All questions

Year in review

i Key themesGig economy workers

The question of whether an individual is a worker has dominated UK employment law during the past two years. The rapid development of the 'gig' economy has changed the pattern and face of the UK employment and labour market, leading to criticism that UK employment law is failing to keep up. The gig economy is made up of businesses that do not pay individuals a regular wage; instead, they are paid for each 'gig' they complete, such as delivering food. Gig economy businesses tend to engage people not as workers or employees but as independent, self-employed contractors who are free to accept or reject work as they wish. It is estimated that more than one million people are engaged in this emerging sector and the numbers are rising. This year, there has been a judgment from the highest judicial level, the Supreme Court of the United Kingdom, in this area. However, we anticipate that it will not mark the end of this trend.

Whistle-blowing

Whistle-blowing continues to be one of the more complicated areas in employment law, for a number of reasons. First, the stakes are high with a whistle-blowing claim, especially the reputational damage to an employer and the immense pressure on an employee. Second, the case law in this area is still developing, as has been seen again in 2018. Therefore, whistle-blowing has not reached its climax and it seems inevitable that this area of law will continue to develop and evolve.

ii Significant casesUnfair dismissal

During the past two years, reported unfair dismissal claims have not had as wide an impact on the UK employment law landscape as in previous years. Broadly speaking, the law on unfair dismissal has been in place since 1971. As a result, many of its basic principles and concepts are now fairly well understood in general and have been considered in many cases.

However, in two areas there have been important cases this year for employers to take into account.

The first relates to the frequent issue of delay in disciplinary proceedings. In Talon Engineering Ltd v. Smith UKEAT/0236/17, the claimant was suspended in July and dismissed two months later. She did not attend the disciplinary hearing because her representative, a trade union official who had been advising her throughout, was unable to attend the revised date. There is a statutory right to delay the disciplinary hearing for five days. However, her representative wanted it delayed for two weeks, which the employer refused. The tribunal and the EAT accepted that the dismissal was unfair as a result.

This is troubling for employers, because after a suspension for two months there is a danger that a tribunal could take the view that the suspension has been too long and the process unfair as a result. It is, therefore, very likely that employers will have to choose very carefully whether to agree to lengthy adjournments in the disciplinary process or face claims for unfair dismissal.

In Afzal v. East London Pizza Ltd t/a Dominos Pizza UKEAT/0265/17/DA, the employee was dismissed for failing to provide the necessary paperwork to prove he had the right to work in the United Kingdom. Having been dismissed, he then produced the paperwork, but the employer refused to hold an appeal against the original decision. The tribunal decided this made the dismissal unfair, which was upheld by the EAT. An appeal process is almost always required in the disciplinary process. Overall, employers cannot ignore a fair process, even when dismissing staff they believe to be working unlawfully.

Whistle-blowing

In contrast to unfair dismissal claims, reported cases on whistle-blowing have dominated the UK employment law landscape in the past couple of years. In the past 12 months in particular, a number of the key cases have involved appeals from the EAT to the Court of Appeal. Whistle-blowing cases are highly significant for employers as there is the possibility of uncapped damages, personal liability for managers involved in penalising whistle-blowers and reputational damage as a result of the public and accessible nature of hearings and online judgments.

In Kilraine v. London Borough of Wandsworth [2018] EWCA Civ 1436, the Court of Appeal considered the circumstances in which allegations may amount to disclosure of information for whistle-blowing purposes. Both the EAT and the Court of Appeal were clear that there is no rigid distinction between 'information' and an 'allegation', as was suggested by the tribunal. A statement of information that can also be characterised as an allegation can amount to a protected disclosure. However, not every statement involving an allegation would do so. Whether an allegation qualified as a disclosure would depend on whether it has sufficient factual content and specificity, which is dependent on the facts in the case.

Timis and Sage v. Osipov [2018] EWCA Civ 2321 is an important case, in which the Court of Appeal upheld the EAT's decision that two individuals (in this case, two non-executive directors of a company) can be held personally liable, with the employer, for losses flowing from a whistle-blower's dismissal. In this case, the employer and the two non-executive directors were held to be jointly and severally liable for compensation of more than £1.7 million following the claimant's dismissal for having made protected disclosures. The EAT decided that the existence of the unfair dismissal claim (which had been brought against the employer only) did not preclude the individual relying on the dismissal as an unlawful detriment to sue the two non-executive directors.

This case will have a significant impact, subject to any successful appeal to the Supreme Court. In broad terms, it appears easier to succeed in bringing a detrimental treatment claim, as there is a lower hurdle in relation to causation. It enables claimants to sidestep the test of an unfair dismissal claim and the reasonableness requirements, and sue individuals for unlawful detriment. The decision will also cause managers and directors to be very cautious if they are asked to deal, for example, with internal disciplinary processes that might lead to whistle-blowing claims, thereby exposing them to personal liability. We would expect that members of staff who do agree to assist will be asking their employers for an indemnity before doing so. A further consequence of this case is that we will inevitably see more whistle-blowing claims issued against employers and various other named respondents who have been involved in the process.

