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Welcome
The Agency Workers Regulations 2010 (AWR) are derived from EU law. They aim to strike a balance between protecting agency workers and preserving the benefits of flexibility that using an agency provides to both businesses and workers. The AWR contain anti-discrimination provisions. Agency workers must be given the same basic terms and conditions of employment as direct recruits when they have worked for a hirer for 12 weeks. Regulation 13 gives agency workers the ‘day 1’ right to be told by the hirer about any relevant vacancies, with the aim of giving agency workers the same opportunity as direct recruits to find permanent employment within the business. The information can be given in a general announcement in a suitable place in the hirer’s business.
In Kocur v Angard Staffing Solutions, the employee was employed by Angard, a wholly owned subsidiary of Royal Mail. Angard supplied agency workers on a flexible basis to meet the fluctuating demands of the postal service for workers. The employee worked in a mail centre. Vacancies for permanent jobs were put on a notice board but offered to direct employees first. Agency workers could not apply. If the jobs were advertised externally, then agency workers could apply along with other external applicants. The employee brought a claim saying this breached the AWR.
The employment tribunal and the EAT disagreed. The right was to be informed of the vacancies, not to apply for them or be considered for them. The Court of Appeal agreed. They looked in detail at the EU law underpinning the AWR. The Court of Appeal was clear that the wording used could not be stretched to mean what the employee contended. The right to only be informed of vacancies recognises that the law is a compromise between competing rights. It isn’t a completely hollow right – it means agency workers have advance or direct notice if a vacancy is advertised externally. Direct recruits and agency workers are not comparable in all ways – the right to parity is limited. To require an employer to allow applications from agency workers for internal vacancies would cause huge upheaval in redundancy and reorganisations where preference for internal candidates is a commonly used tool. Had lawmakers intended to disrupt common practice to that extent, they would have made it plain.
This decision makes it clear that there is a limit to the parity of treatment to which agency workers are entitled. Employers who use agency workers will be relieved that the law has its limits. Employers must simply ensure that information about vacancies is communicated to agency workers and direct recruits on the same basis.
Tim Lang
Employment tribunal compensation
If an employee succeeds in a claim for unfair dismissal, an employment tribunal can order that compensation is paid which includes loss of earnings. The same is true for discriminatory dismissals. However, the tribunal does not have to do so. The principles set out in the case of Polkey v A E Dayton Services allow a tribunal to reduce compensation, potentially by 100%, if it considers that the employee would have been dismissed fairly in any event, had a fair procedure been followed. Discrimination compensation should be ‘just and equitable’ in the circumstances.
In Shittu v Maudsley NHS Foundation Trust, the employee was in remission from cancer and was disabled for the purposes of the Equality Act 2010. He had a day’s pay deducted by the employer for an ‘unauthorised absence’ relating to a hospital check-up and colonoscopy. He went off sick, lodged grievances and eventually resigned. He brought numerous claims including ones for constructive dismissal and discrimination. The tribunal did not accept most of the employee’s alleged complaints. However, they found that the employer’s failure to investigate his grievance relating to the alleged unlawful deduction breached the implied term of trust and confidence. His resignation had in (small) part been due to that breach, and so his constructive dismissal claim succeeded. On the same basis, so did some of his discrimination claims. The successful claims were based on that docking of a day’s pay. The tribunal awarded a basic award (for unfair dismissal) and injury to feelings (for discrimination) but no compensation for loss of earnings. They decided, based on the facts, that the employee would have resigned anyway regardless of the deduction or the complaint about it, and so decided no compensation for lost earnings was required.
The EAT agreed. The sheer number of allegations by the employee had presented a ‘Herculean’ task for the tribunal. The evidence showed that the employee was generally unhappy at work and would have resigned anyway due to that unhappiness or because his sick pay entitlement was ending. These were separate issues to the issue of his pay being docked for the medical appointment. They said the tribunal had approached the issue of compensation correctly and had been entitled to find that there was a 100% chance that the employee would have resigned on the same day regardless of the fundamental breach of contract which had resulted in his successful tribunal claims.
This claim shows that the tribunals have a wide discretion in relation to compensation, including a decision to reduce loss of earnings awards to zero in appropriate cases. Cases with a 100% reduction will be rare. However, this judgment provides comfort that tribunals will be open to an argument that a generally dissatisfied employee will not always be entitled to full losses which may otherwise seem to flow from a dismissal.
Unfair dismissal – contributory fault
If a tribunal decides that an employee has been unfairly dismissed, it can reduce compensation, potentially to zero, for two reasons:
- because the dismissal would have occurred anyway regardless of any procedural errors (the Polkey principle referred to in the previous case); or
- because the employee’s conduct contributed to their dismissal.
