Employment Law Newsletter Autumn/Winter 2016

In this Newsletter, we set out some recent employment law cases and thoughts on what Brexit might mean for workers rights in the UK.

Brexit and its likely impact on UK employment law

With much of UK employment law deriving from EU directives, there has been much discussion on the impact of Brexit on workers rights. The view amongst many employment lawyers, however, is that there will be no impact in the near future and limited impact in the medium term.

Many EU employment protections such as the laws relating to race, sex and disability discrimination, equal pay and the right of return from maternity leave, existed in the UK before European directives with similar protections. For example, the Equal Pay Act 1970, the Sex Discrimination Act 1976 and the Race Relations Act 1977 predate the Equality Act 2010 (which implemented the Equal Treatment Directive) by at least 30 years. The EU directive mirrors pre-existing UK discrimination laws in several respects. It is unlikely that a UK government would rescind rights that predate European laws.

Another reason that the government might be reluctant to repeal employment law protection is that much of it is regarded positively by employers, employees and politicians. Employment rights such as family leave, protection against discrimination and the right to paid holiday are now widely accepted; indeed, rights to family leave in this country go further than required by EU directives.

The impact of the Brexit vote on UK employment law will not be felt for at least two years. The Prime Minister has indicated that the government will give the EU formal notification of the UK’s withdrawal by March 2017, but that timeframe would seem optimistic in light of the recent successful High Court challenge in R (Miller) –v- Secretary of State for Exiting the European Union where judges held that the government’s decision to trigger Article 50 without a parliamentary vote was unconstitutional.

Once notice is given there will be a two year period in which the parties will negotiate terms of departure and possibly put in place new trading arrangements, and the Prime Minister has indicated that there may be transitional arrangements. It is possible that the UK will agree some sort of future trading relationship with the EU, albeit not full EU membership, that requires adherence to elements of EU employment law. This is the case for the arrangements that Switzerland and countries in the European Economic Area, such as Norway, have with the EU.

If and when the UK leaves the EU (and assuming no other restrictions imposed by another free trade agreement), European law will, at least in the short term, continue to apply because disentangling it from UK law will take years. Some EU-derived laws are contained in secondary legislation made under powers given by the European Communities Act 1972, the law that implements EU law in the UK. Other EU laws were implemented through primary legislation, such as the Equality Act 2010. The European Communities Act will have to be repealed in order for the UK to remove the influence of EU law but if it is repealed without anything to replace it, the secondary legislation made under it would just fall away leaving unwanted gaps in the law. To avoid this problem, the Prime Minister has said she will implement ‘The Great Repeal Bill’ which will both repeal the ECA and at the same time preserve all EU law implemented prior to a cut-off date. This will enable a gradual, piece by piece approach with legislation being reviewed over time, and decisions taken on whether to retain, repeal or modify individual laws.

What are some of the likely changes?

Agency Workers

A likely contender for complete revocation is the Agency Workers Regulations 2010. These are unwieldy and unpopular with businesses.

Holidays and Working Time

The Working Time Directive sets out right for workers such as the right to minimum amounts of paid holiday, to working not more than 48 hours a week on average and rest breaks.

The right to statutory paid holiday is now widely taken for granted and is likely to remain post-Brexit. In implementing the EU Working Time Directive, the UK government in fact enhanced the right to minimum paid holiday from the minimum 20 days per annum set out in the Directive, to 28 days.

However, some aspects of the Working Time Directive have proved troublesome and created uncertainty. These include European Court of Justice decisions that commission and some bonus payments should be included in the holiday pay calculation. Also unpopular with businesses are ECJ decisions that holiday continues to accrue during sick leave. The 48 hour weekly limit on working time has also been controversial, despite the derogation allowing employees to opt-out which the government negotiated for the UK. Following Brexit, these provisions may well be modified or repealed.

Discrimination and family leave

For the reasons already mentioned, any wholesale repeal of equality protection or family leave seems improbable. There may, however, be some modifications. It is possible that, following a Brexit, a cap could be imposed on compensation for unlawful discrimination, which is currently uncapped, unlike general unfair dismissal claims where a statutory limit to compensation applies.