In Malik v. Cenkos Securities plc UKEAT/0100/17/RN, the EAT confirmed that a person who subjects a whistle-blower to a detriment must be personally motivated by the protected disclosure in order for the claim to succeed. In this case, Dr Malik argued that the decision to suspend him was influenced by protected disclosures he had previously made about his employer. The tribunal decided that such disclosures had not influenced his suspension. Dr Malik appealed to the EAT, arguing that a chain of command had influenced the decision and that the motives of other individuals in the chain should therefore have been considered. This was rejected by the EAT, who held that it would be unjust to take someone else's motive into account in circumstances where the decision maker can be held personally liable, even if the decision maker was acting on information tainted by another individual's discriminatory motivation.

Discrimination

There were a number of themes coming out of discrimination law this year. In particular, disability discrimination has thrown up a number of interesting issues.

In City of York Council v. PJ Grosset [2018] EWCA Civ 1105, the claimant was a teacher employed by the respondent. The claimant, who is disabled, asserted that his general health was affected by an inappropriate and excessive workload, and led to him suffering from stress. While suffering from stress connected with his disability, he showed a class of 15-year-olds a horror film rated with an 18 certificate. He was dismissed, which he claimed amounted to disability discrimination, contrary to Section 15 of the EqA 2010. This states that an employer has discriminated against a disabled person if that person is treated unfavourably 'because of something arising in consequence of' that person's disability, and the treatment is not a proportionate means of achieving a legitimate aim.

The employer accepted that it knew the claimant was disabled. However, the employer was genuinely unaware that there was any possible link between his disability and showing the 18-rated film to his class. The tribunal and the EAT accepted that the employer could be in breach of Section 15 of the EqA 2010, even if it did not know there was a link between the claimant's error of judgment and his disability. This meant that, in dismissing the claimant, the employer had to meet the higher test of proving the dismissal was a proportionate means of achieving a legitimate aim, rather than the ordinary unfair dismissal test. The tribunal decided that the dismissal was not a proportionate means because the need for the dismissal had arisen because the employer had failed to address the issue of the excessive workload suffered by the claimant. As such, when an employer is aware that an individual is disabled, it is going to be extremely important that the employer treads very carefully, in particular if there is any suggestion that the employee's disability is a contributing cause to the problem.

In DL Insurance Services Limited v. O'Connor [2018] 2 WLUK 589, another employee claiming under Section 15 of the EqA 2010 won her case. She had had significant sickness absence and had reached six times over the trigger point in the respondent's sick pay policy for receiving a written warning. The tribunal accepted that the employer had been very patient with the individual. However, the issue was whether the employer was treating the employee adversely, in breach of Section 15 of the EqA 2010. The employer said it had issued a written warning to the individual, which had the effect of stopping her sick pay, because it wanted to ensure adequate attendance levels of staff. However, the tribunal pointed out that if the absences were accepted as genuine by the employer (which they were), then a written warning was not going to have an effect on whether the employee was absent from work. As such, the written warning was a breach of Section 15 of the EqA 2010.

As in Grosset, the employer in O'Connor knew the employee was disabled, and the link between the individual's disability and her absence was obvious. The issue is whether the employer could have framed its reason for giving a written warning for a more suitable objective.

Cases continue to trouble employers in relation to the interplay between shared parental leave and maternity pay. In Capita Customer Management Limited v. Ali & Others UKEAT/0161/17, the employer faced a claim for direct sex discrimination. The claimant was a father who wished to take shared parental leave. His wife's maternity pay was enhanced but the employer did not enhance shared parental leave, although it did pay the same rate of shared parental leave pay to men and women. However, the claimant wanted to compare himself with the higher voluntarily enhanced maternity pay. The EAT found that this claim failed. The EAT felt that a direct discrimination claim was not available because the purpose of maternity leave was to look at the health and wellbeing of women during pregnancy and after childbirth.

In Hextall v. Chief Constable of Leicestershire Police and another UKEAT/0139/17, the claimant put the argument slightly more subtly. He claimed that it was indirect sex discrimination, because shared parental leave would be taken by a higher proportion of men, whereas maternity leave is predominantly taken by women. This case, when it went to the EAT, considered that the tribunal had not evaluated the test for indirect discrimination correctly and sent the matter back to the tribunal for a rehearing.

Both cases are under appeal to the Court of Appeal and employers will be studying them carefully. If the direct sex discrimination case wins, then it will be essential for employers to level shared parental pay and maternity pay. If the indirect sex discrimination claim wins (but the direct sex discrimination fails) then employers may be able to justify paying different rates for enhanced maternity pay and enhanced shared parental leave. However, employers are likely to view it as an unnecessary risk to run, given that claims can go back for six years, and it would only take one successful claim against an employer to open the floodgates.

Employment status

Employment status is an extremely important concept, as the status of an individual will determine what rights they are entitled to. This is an area of employment law that has dominated the headlines in the past two years and has attracted a great deal of attention from the general public.

