Newsletter July/August 2018


The summer heat appears to have stoked the fires burning in the bellies of our legal decision-makers, as there have been a number of important and interesting cases in the last couple of months.

The most important is the Mencap decision reported immediately below, which will come as a great relief (pending an appeal) to care providers in particular, who rely on employees sleeping in the same building as their workplace.

I also continue the long-running theme of overtime and holiday pay, as well as TUPE, unfair dismissal qualification, whistleblowing, and really to whet your appetite, a case regarding the philosophical belief in the sanctity of copyright law. And at the end there’s a bit on Brexit, just in case you thought I was not interested in it.

Darryl Evans
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National Minimum Wage - time spent asleep

In the connected cases of Royal Mencap Society v Tomlinson-Blake and Shannon v Rampersad (t/a Clifton House Residential Home) (2018 EWCA Civ 1641) the Court of Appeal has held that care workers who were required to sleep at, or near, their workplace, and be available to provide assistance if required, were available for work rather than actually working. Consequently, only time spent awake in order to work should be counted as working time for the purposes of calculating the National Minimum Wage.

The Court considered that a number of previous cases had been wrongly decided. The wording of the National Minimum Wage Regulations, which state that a worker is not working if they are asleep with sufficient sleeping facilities being provided, should be taken literally.

Apparently, the claimants, who are care workers required to sleep in their employer’s premises and to attend to the needs of residents whenever necessary, are intending to appeal to the Supreme Court, so this particular story is not over yet.

Overtime/holiday pay - again……

Flowers and others v East of England Ambulance Trust (UKEAT/0235/17) continues the theme that overtime needs to be reflected in an employee’s holiday pay if it is sufficiently regular so as to be regarded as part of normal pay.

Mr Flowers and his colleagues worked two kinds of overtime. The first was classed as ‘non-guaranteed’ overtime, which was payable when employees were not able to leave work at the end of a shift because they were in the middle of a task which had to be completed. The second was ‘voluntary’ overtime, where employees volunteered for overtime shifts. Both types of overtime were irregular.

The Employment Appeal Tribunal (EAT) held that overtime should be taken into account in holiday pay if it was sufficiently regular and settled. Sadly, there is still no guidance as to what that means, and no further certainty over the reference period on which to base the calculation.

TUPE - relocation abroad

The first of two TUPE cases I cover in this edition concerns the not uncommon scenario of a transfer of business or activities from a UK operation to one based abroad.

Mr Zeb was employed by Xerox UK Ltd in Yorkshire, but was informed that the business in which he worked would be transferred to a Xerox operation in the Philippines. This amounted to a TUPE transaction, but as the business was ceasing in Yorkshire, the employees would become redundant.

Two alternatives were put to the employees. One was to leave under a settlement agreement with an enhanced redundancy package. The other was to take a role in the Philippines on local terms and conditions.

Mr Zeb argued that he should be entitled to transfer to the Philippines on his UK terms and conditions, but the EAT held that he was not so entitled.

TUPE only operates to maintain an employee’s terms of employment, and one of those terms in this case was that the employee worked in Yorkshire, not the Philippines. Therefore, although it was reasonable to offer a role in the Philippines as an alternative to redundancy, it was not necessary to maintain the same terms and conditions as applied in the UK. Common sense, it must be said, prevailed. (Xerox Business Services Philippines Inc Ltd v Zeb UKEAT/0121/16.)

Five-month cessation of activities did not preclude TUPE transfer

The contract to operate a Spanish music school ended, some time after the staff there had been dismissed. Some five months later the service was resumed by another contractor, which refused to take on any of the dismissed staff.

The European Court of Justice (ECJ) found that there was potentially a transfer of an undertaking. The economic activity in question was an asset reliant one and the new contractor used the same premises, instruments and resources. Three of the five months between the services were the summer holiday period when the music school would have been closed anyway.

