Key employment law developments: indirect discrimination; Acas conciliation; gig economy

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Summary: Our May 2017 blog outlines key employment law developments over the last month. These include recent cases on the correct approach in indirect discrimination cases, further clarification on the Acas early conciliation procedure and the latest case law on the hot topic of ‘gig economy’ workers. We also outline other points of note this month including the final guidance on the Gender Pay Gap Reporting Regulations and the latest on Brexit.

Indirect discrimination – no need to show that disadvantage was caused by the protected characteristic

Considering two conjoined cases raising the same issue, the Supreme Court has held that to succeed with an indirect discrimination claim it is not necessary to establish the reason for the particular disadvantage. In Essop and others v. Home Office, the claimants relied on statistical evidence that black and minority ethnic (BME) and older candidates had a lower pass rate for an occupational exam. In Naeem v. Secretary of State for Justice, a Muslim prison chaplain claimed indirect discrimination due to a pay scale based on length of service. This meant Muslim prison chaplains had lower average pay than Christian chaplains, because the Prison Service has only employed Muslim chaplains since 2002. In both cases, the Court of Appeal had found it necessary to show a causal link between the claimant’s protected characteristic and the disadvantage suffered.

Overturning the Court of Appeal, the Supreme Court clarified that the essential element of an indirect claim is a causal connection between the provision, criterion or practice (PCP) and the disadvantage suffered by the group. The individual claimant must also suffer the same disadvantage as the group. There is no requirement to explain the reason why a particular PCP puts a group who share a protected characteristic at a disadvantage when compared with others who don’t share that characteristic. Although there may be ‘context factors’ which might explain why one group may find it harder to comply with the PCP than others, such as physical or social reasons, it is not necessary to show that the disadvantage is caused by the shared protected characteristic.

Why this matters? This decision makes it easier for claimants to establish indirect discrimination claims. However, even if group disadvantage is established it is still open for an employer to argue that the disadvantage suffered by a particular claimant was not for the same reason as that suffered by the group. Further, it is always open for the employer to show that any indirect discrimination is objectively justified.

Essop and others v Home Office (UK Border Agency) and Naeem v Secretary of State for Justice


Acas early conciliation - extension of time does not apply to a second conciliation period

In Commissioners for HM Revenue and Customs v. Serra Garau, the Employment Appeal Tribunal (EAT) has provided further guidance on the operation of the Acas early conciliation (EC) process. In this case, the employee commenced EC shortly after being given notice of termination. An EC certificate was issued before the notice period expired. He commenced another EC process some three months after the termination of his employment, just before the expiry of the three-month limitation period. Acas then issued a second certificate and the Claimant lodged his claim one month later. The EAT held that the claim had not been brought in time. In doing so, it clarified that:

  • the EC rules do not allow for more than one EC certificate per ‘matter’. A second certificate therefore has no impact on the limitation period;
  • extension of time provisions do not apply to an EC period which occurs prior to the start of a limitation period, as the clock cannot be stopped if it has yet to start.

This meant that the three-month time limit started to run when the claimant’s notice expired. The second EC certificate had no effect, so his claim had been presented out of time.

Why this matters? This decisions contrasts with a number of cases which have demonstrated some flexibility in the EC provisions. It also provides welcome clarification, following a number of decisions in the Employment Tribunal (including Fergusson v. Combat Stress discussed in last month’s update), that time spent in EC prior to the start of the limitation period does not ‘stop the clock’.

Commissioners for HM Revenue and Customs v. Serra Garau


Gig economy continued - cycle courier was a worker not self employed

In our February update, we reported on a Court of Appeal decision which found that a plumber was a worker rather than a self-employed contractor (Pimlico Plumbers and another v. Smith  – read our blog here). The Employment Tribunal (ET) has now applied that case in finding that a cycle courier was a worker and not a self-employed contractor.  Mr Boxer had to work regular hours, be available at all times during the working day and could take leave or change his hours only with agreement. He worked for fixed rates and did not have any role in negotiating jobs with clients. It was also found that in practice it would be difficult for the claimant to send a substitute in his place. On that basis, despite Mr Boxer's written contract providing that he was self-employed, the ET found that he was a worker.

Why this matters? This is the latest in a string of employment status cases by ‘gig economy’ staff and there are further claims by couriers currently underway in the ET. This case bears comparison with similar recent successful claims against Uber and City Sprint. Leave has now been granted for Uber to take their case to the Court of Appeal and that judgment will be keenly awaited.

Boxer v. Excel Group Services Ltd (in liquidation)


Notice of dismissal only effective on personal receipt by the employee

In the absence of an express term in the employment contract, it is implied that notice may be given by either party in writing. The Court of Appeal has now held that such a notice, when sent by post, is only effective when actually received personally by the employee. It was important in this case to establish whether the employee’s contractual notice had expired before her 50th birthday, as this would affect the pension benefits to which she was entitled.

The employer had sent notice of termination for redundancy by recorded delivery. The employee’s father-in-law collected the letter as the claimant was on holiday. She was then passed the letter some days later, on her return. The Court of Appeal held that the date of posting did not determine the date of receipt. Instead, the notice only took effect from the date it was actually received by the employee, i.e. when she personally took delivery of the letter, rather than when it arrived at her home or was collected by her relative.

Why this matters? This case is a reminder of the value of well-drafted contractual provisions which specify when and how notice will be effective. Otherwise, there may be uncertainty as to whether an employee has actually received a postal notice, unless delivered personally. This case applies to provision of notice under an employment contract. It is important to remember that this is not the same as establishing the ‘effective date of termination’ for statutory purposes, and the two tests can give different results. 