Rights to parental and family leave in the UK are a mixture of rights deriving from the EU and rights originating in the UK. UK maternity leave and pay preceded the EU rights. The new right to shared parental leave and the right to request flexible working are both purely domestic in origin. Accordingly, these are unlikely to be repealed or modified.

Transfer of Undertakings

TUPE can be unpopular with transferee businesses, but the principle that employees should transfer when a business changes hands or is contracted out is often useful for business and is incorporated and priced into many commercial outsourcing agreements. For this reason, although there may be some businesses that would like to get rid of TUPE, it seems more likely that the government would make some small changes to make it more business friendly, such as permitting the harmonisation of terms following a TUPE transfer.

Uber drivers are entitled to the national minimum wage and paid holiday

Implications for the Gig Economy

Farrar & Aslam –v Uber

In a landmark judgement, the employment tribunal has held that Uber drivers are entitled to the national minimum wage, statutory paid holiday and other rights as they are ‘workers’ for the purposes of employment legislation including the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998.

Uber’s case was that its drivers were genuinely self-employed, that it is simply a technology platform which puts drivers in touch with passengers and that it is in no way a provider of taxi services. Uber had complex contractual documentation that purported to underpin the relationships between it, drivers and passengers. However, the employment tribunal disagreed, deciding that in reality, Uber is in the business of providing taxi services and engaged the drivers as workers to deliver its business. The Panel of Judges, in colourful but scathing language, held that the contractual documentation did not correspond with reality:

Any organisation … resorting in its documentation to fictions, twisted language and even brand new terminology, merits, we think, a degree of scepticism.

The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our minds faintly ridiculous.

Ms Bertram [Uber’s regional general manager for the UK] spoke of Uber assisting the drivers to “grow” their businesses, but no driver is in a position to do anything of the kind, unless growing his business simply means spending more hours at the wheel.

Reflecting on the [Uber] case, and on the grimly loyal evidence of Ms Bertram in particular, we cannot help being reminded of Queen Gertrude’s most celebrated line: ‘The lady doth protest too much, methinks’.

We are satisfied that the supposed driver/passenger contract is a pure fiction which bears no relation to the real dealings and relationships between the parties.

It is not real to regard Uber as working ‘for’ the drivers … the only sensible interpretation is that the relationship is the other way around.

Needless to say, Uber has appealed the decision.

Workers are entitled to a rest break without requesting one

Grange v Abellio London

Under the Working Time Regulations, workers are entitled to a daily 20 minute rest break if they work at least 6 hours at a stretch. Are they required to ask for a rest break before claiming to have been refused a rest break?

No, held the EAT.

The Claimant was contracted to work an eight and a half hour shift, which included a half hour break for lunch. He was told that, instead, he should work for eight hours without a break, and leave early.

The Claimant made a claim based on section 10 of the Working Time Regulations that he had been refused a rest break, but the employment tribunal held that he had never asked for a rest break and therefore he had never been refused one. The EAT overturned the decision on the grounds that the instruction to work without a rest break could be construed as a refusal, without an explicit request.

Redundancy dismissal unfair where consultation was ‘perfunctory and insensitive’

Thomas v BNP Paribas Real Estate

Is a ‘perfunctory and insensitive’ redundancy consultation likely to make a redundancy dismissal unfair?

Yes, held the EAT overturning the decision of the employment tribunal that the dismissal was fair.

The Claimant had over 40 years’ service, ending up as a Director of the Respondent’s property management division. After a strategic review, the Claimant was put at risk of redundancy, immediately put on ‘garden leave’ and told not to contact clients or colleagues. The Respondent then made a number of procedural errors, including getting the Claimant’s first name wrong in a letter. However, the employment tribunal found that the dismissal was fair.

The EAT quashed the decision, remitting the claim to a different employment tribunal. The EAT criticised the decision to put the Claimant on garden leave and to prohibit contact with colleagues during the consultation period. The EAT found it ‘particularly troubling’ that the employment tribunal had found the manner of consultation perfunctory and insensitive, yet considered that it was reasonable, without saying why.

Knight-Webb Solicitors are specialists in employment law. We pride ourselves in providing a first-rate, cost-effective and personal service to clients. We can advise you on employment law matters and update your policies and procedures, taking into account all the recent changes in the law, including those outlined in this Newsletter.

Contact Sunita Knight-Webb on 020 7207 6195 or at sunita@knightwebb.com