Summary: Our January update considers recent developments in employment law, including cases on employment status, disability discrimination and collective redundancy. We also outline other points of note, including developments relating to immigration post-Brexit and the government’s plans to strengthen the regime dealing with sexual harassment.
Court of Appeal confirms that Uber drivers are workers and not independent contractors
The Court of Appeal has upheld the decisions of the Employment Tribunal and EAT that Uber drivers are “workers”. Consequently, Uber drivers are entitled to certain employment rights, including national minimum wage, holiday pay and whistleblower protection.
The majority of the Court of Appeal concluded that the complicated contractual arrangements between the drivers and Uber, which described the drivers as independent contractors, did not reflect the reality of the relationship. A number of factors demonstrated that Uber had a lot of control over the drivers, including Uber’s determination of the fare, requirements relating to the type of vehicles and routes to be taken and Uber’s right to disconnect drivers who fail to accept enough jobs.
The majority of the Court of Appeal also said that Uber drivers are working during any period when they are within their territory, have the Uber app switched on and are ready and willing to accept requests, rather than just working when they have a passenger.
Why this matters?
The Court of Appeal’s ruling is in keeping with the direction of travel of other recent gig economy employment status cases. However, Lord Justice Underhill, who is a specialist employment law judge in the Court of Appeal, gave a strong dissenting judgment. He thought there was no inconsistency between the written terms and the working arrangements and so in his view the Uber drivers were self-employed. This may add weight to Uber’s arguments in the Supreme Court, to whom they have been given permission to appeal.
It is worth noting that the UK government announced in December as part of its Good Work Plan that it will legislate in due course to clarify the law on employment status in a way that reflects the reality of modern working relationships. This includes dealing with situations where the government believes businesses attempt to avoid giving staff employment rights by misclassifying or misleading their workforce.
Supreme Court confirms it is not “unfavourable treatment” to be awarded an enhanced pension
The Supreme Court has ruled that a disabled employee was not unfavourably treated when he was granted an ill-health early retirement pension based on his part-time salary, rather than his previous full-time salary before he went part-time because of his disabilities.
The employee argued that he had suffered discrimination arising from his disabilities, and that the unfavourable treatment was basing the pension on his part-time salary. However, the Supreme Court unanimously dismissed his appeal. The treatment he had received was the early award of the pension itself and not the method of its calculation. There was nothing intrinsically unfavourable or disadvantageous about that since the employee was only entitled to the pension because of his disabilities. If he had been able to work full-time, he would not have been entitled to receive the ill-health early retirement pension at all.
Why this matters?
The Supreme Court’s decision highlights that it is not unfavourable to receive beneficial treatment, even if the individual could have received even more beneficial treatment. In addition, the Supreme Court said that in most cases, being treated “unfavourably”, which is the test for discrimination arising from disability, and suffering a “disadvantage”, which is the test for certain other types of discrimination claim, means the same thing.
Court of Appeal rules that ships in a fleet are individual ‘establishments’ for redundancy collective consultation purposes
The Court of Appeal, overturning the judgment of the EAT, has held that the ships of an international fleet each formed a single "establishment" for the purposes of collective redundancy consultation.
Collective redundancy law requires an employer, who proposes to make 20 or more employees of an establishment redundant within a 90 day period, to collectively inform and consult about the dismissals. In this case, the employer needed to make redundant more than 20 of their employees who were working on various ships. The Court of Appeal held that each ship was a self-contained operating unit which forming a separate establishment. Accordingly, for those ships that had less than 20 redundant employees, the obligation to collectively consult was not triggered.
As the ships were largely based outside of UK territorial waters, there was also a question about whether UK collective redundancy law applied at all in this case. The Court held that in order for collective redundancy rights to apply, there has to be a sufficiently close connection between each establishment - that is, between each ship - and Great Britain. On the facts, there was not a sufficiently strong ‘territorial pull’ to satisfy this requirement.
Why this matters?
This case highlights that ships are capable of forming distinct establishments for the purposes of collective consultation, although this will be fact specific. In addition, this case confirms that the concept of a sufficiently close connection for collective redundancy purposes should be applied by reference to the connection of the establishment to Great Britain, rather than the connection of individual crew members to Great Britain.
Round up of other developments
Immigration: The government has published its long awaited White Paper on the UK’s future skills-based immigration system post-Brexit. The proposals include ending freedom of movement, scrapping both the Tier 2 skilled worker 20,700 annual cap and the resident labour market test, and introducing a single system for UK Immigration Rules to apply to all migrants from 2021.
Sexual harassment: The government’s Response to the Women and Equalities Committee Sexual Harassment report has been published. It sets out various action points including the development of a statutory code of practice on sexual harassment and a plan to consult on how to better regulate the use of non-disclosure agreements (NDAs) in sexual harassment cases.
Employment Tribunal Awards: Following a recommendation in the Taylor Review, the government is establishing a naming scheme for employers who fail to pay employment tribunal awards. The new scheme applies to unpaid tribunal awards of at least £200 that are registered with the Department for Business, Energy and Industrial Strategy (BEIS) from 18 December 2018 onwards. The existing employment tribunal penalty scheme will continue to run alongside the new scheme.
Diversity in financial services: The FCA published a speech on diversity and inclusion in financial services. The speech discusses diversity as a commercial imperative for firms rather than a ‘nice-to-have’, and highlights that the approach a firm takes toward non-financial misconduct, including allegations of sexual misconduct, is potentially relevant to the FCA’s assessment of that firm and to the assessment of whether a senior manager is fit and proper.