The EAT has recently looked at a case where the employment tribunal had reduced an employee’s compensation on both bases. In Wilkinson v Driver and Vehicle Standards Agency, the employee was a former police traffic officer who subsequently gained employment as a driving examiner. He knew that he was not allowed to drive candidates’ vehicles due to potential insurance issues. Despite this, he drove the vehicle of another driving instructor back to the base after a driving test. He did not mention this in his post-test reports, but his manager found out. The employee was not suspended. He was invited to a disciplinary meeting by letter which did not set out all the allegations comprehensively. Nor was he provided with all the evidence in advance, including a letter written by his manager which said that trust had been broken and was difficult to repair. After a short hearing of 24 minutes, he was dismissed for gross misconduct. He brought a claim for unfair dismissal.
The employment tribunal said he had been unfairly dismissed. The failure to set out all the allegations and provide relevant evidence in advance meant the employee could not know the case against him nor properly challenge the evidence. The manager’s alleged breakdown in trust had not been properly interrogated during the disciplinary hearing. The dismissal was unfair. The tribunal imposed a Polkey deduction of 50% because they assessed that the chances of the employee being dismissed anyway were 50/50. They also reduced compensation (and his basic award) to zero due to his contributory fault. The employee appealed.
The EAT disagreed with the tribunal’s reasoning on compensation. The tribunal had not approached the Polkey issue properly. They should have decided would have happened had there been no unfair dismissal - that is, if a fair procedure been followed and the manager’s evidence about trust and confidence had been properly scrutinised at the disciplinary hearing. The EAT said it was wrong to conclude that trust had broken down irretrievably when the manager’s letter had not said that. The tribunal had reached a conclusion for which there was no evidence. However, the EAT confirmed that a reduction for contributory fault can still be made even if the dismissal would not have happened at all had the employer acted fairly. That reduction involves apportioning fault between the parties in relation to matters which led to the dismissal. Based on the limited evidence about trust from the manager’s letter, the employee could not have been ‘wholly responsible’ for his dismissal which would justify a 100 per cent reduction for contributory fault. The employer’s own poor conduct had not been properly considered. The case was sent back to the same employment judge to reconsider those conclusions.
There are a few things in this case for employers to note. Firstly, the EAT has confirmed that contributory fault can still be relevant even if the dismissal would not have happened at all had the employer acted fairly. But perhaps of more practical importance is the reminder about getting your process right. Employers must clearly set out all relevant allegations, and provide all relevant evidence, to the employee in advance of the disciplinary hearing. A dismissal process can never be fair if the employee doesn’t know the allegations they face or the evidence to support them. Even in clear cut cases, scrutiny of the relevant evidence will usually take more than 24 minutes.
Fire and rehire – implied terms
Additional terms can be implied into employment contracts where certain facts reflect the parties’ contractual intentions. A term can be implied to give business efficacy to the contract – to make it work. Or it can be implied if the term is so obvious that if an ‘officious bystander’ suggested to the parties that they include such a term, they would reply ‘of course!’. It is an either/or test, assessed at the time the contract is made rather than when the parties are in dispute, when one will necessarily object to the other’s construction.
In USDAW v Tesco, during a business reorganisation process, the employer and union negotiated ‘retained pay’ for distribution centre operatives who agreed to move workplaces up to 45 miles away rather than taking redundancy. It was crucial for the employer to retain enough employees to avoid significant disruption to their distribution centres and the wider business. They made it clear that the retained pay would last for as long as the employees remained in their current roles, could not be negotiated away in future and would be subject to annual increases. A joint statement referred to retained pay as ‘guaranteed for life’ and a ‘permanent feature’ which could only be changed by mutual consent or promotion to a new job. In 2021, the employer said it was going to remove retained pay. They offered 18 months’ pay as a lump sum in return for giving up the entitlement, or they would dismiss and reengage the employees on new terms. USDAW applied for an injunction to stop the employer dismissing and reengaging, saying there was an implied term that prevented Tesco from dismissing the employees to remove retained pay.