Newcastle upon Tyne NHS Foundation Trust v Haywood 


TUPE employee liability information – transferor not required to state whether a bonus was contractual

Under TUPE, a transferor must provide the transferee with information on the particulars of employment for the transferring employees, known as ‘employee liability information’ (ELI). The transferee can claim compensation, subject to a minimum of £500 for each employee, if the information was not provided or was defective. In Born London Ltd v. Spire Production Services Ltd, the transferor stated incorrectly that a Christmas bonus was non-contractual, when in fact it was contractual. The transferee claimed that this mistake meant the provision of ELI was defective. The EAT held that the obligation to provide ELI is not confined only to contractual matters, so the transferor’s mistake as to the legal status of the bonus did not render the ELI defective.

Why this matters? The EAT adopted a flexible approach to the ELI requirements, which is helpful to transferors. For transferees, reliance on the ELI alone is not advisable in any event given both the limited content and the timing for provision. Instead, transferees can ensure that their interest are adequately protected by undertaking appropriate due diligence as to the contractual status of the employees’ remuneration arrangements. Suitable warranties and indemnities covering these issues can also be sought from the transferor.

Born London Ltd v. Spire Production Services Ltd


Tribunal awards minimal compensation for breach of right to be accompanied

An employee has a statutory right to be accompanied by either a colleague or a trade union representative at a grievance or disciplinary hearing. In Toal v GB Oils Ltd, the EAT held that the employee has an unfettered right to choose their companion, provided they fall within one of these two categories. If an employer prevents the employee bringing their chosen companion, even if they have a good reason for doing so, they will be liable to pay compensation of up to two weeks' pay.

In Gnahoua v Abellio London Ltd, the employer prevented two union official brothers from accompanying employees at disciplinary or grievance meetings, as an employment tribunal had previously awarded £10,000 in costs against both brothers for vexatious conduct, including falsifying documents. Although this stance breached the claimant’s rights, the ET awarded nominal compensation of £2, as no loss or detriment had been suffered and the disciplinary hearing had been conducted in a considerate and thorough fashion.

Why this matters?  It is helpful for an employer that if it has a valid reason to exclude a chosen companion the ET is likely to award only minimal compensation. However, this approach could still prejudice the fairness of a disciplinary or grievance process, and could also result in an uplift of up to 25% on any compensation awarded, for breach of the Acas Code. Employers should therefore continue to consider the circumstances of each case before refusing a chosen companion.

Gnahoua v Abellio London Ltd


Other developments:

Final guidance on Gender Pay Gap Reporting Regulations: the final Acas guidance on the Gender Pay Gap Reporting Regulations, published in association with the Government Equalities Office, is now out. It takes into account feedback on previous draft guidance. Whilst there are a number of helpful clarifications, three of the most significant changes relate to the treatment of zero hours workers, bonuses paid in shares and other securities, and the treatment of sign-on, buy-out and retention payments. You can read more in our blog post here.

In a further development, the government website on which Gender Pay Gap information will be published has now gone live, and the first employer has published their information.

Changes to tax treatment of termination payments dropped, for now: in light of the upcoming general election on 8 June 2017, the Finance Bill 2017 is now being fast-tracked through the legislative process. As a result, numerous clauses have been dropped from the proposed bill. This includes the following measures which are of interest to employment and HR specialists:

  • a requirement for employers to treat all payments in lieu of notice as taxable earnings, even where there is no contractual PILON clause;
  • measures making all termination payments above the £30,000 threshold subject to employer’s class 1A NICs;
  • the abolition of foreign service relief;
  • clarification that payments for injury to feelings fall outside the exemption for injury payments, save where the injury amounts to a psychiatric injury or other recognised medical condition;
  • a power for the Secretary of State to vary the £30,000 threshold by secondary legislation.

It is expected that these proposals will continue through the legislative process following, and subject to the result of, the general election.

Government consultation on caste discrimination: at present, caste discrimination is not expressly prohibited because caste is not a ‘protected characteristic’ under the Equality Act 2010 (EqA).  In 2013, a new provision was added to the EqA, committing the government to amend the EqA to explicitly include caste as an aspect of race. This process was put on hold following Chandhok and another v Tirkey, in which the EAT found that the concept of ‘ethnic origin’ under the EqA was wide enough to encompass caste. The government has now published a consultation paper, to solicit views as to whether legislation is desirable as a means of protecting against caste discrimination. It asks for views on the following issues:

  • whether it is appropriate to rely on the existing case law, and the pros and cons of doing so versus introducing specific legislation;
  • which types of caste discrimination (if any) would not be covered by the existing prohibition of discrimination because of ‘national original’;
  • whether there is anything else the government ought to be doing to prevent caste discrimination.

The consultation closes on 18 July 2017.

Brexit update: on 4 April 2017, the House of Commons Exiting the European Union Committee published a report on the government's White Paper published in February 2017 concerning its Brexit negotiating objectives. The report contains details of the government’s 12 priorities when negotiating the terms of the UK’s exit from the EU and their future relationship. The following details will be of particular interest to employment and HR specialists:

  • Jurisdiction of the Court of Justice of the European Union - Ending the ECJ’s jurisdiction over the UK courts is one of the Prime Minister’s ‘red lines’. Nonetheless, the Committee observes that the terms of the UK's future relationship with the EU may require conformity with EU law in some areas, which could leave the ECJ with a role to play in settling disputes.
  • Employment and workers' rights - The government has confirmed that the Great Repeal Bill will maintain current EU protections for workers, as existing EU law will be converted into domestic legislation. The Committee reports that, although regulations will be aligned on the day that the UK leaves the EU, worker protections may diverge thereafter.
  • Immigration - The Committee urges the government to ensure that future arrangements for EU migration are sufficiently flexible to meet the needs of all sectors of the UK economy.

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