Newsletter November 2018


No long preamble from me this month. In fact, it has been relatively quiet, so I have taken the opportunity to report on a couple of mainstream unfair dismissal cases which serve as reminders of how flexible tribunals will and will not be on the procedures employers should follow before dismissal.

Darryl Evans
T: +44 (0)7771 725341

Addison Lee drivers were workers

That said, let’s start with a favourite theme of the age – the status of people who work in the gig economy. These cases are all moving inexorably in the same direction.

In this case the Employment Appeals Tribunal (EAT) upheld an employment tribunal's finding that drivers working for Addison Lee were workers, not genuinely self-employed independent contractors. This brought them within the national minimum wage and working time rules, for example.

Each claimant was a private hire driver, who entered into an agreement to hire a liveried car from a company associated with Addison Lee and a separate driver contract. This second contract said there was no obligation for the company to offer work or for the driver to accept. However, a driver had in practice to log into the company’s computerised system and once they did, work was allocated automatically to them. They had to provide reasons if a job was refused and if they did not, there were sanctions in place.

There was, said the EAT, an overarching contract between the company and the driver. Alternatively, during periods when the driver was logged on to the system, there was an agreement to work. The drivers were workers either way you looked at it.

In a reminder of the ‘Autoclenz’ principle of reality prevailing over paperwork, the EAT said the tribunal was entitled to regard the contractual documentation, which characterised the drivers as self-employed contactors, as not properly reflecting the true agreement between the parties. It was legitimate for the tribunal to use a "realistic and worldly wise" approach to determining employment status. (Addison Lee Ltd v Lange and others UKEAT/0037/18.)

Dismissal for failing drugs test was unfair

In Ball v First Essex Buses Limited (ET/3201435/2017) an employment tribunal has held that a 61 year-old diabetic bus driver was dismissed unfairly for gross misconduct when he failed a routine drug test.

The employer determined the test result to be incontrovertible and had made up its mind that dismissal was inevitable in the circumstances. It refused to take account of Mr Ball's own drug test and did not engage with arguments that the company sample may have been contaminated. Its investigation and approach were outside the range of reasonable responses.

It also made the mistake of characterising the situation as gross misconduct (being under the influence of drugs, when in fact there was no evidence of that) rather than more neutrally as failing a drugs test (which could potentially form the basis of a dismissal for some other substantial reason).

There is nothing remarkable in this case, but it serves as a reminder to all employers not to leap to conclusions in even routine cases and give employees a fair hearing.

Misconduct or capability?

In Philander v Leonard Cheshire Disability (UKEAT/0275/17), another unfair dismissal case, the issue was whether it was fair for an employer to treat an allegation of gross negligence as a conduct rather than a capability issue.

Mr Philander, who had dyslexia, managed two residential care homes. When independent inspections revealed issues with record-keeping, he was given guidance and additional training, but was at the same time warned that more failures could result in disciplinary action. Following a further highly critical supervisory report by the Care Quality Commission (CQC) he was dismissed for gross misconduct.

The employment tribunal found that his dismissal was fair but Mr Philander appealed on the grounds that that the case was one of capability not conduct, particularly in light of his dyslexia. The EAT rejected his appeal. The dyslexia had not a "material bearing" on the errors identified by the CQC and Mr Philander’s failure to understand the requirements of his role, having received training and support, meant that the charity was entitled to conclude that what he did (and didn’t do) amounted to gross misconduct.

The EAT accepted that the distinction between conduct and capability can be "paper thin", but this was an example of extreme negligence which could be treated as a conduct issue. It also decided that had the charity treated the matter as one of capability, it would have been entitled to dismiss in light of the training already provided and the seriousness of the failings.

In my eyes this decision employer seems pretty employer-friendly, but it provides succour for those who want to adopt a robust approach in such situations.

Constructive dismissal

Kaur v Leeds Teaching Hospitals NHS Trust (2018 ewca Civ 978) is an instructive case about how the courts will look at a series of actions which lead to an employee claiming constructive dismissal.