The High Court granted the injunction. The Court said that a reasonable person would look at the facts around the time of the original agreement and construe ‘permanent’ as meaning ‘for as long as the relevant employee is employed by Tesco in the same substantive role.’ The employer had used the terms ‘guaranteed’, ‘protection for life’ and ‘for as long as you are employed by Tesco in your current role’. The High Court said the intention had been to preserve the higher pay permanently, without which the relocations would not have been agreed. There was a conflict between the permanent right to retained pay and the right to terminate contracts in order to remove it. On the extreme facts in this case, there was an implied term (either based on business efficacy or obviousness) that the employer would not terminate contracts to remove the entitlement to retained pay. They could still terminate for normal reasons – conduct or redundancy for example - although the court conceded that such a decision would be subject to close scrutiny in the circumstances. They granted an injunction stopping Tesco from terminating contracts to get rid of retained pay because the employees’ losses would be significant and the normal remedy – unfair dismissal compensation – would not be adequate.
This kind of injunction is rare. There were rather extreme facts at play here, with a clear agreed expression that retained pay would be permanent for as long as the employees remained in their current roles. As such, the High Court implied a term stopping them from rolling back on that permanency, on which the employees had relied when agreeing to relocate to their otherwise disadvantage. Due to the extreme facts, it is unlikely that this case will start a domino rally of similar cases. However, employers must take care when negotiating terms to ensure that they don’t accidentally tie the hands of future business decision makers.
Tips
The government has given more information about when it will introduce new laws requiring employers to pass on all tips to workers. The government has said previously that tips earned by workers should go to the workers that customers intended them for. The new laws will require employers to pass on all tips, gratuities and service charges to workers without making any deductions. If businesses have control or significant influence over how tips are distributed then they will be required to distribute tips in a fair and transparent way. To help employees bring employment tribunal claims where necessary, the government proposes to introduce a new right for workers to make a request for information relating to an employer’s tipping record.
There is currently no clarity on when these new rules will come in. The government says the laws will be brought forward ‘when parliamentary time allows’. However, employers will be comforted by the government’s plan to give businesses a year’s grace after bringing in the new legislation, to allow for business practices to be adjusted. Although the ball has been kicked into the long grass, employers who may be affected by these new laws should start to think about how they will change their current practices in order to comply with them in due course.
Employment status
We have seen many worker status cases over the last few years. The majority stem from the gig economy, with many cases finding that an individual described in contractual documents as self-employed is really an employee or a worker of the business. This month has seen another rare win for the employer in the worker status litigation, in Waters v Mote Cricket Club.
The employer was a cricket club, run as an unincorporated association. It had previously employed a groundsman who lived in accommodation on site. The claimant was a member of the club and was latterly a committee member. He ran a gardening and grounds maintenance business which undertook grounds maintenance for another cricket club. He occasionally helped out the groundsman as a volunteer/casual worker. When the employed groundsman left, the claimant rented the residential property at the club and ran his business from there. The club decided to engage a contractor (rather than an employee) to maintain the grounds. The first contract ended when the club felt the chosen contractor did not do enough. They then retained the claimant to do the grounds maintenance work. The contract was between the claimant’s business and the club. One of the terms was that 60 hours of work was needed during the summer months, at least 40 of which should be done by the claimant himself. Once he had started the work, the claimant tried to renegotiate the terms of the agreement, including ones relating to pay. The parties fell out, and the claimant brought claims asserting worker status and that he was entitled to holiday pay.
The tribunal said that the claimant was self employed and running his own business. The club was his customer. The club was a major customer of the claimant’s business, accounting for £20,000 of the £40,000 annual turnover. He had other customers, including another cricket club. Although the contract required personal service, in reality he employed others to do the work and his personal hours of work were not checked by the club. The contract was not a sham – he was genuinely self-employed. The EAT agreed. The tribunal judge had seriously considered the personal service element of the contract as part of the overall assessment of worker status. The EAT said that a person can run their own business and still be required to do some or all of the work personally. The sensitive factual matters which are relevant to the question of employed, worker or self-employed status are questions for the tribunal. The tribunal was entitled to find that the contract here was one of business and customer, rather than one involving worker status.
Once again, this judgment shows that worker status cases are fact sensitive. In this case, the individual was already running their own business, providing grounds maintenance services to another cricket club, at the time he contracted to take over grounds maintenance at Mote. The evidence showed that he had wanted a different kind of working arrangement, but the tribunal said that was not relevant to the reality of the contractual relationship between the parties. Employers will be comforted that individuals who are genuinely self employed cannot then claim worker status if they have a later falling out over the terms of business.
Holiday pay
Regulation 14 of the Working Time Regulations 1998 (WTR) sets out a worker’s right to a minimum of 4 weeks’ paid holiday per year which derives originally from the Working Time Directive (WTD). In a case called Bear Scotland v Fulton, the EAT said that a three-month gap between related deductions in a series will break the chain, meaning anything before the three-month gap cannot be claimed. The Court of Appeal has recently confirmed in Smith v Pimlico Plumbers that a worker’s right to paid annual leave is a single composite right - to leave and to pay for that leave – and strongly challenged the principle set out in the Bear Scotland case.
