Travelling time for peripatetic workers counts towards working time under the Working Time Directive

The Advocate General has given an opinion in a Spanish case concerning the working time status of travelling time at the start and end of the working day. InFederacion de Servicios Privados del sindicato Comisiones Obreras v Tyco Integrated Security SL and another, a group of technicians worked from home and travelled to client sites using a company vehicle. The employer did not count the time spent travelling from their homes to their first assignment or from their last assignment back to their home as working time and this was challenged by the employees’ union. The issue was referred by the Spanish courts to the ECJ.

The Advocate General’s opinion is that this does amount to working time under the Directive. If the ECJ agrees with the Advocate General (as is usually the case) this decision may have significant implications for UK employers. The Working Time Regulations use the same definition of working time, but in the absence of authority on the point, UK employers with a peripatetic workforce may not be treating this time as “working time”. This case suggests that approach is vulnerable to challenge. As with the recent cases on working time, this is a further example of the health and safety objectives underpinning the Directive resulting in an increasingly onerous position for employers.

Two decisions on TUPE in an outsourcing context

Can there be a client/contractor relationship between an outsourcer and a sub-contractor?

The application of the TUPE outsourcing provisions to multi-party outsourcings is complex and has resulted in a number of appellate decisions. In Jinks v London Borough of Havering, the council had outsourced an ice rink and a car park to a contractor (Saturn). Saturn, in turn, sub-contracted just the car park to a sub-contractor (Regal). When the services were all taken back in house, the Claimant alleged that his employment transferred under TUPE from the Regal to the council.

The Employment Tribunal struck out the claim without hearing evidence, on the basis that Regal’s “client” for these purposes was Saturn and could not be the council. This was overturned by the EAT. Case law confirms that the nature of the “client” is a question of fact not law. Further, there can be more than one “client” in any given case. Accordingly, the case was remitted.

The key point to note here is that the identity of the client is a question of fact. Employers faced with claims in these circumstances can still therefore challenge the application of TUPE in relation to their own circumstances.

Does an employee still transfer when the client has requested their removal from the service

In Jakowlew v Nestor Primecare Services Ltd and another, the client in an outsourcing arrangement requested Ms Jakowlew be removed from their service. She had been suspended by the service provider pending disciplinary proceedings, but the provider did not reassign her. At the same time, the contract between the client and provider came to an end and a new provider took over the service. Following confusion over who now employed Ms Jakowlew, she was dismissed for redundancy by her original employer. She brought unfair dismissal proceedings against both providers.

The EAT, overturning the Tribunal’s decision, found that the employee had transferred to the new provider. The instruction from the client was not determinative, only the employer had the power to reassign the employee and it had not done so. As a subsidiary point, the EAT also confirmed that a suspension did not prevent an employee from transferring. As with other periods of absence, such as holiday, sickness or maternity leave, an employee on suspension remains a part of the organised grouping of employees and, as such, will transfer even though they are not at work when the transfer takes place.

Is there an implied term requiring employees to disclose their own wrongdoings?

According to The Basildon Academies v Amadi, there is no implied duty which requires employees to disclose details of their own wrongdoings. In this case, the employee allegedly committed an act of sexual misconduct while working for another employer. When the employer discovered this, he was dismissed for failing to disclose the information.

The employer failed to establish that there was an express term which required him to disclose. It therefore argued that a requirement to disclose fell within the implied duty of fidelity. This argument also failed. While there is potentially a fiduciary duty to disclose, there is no general duty to do so and it is still good law that an employee is not obliged to report his own wrongdoings to his employer. In this case, it meant that the employee’s dismissal for failing to provide the information was unfair (albeit his compensation was reduced for contributory fault).

This decision illustrates the danger of seeking to rely on implied terms. Instead, employers should ensure that their contracts of employment (and/or any supporting documents) clearly establish what amounts to gross misconduct. Further, it is possible to include contractual terms which require the disclosure of wrongdoings. This can be controversial, however, and is more commonly seen in the employment contracts for relatively senior employees.

Unfair dismissal – the importance of following an adequate procedure

In McElroy v Cambridgeshire Community Services NHS Trust, an employee was dismissed following complaints that he smelt of alcohol while at work. The dismissal was found to be unfair as a result of two procedural defects. First, the employer had concluded that the employee had put himself, colleagues and patients at risk by attending work under the influence of alcohol. In fact, there was no evidence of impairment of performance so the Trust had been unreasonable in reaching this conclusion. Second, the dismissal decision referred to the employee’s refusal to attend an OH appointment. However, this appointment was referred to as a supportive step and was not put to him during the process as a disciplinary allegation.