As a quick reminder, constructive dismissal occurs where an employee resigns due to the actions of their employer which amount to a serious or repudiatory breach of contract. That breach could be a single serious incident, or it could be a cumulative series of several acts or omissions that, when taken in isolation, would not provide sufficient grounds to resign, but in aggregate are enough. In those circumstances, the employee relies on the last incident as the ‘final straw’ that caused their resignation. But a well-established conundrum for the employee is that they must respond promptly to a breach by resigning in response to it. If they do not do that, they waive the breach and affirm the contract. How does that work where there is a series of breaches?

Ms Kaur’s ‘last straw’ was the rejection of her appeal against a final written warning. The earlier events she relied on included an altercation with another staff member that led to the final written warning and the manner in which the internal disciplinary and appeal process was handled. The time scale was spread out: the altercation occurred in April 2013; the final written warning was issued in October 2013; and the appeal was dismissed in July 2014.

The Court of Appeal concluded that she had not been constructively dismissed. It did not matter that Ms Kaur had not resigned as a result of the original altercation and had therefore ‘affirmed’ the contract. As long as the ‘last straw’ contributes something to the cumulative breach, it effectively revives an employee’s right to resign and allows an employee to rely on the totality of the employer’s conduct to establish their case for constrictive dismissal. However, in this particular case, there was insufficient evidence that the conduct of the processes was a part of a cumulative breach, so her appeal failed.

The case shows that employers will not avoid the risk of a successful constructive dismissal claim simply by operating a prolonged grievance/disciplinary and appeal procedure. However, a well run and robust process may extinguish that possibility.

Is untaken leave lost?

The European Court of Justice has held that a worker does not necessarily lose their accrued but untaken holiday entitlement at the end of the relevant reference period if they have failed to take it.

Whether they do lose it depends on what the employer has done. If the employer can show that it ‘diligently’ enabled the worker to take the holiday before the end of the reference period, for example by giving information as to the holiday and the possibility of its being lost, then accrued holiday could be forfeited.

If the worker has not lost their holiday entitlement, they are entitled to a payment in lieu of that entitlement on termination. (Max-Planck-Gesellschaft zur Forderung der Wissenschaften eV v Shimizu (C-684/16).)

Equivalent treatment of part-time workers

In British Airways plc v Pinaud (2018 EWCA Civ 2427) the Court of Appeal dismissed BA’s appeal against the EAT's decision that a part-time cabin crew purser had been treated less favourably than her full-time comparator in relation to pay.

A full-time purser had to be available for work on 243 days a year. Ms Pinaud had to be available on 130 days - so 53.5% of a full-time purser's available days. However, she only received 50% of full pay.

Guess what: the employment tribunal, said the Court, had been right to conclude that the requirement to be available for 130 days a year rather than 121.5 days (50% of 243) was prima facie less favourable treatment.

The case will now return to a fresh tribunal to determine whether the less favourable treatment was objectively justified. This may involve an analysis of statistical evidence adduced by BA which allegedly shows that the purser worked fewer days pro rata than her full-time comparator, limiting the impact of the less favourable treatment.

These nuanced factors may get BA out of what in fact is quite an expensive problem, but the bottom line in most situations is that part-timers must be treated pro rata to their full time equivalents, not roughly in proportion.

Key things from the Autumn budget

Following the recommendations of the Low Pay Commission, the government will increase the national minimum wage from April 2019 to the following rates:

  • Apprentices: £3.90 an hour
  • 16-17 year olds: £4.35 an hour
  • 18-20 year olds: £6.15 an hour
  • 21-24 year olds: £7.70 an hour
  • National living wage (workers aged 25 and over): £8.21 an hour

The introduction of employer Class 1A National Insurance contributions on termination payments over £30,000 has been delayed until April 2020. Until then termination payments remain NIC-free.

The proposal to extend the public sector off-payroll working rules, making the user of the services of someone who contracts though their own personal service company responsible for an IR35 assessment and potentially liable to withhold tax, will be extended to the private sector from 6 April 2020. The rules will only apply to large and medium-sized businesses, with the existing IR35 rules continuing to apply to small businesses.

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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