user taking the line of least risk and deducting the tax in almost all situations and leaving the contractor to argue it out with HMRC over whether IR35 applies or not, in circumstances where HMRC already has the tax.

Payment on early termination of fixed term contract not taxable as earnings

A couple of months ago I reported a case in which HMRC lost an argument about whether a payment for notice was taxable as income or under the more beneficial termination payment rules. Well, it has lost again in a similar case.

Payments made by Tottenham Hotspur FC to two footballers on the early termination of their fixed term contracts were not earnings but termination payments, and, therefore, outside the scope of NICs, said the tax tribunal. The payments compensated for the surrender of rights as part of the abandonment of the players' contracts. They were not from the employment but from its destruction.

HMRC argued that the payments were earnings because the terms of the players' employment contracts provided for early termination by mutual consent so any payment received in consequence of implementing those terms was "from" the employment. The tribunal noted that all contracts can be terminated by mutual agreement and, therefore, such a right arises from general contract law rather than the contract. (Tottenham Hotspur Ltd v HMRC 2016 UKFTT 0389 (TC).)

Tribunal fees

The House of Common Justice Committee has published its review into Court and Tribunal Fees. This is not the government review which was completed in 2015 but has not been published. This current report criticises that delay.

The key findings of the Justice Committee’s report are that:-

  • there has been a significant drop in the number of employment tribunal claims
  • the government's assertion that the drop is largely attributable to the success of Acas Early Conciliation is "even on the most favourable construction, superficial"
  • fees have had a significant adverse impact on access to justice for meritorious claims
  • the 'type A' and 'type B' claim distinction should be replaced as it does not relate to the complexity or length of cases
  • the level of fees should be a substantially reduced
  • the remission system should be overhauled
  • there should be special consideration in maternity and pregnancy discrimination cases

This report is embarrassing for the government, but query whether it will have much impact.

Data Protection Act - confidential information

The Data Protection Act 1998 has recently come to the aid of an employer who reported an infringement by a former employee who had taken with him a list of 957 clients after resigning and joining a competing employer.

The employer believed that the employee was in breach of section 55 of the Act, which states that it is a criminal offence for any person to knowingly or recklessly obtain or disclose personal data without the permission of the data controller (in this case the employer).

Although the Act does not enable an employer to take direct enforcement action against an employee, the employer, as happened in this case, can report the infringement to the Information Commissioner, who can then decide whether or not to take enforcement action.

The IC decided that enforcement action was warranted in this case, which resulted in the employee having to pay a fine of £300, £405.98 costs as well as a £30 victim surcharge. The financial sanctions are not great, but the employee ended up with a criminal record, making a threat of enforcement action under section 55 a genuine deterrent.

Data Protection Regulation

Finally, I am indebted once again to my former colleague Olivia Whitcroft of law firm OBEP who has added a further contribution to this topic as covered in my last Newsletter.

Her view is that, although some employers conventionally seek general consent from their employees to process their personal data, compliance with data protection rules, even as they are now, is best addressed through compliant processing of the data. It is advisable not to regard the employee’s consent as a panacea, even under present laws and certainly under the new regime. The employee usually has no genuine choice in giving consent so it may not be technically valid unless used in relation to a specific optional matter. That said, the request for consent usually also gives information to the employee about the processing of his/her data and that in itself is valuable.

The law in any event allows processing without consent where necessary for performance of the employment contract or otherwise needed for legitimate business interests. Even sensitive personal data can be processed without consent for the purposes of exercising or performing any right or obligation which is conferred or imposed by law on the data controller in connection with employment. Additional care is, however, needed around the use of sensitive data or employee monitoring.

Olivia has written a brief guide to the new Regulation, accessible here.

The information and any commentary contained in this newsletter are for general information purposes only and do not constitute legal or any other type of professional advice. Darryl Evans and Evans Employment Law Limited do not accept any and, to the extent permitted by law, exclude all, liability to any person for any loss which may arise from relying upon or otherwise using the information contained in this newsletter. If you have a particular query or issue you are strongly advised to obtain specific, personal advice and not to rely on the information or comments in this newsletter.

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