This decision may seem surprising. The Tribunal found that it was reasonable for the employer to conclude that the employee had attended work smelling of alcohol and that he had consumed more alcohol that the two beers he had claimed, but went on to conclude that it was not reasonable to conclude that he was unfit for work. Further, it held that it was not reasonable to treat attending work smelling of alcohol as conduct justifying dismissal. The key problem for the Trust in this regard was that it failed to consider the precise terms of its own policies and procedures. The policy required the employee to be “unfit for duty” so the disciplinary process should have reached findings in light of this requirement. Further, treating the refusal to attend the OH appointment as one ground for dismissal was clearly flawed on a procedural basis as the allegation had not been raised during the process. This is an example of a case where the relevant issues changed during the course of a disciplinary procedure and shows how important it is for employers to keep track of the allegations put to an employee and, if necessary, make sure that further allegations are given separate consideration, even if this results in delay.

Dress codes and indirect discrimination – policy did not discriminate against Muslim woman

Dress codes in the workplace are often problematic, giving rise to potential sex and religious discrimination issues. In Begum v Pedagogy Auras UK Ltd, a nursery had a policy which required any clothing worn must not present a tripping hazard. When a Muslim job applicant was informed of this policy, she did not proceed with her application. Instead, she brought proceedings in the Employment Tribunal, alleging that there was a requirement not to wear an ankle length jilbab and that this amounted to indirect discrimination on grounds of religion or belief.

The Tribunal did not uphold the claim and the EAT upheld its decision. The requirement was that clothing worn in the workplace not to present a tripping hazard and, given that a quarter of the staff were female Muslims and at least one did wear a full length jilbab, it was not a policy that Muslim women were unable to comply with. Accordingly, there was no PCP applied to Ms Begum which indirectly discriminated against Muslims. In the alternative, the Tribunal also held that, had the policy been indirectly discriminatory, the nursery was able to justify it given that the policy was in place on health and safety grounds.

This case has specific facts (the high proportion of Muslim employees, one of whom already wore a jilbab) which makes it dangerous to rely on as a general authority. It is also worth noting that, perhaps given the facts, the Tribunal did not place the health and safety conclusions the employer had drawn which underpinned the policy under any degree of scrutiny. Employers defending similar cases should not assume such leniency in their situation and should be able to back up any health and safety assumptions. In many cases, being unable to do so may well mean that any policy will fail at the proportionality stage of the justification test.

Competing rights – Tribunal considers impact of Christian employee expressing views on homosexuality in the workplace

When employees with protected characteristics which clash with each other come into contact in the workplace, it can create difficult scenarios for employers to deal with. This was the case in Mbuyi v Newpark Childcare (Shepherds Bush) Ltd. In this case, an evangelical Christian employee who worked for a nursery was dismissed following a number of incidents where she made comments to a lesbian colleague. Following a disciplinary hearing, the employer concluded that her conduct amounted to harassment of her colleague and she was dismissed for gross misconduct.

The Tribunal found that Miss Mbuyi’s dismissal amounted to both direct discrimination and indirect discrimination. The direct discrimination was made out primarily because the nursery’s disciplinary process had been so flawed that it shifted the burden of proof and it was then unable to offer a non-discriminatory explanation for its failures. The Tribunal therefore reached a decision that its treatment of Miss Mbuyi had been motivated by stereotypical assumptions about evangelical Christians. In relation to indirect discrimination, the practice of providing the nursery service in a non-discriminatory way was a legitimate aim, but the nursery failed to show that the dismissal was proportionate because of its procedural failings, for example failing to give Miss Mbuyi a warning and failing to discuss the inappropriateness of the conversation with both Miss Mbuyi and her colleague.

This is another case where unusual facts made a significant difference to the overall outcome. Despite media reporting to the contrary, it is not a case of religion (specifically Christianity) as a protected characteristic outweighing sexual orientation but rather a lesson for employers in the critical importance of carrying out a full and fair disciplinary process. Failing to do so in this case left the employer unable to disprove discrimination when the burden of proof shifted to it.

Compensation under a settlement agreement to settle a potential discrimination claim is not taxable

A First-tier Tribunal has considered the tax status of a payment made to an employee who had raised issues of discrimination in relation to historic bonus payments. In Mr A v HMRC, the employee was ultimately dismissed for redundancy and received a settlement payment in lieu of statutory and contractual redundancy entitlements but, in addition, received a further £600,000. HMRC sought to tax this sum.