In the first case of this kind to go to the Supreme Court, Pimlico Plumbers Ltd and another v. Smith [2018] UKSC 29, the Court found that a plumber was, in fact, a worker, as opposed to being self-employed, despite the contract labelling the individual as an independent contractor. It therefore confirmed the decision of the EAT and the Court of Appeal. The Supreme Court found that the claimant was obliged to work personally for the company, with only a limited right to appoint a substitute; this limitation was considered a significant factor. Unfortunately, this case does not provide any further legal clarity and the decision is highly fact-specific. However, the Court of Appeal did make the following interesting observations about substitution clauses generally, which, although the Supreme Court did not expressly endorse them, neither did it reject them:

  1. an unfettered right to substitute another person to do the work is inconsistent with the obligation to accept work personally;
  2. a conditional right to substitute may or may not be consistent with the obligation to accept work personally, depending on the conditions;
  3. the greater the limitations for the individual seeking to find a substitute, the more likely it is that the individual is providing a personal service;
  4. if the right of substitution only operates if the contractor is 'unable' to do the work, rather than simply choosing not to do it, then the substitution right is still consistent with personal service;
  5. it is the exception that would prove the rule; and
  6. if the individual has a right of substitution, but would have to show that the person he or she had given the work to was equally well qualified, that right would be inconsistent with personal performance.

Uber BV and others v. Aslam and others [2018] EWCA Civ 2748 is similar to the Pimlico Plumbers case. Here, Uber drivers argued that they are workers, as opposed to self-employed, and are therefore entitled to basic employment rights such as the national minimum wage and holiday pay. The EAT, agreeing with the tribunal, concluded that the drivers were workers. The case has now been decided by the Court of Appeal, which upheld the tribunal and EAT decisions. Interestingly, however, the Court was not unanimous, with one of the judges ruling in favour of Uber. The majority considered that the tribunal had been entitled to come to a view that the documentation, which purported to show Uber working for the drivers, was in fact a sham, and the correct analysis was that the drivers were workers for Uber. Clearly, this case or this issue is likely to run throughout 2019. However, in December 2018, the government published the Good Work Plan, setting out what it describes as 'the biggest package of workplace reforms for over 20 years'. Within it, the government states that it will legislate to improve the clarity of employment status tests, but it is yet to say how it will provide this clarity.

Data privacy

Employers have a number of obligations with regard to the personal data they hold about their employees. One of these is to ensure that employees' personal data is kept secure, and the financial consequences of breaching this obligation can be very severe since the introduction of GDPR. WM Morrison Supermarkets plc v. Various Claimants [2018] EWCA Civ 2339 is an important case, of which employers should take note, as the Court of Appeal held the employer vicariously liable for a data privacy breach, even though the facts of the case were that a rogue employee had deliberately sent employee personal data to third parties. The Court of Appeal admitted that the employer was not to blame for the breach, but concluded that the wrongful acts of the 'rogue' employee were within the field of activities assigned to him by the employer and therefore the employer was vicariously liable. Since the data breach related to 100,000 Morrisons employees, and it is not necessary for the claimants to show that they suffered any loss or damage before they receive financial compensation for the data breach, it is clearly a huge case for Morrisons.

In a related area, the courts have also had to consider the issue of non-disclosure agreements. Non-disclosure clauses are common in settlement agreements and may effectively be included in contracts of employment, in which there are tightly worded confidentiality clauses. In ABC & Others v. Telegraph Media Group Limited [2018] EWCA CIV 2329, five employees of the company made allegations of inappropriate behaviour against a senior executive. All of the claims were settled. All the individuals had independent legal advice before entering the settlement and received significant payments settling the claims. In all the cases, there were terms under which both sides agreed to keep the subject matter and the complaints themselves confidential. There was an exclusion to allow individuals the right to make legitimate disclosures, including the reporting of any criminal offences, if they so wished. The press got wind of the story and wanted to publish the allegations.

The company and the senior executive applied for an injunction to prevent disclosure of the story. The Court of Appeal confirmed it would issue an injunction as requested. The Court accepted that each of the settlement agreements had an express contractual obligation of confidentiality. Provided the agreements had been freely entered into, there had not been improper pressure, and the employees had had independent legal advice, there were strong public policy reasons in favour of upholding the non-disclosure clauses. The Court also accepted that there was an important and legitimate role for non-disclosure agreements in the consequential settlement of employment disputes.

The case is important because, in the wake of the #MeToo movement, there has been a suggestion that non-disclosure clauses were, by themselves, inappropriate. The Court of Appeal has firmly rejected that assertion. However, employers do still need to ensure that clauses are properly drafted and permit legitimate disclosures of wrongdoing to the appropriate authorities.

Outlook and conclusions

Employment law has a reputation for being fast-paced, with significant legal developments occurring every year: 2018 was no exception. From the cases that we know are continuing through the system (such as Uber, Capita and Hextall), it is quite clear that there will be a number of significant further developments in UK employment law in 2019.