Mr Smith won his worker status claim in the Supreme Court. He then sought backpay for holiday pay relating to each year he worked for the employer between 2005 and 2011. He had taken holiday but not been paid for it. The employment tribunal and EAT said he could only bring a claim for holiday which had never been taken at all (rather than holiday that had been taken but not paid). The Court of Appeal disagreed. The Court said that if the worker takes leave but isn’t paid for it, he is not exercising his rights under the WTD. The worker only loses the right where the employer can show they gave the worker the opportunity to take the leave, encouraged them to take it and told them they would lose it if they didn’t take it. If the employer does not do this, the holiday carries over and continues to accrue until the end of employment when a payment in lieu of all the untaken and unpaid holiday is due. It is a one-off payment not the combined total of a series of deductions. That meant Mr Smith’s claim – brought within three months of termination – had been brought within time. The judge in this case also gave her ‘strong provisional view’ that Bear Scotland v Fulton was wrongly decided (though it wasn’t key in this case so has not officially overruled that binding case law).
While the Court of Appeal has no ability to change legislation, they have suggested the following wording is inserted into regulation 13 of the WTR:
Where in any leave year an employer i) fails to recognise a worker’s right to paid annual leave and ii) cannot show that it provides a facility for the taking of such leave, the worker shall be entitled to carry forward any leave which is taken but unpaid and/or which is not taken, into subsequent leave years.
This case is another win for workers in the ongoing holiday pay saga. If an employer denies a worker the right to paid annual leave, the entitlement to paid holiday accrues throughout employment and crystallises as a claim on termination. It is a claim for payment of the whole sum owed, not a series of deductions, so the 2-year backstop (brought in by the Deduction from Wages (Limitation) Regulations 2014) does not apply. This could prove very costly for businesses who wrongly categorise workers as self-employed. It’s worth remembering that reasoning in this case only relates to the 4 weeks’ WTD holiday, leaving the 1.6 weeks of domestic leave still subject to the normal rules of unlawful deduction from wages (and a series of deductions). However, whether the three-month gap rule in Bear Scotland is displaced by the Court of Appeal’s ‘strong provisional view’ will be a battle for tribunals, and no doubt appeal courts, in future cases.
And Finally...
Is it unlawful harassment to ask a flatulent colleague to stop breaking wind in a shared space? Not according to the employment tribunal in Mohammed v CPS. In this case, the employee was a barrister and Senior Crown Prosecutor. He had a heart condition, the medication for which made him flatulent. He shared a small office with one of his colleagues who did not know about the medication or its side effects. In response to repeated flatulence in the office, the colleague said ‘do you have to do that Tarique?’. The employee said the flatulence was due to his medication, so the colleague asked if he could step outside to do it. The employee said he could not. The employee found the incident embarrassing but was not obviously upset and did not make a complaint. Those facts formed the basis of a harassment claim brought by the employee, which was part of a wider discrimination claim. He said it was unwanted conduct related to his disability that had the purpose or effect of creating an intimidating or hostile environment for him at work.
The employment tribunal found that the colleague’s comments were unwanted conduct. They said that the conduct related to disability because the employee’s flatulence was a side effect of the medication for his heart condition. The colleague didn’t know that the flatulence was disability related but knowledge is not required for a harassment claim. However, the tribunal said that the conduct did not have the purpose or effect of creating an intimidating or hostile environment for the employee. The colleague’s actions did not have that purpose, nor on the facts did they have that effect - the employee wasn’t overly upset and did not make any complaint before starting the tribunal process. The tribunal went further. Even if the comments had had that effect, it would not have been reasonable for them to do so. The tribunal said the colleague’s question was a reasonable one to ask when there had been repeated incidents of flatulence in a small office. It was a brief one-off discussion which was not repeated. It was not harassment.
In this case, the failed harassment claim was part of a wider set of discrimination allegations which succeeded, including ones for failing to make reasonable adjustments. Flatulence might seem funny, especially when discussed so formally in an employment tribunal judgment, but it isn’t funny if it is the embarrassing side effect of potentially life-saving medication that a disabled person may experience. In this case, the background to the harassment allegation was that the employer had failed to make reasonable adjustments for the employee and had discriminated against him in other ways. That had no doubt set the tone for the relationship. The lesson from this case is that employers must ensure that reasonable adjustments are made to accommodate employees with disabilities. That could prevent embarrassing details for both parties being argued out in court.