However, the ECJ went on to decide that the employees’ dismissals were probably for an ‘economic, technical or organisational reason entailing changes in the workforce’ (meaning in UK parlance that they could be fair). For reasons particular to this case, the dismissals of the employees had taken place well before the date of the potential transfer, and indeed before the outgoing contractor’s contract ended. It was impossible for the new service provider to pay its staff. Both of these factors were relevant to the legality of the dismissals.

The circumstances of the case were unusual, but the key message for us all is that a gap of five months between the end of one service provision and the start of another does not rule out there being a TUPE transfer. (Colino Sigüenza v Ayuntamiento de Valladolid and others Case C-472/16).)

Whistleblowing - factual content of disclosures

In Kilraine v London Borough of Wandsworth (2018 EWCA Civ 1436) the Court of Appeal considered the sometimes difficult question of whether information reported by an employee amounts to a protected disclosure.

For a person to be protected as a whistle-blower they must disclose information which, in their reasonable belief, tends to show that one or more of six specified types of malpractice has taken place, is taking place or is likely to take place

Ms Kilraine made allegations that the Council had failed in its legal obligations towards her in relation to bullying and harassment, as well failing to provide adequate managerial support over a safeguarding issue. She said that there had been “numerous incidents of inappropriate behaviour towards me”.

The Court held that in order for information to amount to a protected disclosure it could be what might be termed an ‘allegation’, but that the allegation must contain “sufficient factual content and specificity”.

Here the information was not sufficiently factual to demonstrate a breach of any legal obligation or any of the other relevant failures referred to in the whistleblowing legislation, so the disclosure was not a qualifying one.

Unfair dismissal – two years’ service

Under the Employment Rights Act 1996 an employee is not normally entitled to claim unfair dismissal unless they have reached two years’ service with their employer. However, if an employee is dismissed without notice for anything other than gross misconduct it is necessary to add on to their period of service their statutory entitlement to one week’s notice.

What this means is that if an employee’s two year anniversary is due, for example, on 7th August, but they are dismissed without notice (even if they are paid in lieu) on 2nd August, they will have achieved the two year qualifying period and will be able to make an unfair dismissal claim. However, if the employee is dismissed for gross misconduct, the extra one week is not added on.

The employer in the case of Lancaster and Duke Ltd. v Wileman (UKEAT/0256/17) was saved by this proviso. Ms Wileman was dismissed two days before her two-year anniversary, but because she had been properly dismissed for gross misconduct, she was not entitled to the statutory one week’s notice, did not therefore achieve two years’ service and was not entitled to claim unfair dismissal.

The advice in all cases is never to dismiss as late as the last week of an employee’s first two years of employment, though. The company here was relying on justifying summary dismissal to avoid the unfair dismissal claim. If they had dismissed a week earlier it would not have mattered.

Effect of successful appeal on dismissal

In Patel v Folkestone Nursing Home Ltd (2018 EWCA Civ 1689) the Court of Appeal considered the question of whether a successful appeal under a contractual disciplinary procedure effectively rescinds the dismissal.

Mr Patel was a healthcare assistant who was dismissed for sleeping on duty and falsifying residents’ records. His dismissal letter stated that he would be referred to the Disclosure and Barring Service in relation to the second offence.

His appeal succeeded and he was reinstated, but strangely the appeal outcome letter did not refer to the second offence at all. Mr Patel consequently refused to return to work due to his dissatisfaction with the fact that his employer had not dealt with the issue of falsifying residents’ records.

He then made a claim of unfair dismissal based on his original dismissal. However, the court decided that as he had been reinstated as a result of his appeal, his dismissal had disappeared, and so could not be relied on to form the basis of a claim.

The logic behind the Court’s decision was that it is implicit in any contractual right of appeal that the appeal panel has the right to reverse or vary the original decision to dismiss. Therefore, if an appeal is successful, the effect is that both employer and employee are bound to treat the employment relationship as not having come to an end in the first place.

However, the court also held that the employer’s behaviour in not dealing properly with the second offence may well have amounted to a fundamental breach of contract entitling the claimant to have resigned and claimed unfair constructive dismissal. They also took the view that the facts may well support such a claim, and so the parties were invited to make written submissions as to whether Mr Patel’s claim should be successful on this alternative ground.