The Tribunal found that the sum was not taxable, making a number of conclusions in order to reach this decision. Its primary finding was that the sum was paid in compensation for the alleged race discrimination. It did not matter that the sum may have been calculated with reference to the employee’s lost earnings that flowed from the discrimination, the sum did not constitute “earnings”. Other useful points which arise from the decision:

  • the Tribunal recognised that employers are reluctant to admit discrimination, so the absence of an admission is not determinative;
  • it was not necessary to establish that the employee would have succeeded in a tribunal claim or that discriminatory treatment had occurred. Instead, the relevant issue was whether the payment was made by the employer to settle a discrimination claim; and
  • the motive of the employer in making the payment was relevant rather than the wording of the settlement agreement. It did not matter that the agreement settled all claims and there was no specific sum assigned to the discrimination claim.

This case is useful when negotiating settlements, although it is worth bearing in mind that First-tier tribunal decisions are not binding and that the discrimination in question occurred during employment. Compensation for discrimination on termination is covered by a different tax provision and there are contradictory authorities on whether these payments are taxable. Also of interest to employers is the fact that the Tribunal used its discretion to keep details of the employer anonymous as this is often a concern for employers when employees seek to challenge the tax treatment of settlement payments.

For further discussion of this case and the tax status of settlement payments, click here for our blog, When can compensation for discrimination be paid tax free?

Direct Discrimination – EAT confirms it may be appropriate to use different comparators for different issues within a case

In CP Regents Park Two Ltd v Ilyas, the EAT considered an appeal against two findings of direct race discrimination. The issue arose following the dismissal of the employer’s Financial Controller, A, for appropriating company funds. This led to a wider investigation and Mr Ilyas, the reception supervisor, was investigated. Both A and Mr Ilyas were of Pakistani racial/national origin and although other receptionists were investigated, Mr Ilyas was subjected to “unduly aggressive and inappropriate questioning”, including being asked if he knew A from Pakistan and threats about his visa status. Mr Ilyas failed to provide an adequate answer to the allegations and was referred for disciplinary action which led to his dismissal.

The Tribunal found that the manner in which the investigatory meeting was conducted and the decision to progress with a disciplinary process amounted to direct discrimination. In both cases, the Tribunal used the other receptionists as actual comparators. On appeal, CP argued there were material differences between Mr Ilyas and the receptionists, so the Tribunal should have used hypothetical comparators instead. The EAT held that the appropriate comparator was different for the two different issues. In relation to the conduct of the meeting, the Tribunal’s finding of fact was that the differences between Mr Ilyas and the receptionists were not material. The Tribunal had then gone on to ask why the meetings had been conducted differently. In the absence of another explanation, it was permissible for the Tribunal to have found that the reason for the treatment was race/nationality. However, on the referral for disciplinary action, the EAT agreed that the receptionists were not appropriate comparators. By this point Mr Ilyas’s failure to provide an adequate explanation meant that the appropriate comparator became a hypothetical employee who had failed to provide an adequate response to questions in an investigatory meeting but who did not share Mr Ilyas’s protected characteristic.

In addition to the comparator finding, there were two other points of interest in this case. First, during the investigation, the Claimant was asked questions about his links with A because of their shared nationality. While the questioning may appear inappropriate, the EAT confirmed that exploring potential links between employees with a shared racial or national background is not in itself discriminatory. The problem here was that the employer had pre-determined that a link must exist. This conclusion, based on race, had affected the tenor of the meeting and that did amount to discrimination. Second, although direct discrimination occurred, the ultimate dismissal was fair. This is relatively unusual and highlights the possibility of a defect in an early stage of a disciplinary process being corrected by a thorough process at a later stage.

Voluntary overtime and holiday pay

Voluntary overtime may be included when calculating an employee’s holiday pay, according to a decision from the Northern Ireland Court of Appeal. The full article,Voluntary overtime may need to be included in holiday pay, considers the decision in more detail.

Final PRA/FCA Remuneration Rules

The PRA and FCA issued a joint policy statement on the new remuneration rules on 23 June 2015. Our blog, Changes to the PRA and FCA Remuneration Codes: what the final rules say, considers what this means for financial services employers.

Review of Employment Tribunal Fees

The Government has announced the start of its promised review into employment tribunal fees. The review, which is due to be completed later this year, will consider whether the introduction of fees has achieved its aim and whether there has been an impact on access to justice. Following the review, it is anticipated that there will be a consultation on the proposed recommendations, so any changes to the fee system are still some way off.