It is a quirky case, but nonetheless a reminder to consider in advance the consequences of an appeal against a dismissal being upheld.

Discrimination - philosophical belief (or lack of it)

When drafting the provisions in the Equality Act dealing with discrimination in relation to an employee’s religion or belief, did the lawmakers anticipate that an employee would seek the protection of their provisions on the basis of her philosophical belief in the sanctity of copyright law? I doubt it.

However, this is exactly the scenario in Gray v Mulberry (UKEAT/0040/17), when Ms Gray, an employee with less than two years’ service (so unable to claim unfair dismissal), was dismissed for failing to agree a contract of employment which gave her employer copyright over any work created as part of her employment.

Ms Gray was concerned, without any justification, that the contract would have handed copyright ownership of her personal work, which was unconnected with her employment, to her employer. After being dismissed she complained that she had been treated less favourably as a result of her belief in the sanctity of copyright law.

The EAT held that her belief lacked sufficient cogency and that, as she was the only person known to hold such a belief, there could be no disadvantaged group, and so her claim had to fail.

Service company structure was actually an employer/employee relationship

Most readers will be familiar with the approach of engaging with a consultant’s personal service company, rather than the individual consultant directly, to reduce tax and employment law risks arising from a personal relationship.

Bearing that in mind, please take note that the High Court has found that, despite a contract for services arrangement of the type I describe, the true relationship between the parties in this case was of employer and employee. Ownership of disputed source code and related intellectual property was construed accordingly.

Although the parties had not questioned the description of their relationship, the Court examined the law concerning the practice of using service companies in an employment context and expressed concern about the level of artificiality involved. Food for thought. (Sprint Electric Ltd v Buyer's Dream Ltd and another [2018] EWHC 1924 (Ch).)

Disability discrimination - part-time working as an alternative to dismissal

The EAT has held that, when considering whether the dismissal of an employee on long term sick leave was justified, the tribunal should have considered whether part-time working as an alternative to dismissal was a less discriminatory means of achieving the employer's legitimate aim.

The employment tribunal had taken into account the possibility of part-time working in relation to the employee's unfair dismissal claim, but had mistakenly not done so in relation to the discrimination arising from the disability discrimination claim. (Ali v Torrosian and others (t/a Bedford Hill Family Practice) UKEAT/0029/18.)

Brexit and employment law

The Government has, as we all know, released its White Paper: 'The Future Relationship between the United Kingdom and the European Union'.

It proposes that there be no regression in employment laws. That apparently means that no EU based laws will be repealed, so rules with which we are now very familiar such as TUPE, the Working Time Regulations, collective consultation requirements and much of our discrimination legislation will not change when we leave the EU.

Much, of course, depends on what deal (if any) is made on our future trading and other terms, but I still envisage a Conservative government at some point wanting to try to water down some of the EU based rules, notably the extra protections secured by agency workers in 2010.

Meaning of agency worker

It is ironic that, shortly after I wrote my last comment about agency worker rights being vulnerable after Brexit, a case landed on whether a particular employee was or was not an agency worker.

Mr Matei was employed by Brooknight Guarding Ltd on a zero hours contract for 21 months. His contract terms meant that Brooknight could assign him to different sites as they required. In fact, he was generally (although not exclusively) supplied to Mitie as part of their provision of security services to Citi Group.

Mr Matei claimed that he was an agency worker, and hence was entitled to the same basic working conditions as the Mitie staff after 12 weeks' service in accordance with the Agency Worker Regulations 2010. The tribunal agreed, relying on the fact that he had been supplied to work temporarily for Mitie and worked under their supervision and direction.

Brooknight appealed but lost. The EAT concluded that the nature of the work carried out by Mr Matei and whether it was permanent or temporary determined whether he was an agency worker under Agency Worker Regulations 2010, not the type of contract he worked under (zero hours) or the length of his employment. On that basis he was an agency worker. (Brooknight Guarding Ltd v Matei UKEAT/0309/17.)

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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