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Employment Law Decisions Spotlight – 2021

Employment Law Decisions Spotlight – 2021

Overview

The purpose of this article is to look back over what we see as the most important employment law judgments that have been reported in 2021, summarising what the cases were about, what the judgments said and what the effect will or maybe on employers moving into 2022. 

This article is meant only as an overview. If you believe that any of these judgments may affect your company, please let us know and we will be able to provide you with tailored advice on your situation.

 

Important Judgments

Royal Mencap Society v Tomlinson-Blake [2021] UKSC 8

This case dealt with the issue of payment for workers carrying out sleep-in shifts. In some circumstances, workers for certain employers, often care organisations, are required to remain on company premises, or at a client’s premises, overnight. During these shifts, the workers are normally allowed to sleep through the night and are only required to be awake when needed to perform any duties that arise, normally when the person for whom they are caring wakes up, for example.

This has caused difficulty for several years as to the correct interpretation of the minimum wage regulations and their application to these circumstances. 

In the past, employers had commonly taken the approach that they would pay workers working sleep-in shifts an allowance to cover the evening on the basis that this would normally cover their hourly rate for the limited time that they might be awake across each evening. 

This question was first put before the courts as far back as 2003 and initial decisions were generally favourable to the workers’ position. 

There were also changes made to the National Minimum Wage Regulations 2015 which stated that a worker is only considered to be available for work for the purposes of calculating ‘time work’ when they are awake. 

There have been several further cases addressing the issue but the decision in Royal Mencap, which has been handed down by the Supreme Court, should now finally confirm the correct position for employers to take moving forward. 

The Supreme Court drew a clear distinction between carrying out actual work and being available for work. They found that if a worker was simply available for work, as they would be in circumstances where they were sleeping and not attending to a service user for example, they were not carrying out actual work and the national minimum wage would not apply to that time. 

In short, this means that employers who employ workers on sleep-in shifts will only have to ensure that those employees are paid the national minimum wage for the time that they are actually working, and not for the time that they are simply available for work, i.e., sleeping. 

This judgment is good news for employers. Under the previous position, care sector employers were likely to face claims for considerable amounts in back pay that would have been very unlikely to be covered through funding. The future of a number of care sector businesses would have been under threat. This judgment ensures that the impact on the care sector is minor, if there is any at all, which will be welcome news. 

 

Uber BV v Aslam [2021] UKSC 5

This particular case focussed on the ‘gig economy’, and more specifically, on the employment status of Uber drivers. 

This issue was first raised in 2016 when several Uber drivers brought claims in the Employment Tribunal asking whether they were entitled to holiday pay and national minimum wage. Ultimately, this boiled down to one simple issue, were the Uber drivers workers (in other words employed), or were they self-employed contractors?

There are already established tests for considering whether an individual is a worker or self-employed and the Supreme Court applied those tests to the Uber drivers who had made the claims. 

They considered, amongst other things, the following important factors:

  • The contract between the individual and the company. Normally, the contract of employment is the place to start. It is the document that defines the relationship and sets out the relevant terms. However, the Supreme Court was clear in stating that the contract is not important and should not be the place to start. It said that there was no legal presumption that a contractual document contains the whole agreement and no absolute rule that the terms of a contract represented the true agreement. In other words, it is more important to look at the relationship in practice rather than the contractual position. 
  • Control. This is a vitally important element. It is key to look at the level of control the employer has over the individual. For example, do they dictate when and where they should work, how they should do it, who should do it and dictate the equipment that should be used? In the Uber case, the Supreme Court considered the following matters to be particularly important:
    • Uber employed a rating system whereby if a driver fell below a certain level they would be penalised, including termination
    • All prices were set by Uber and the drivers had no influence or control over this
    • The drivers were discouraged from working elsewhere
    • The drivers also faced penalties for cancelling or not accepting rides through the app once it was on 
    • That there was no right of substitution, meaning the drivers had to perform the work personally.

 

Ultimately, the Supreme Court found that the drivers were workers. Uber have enough control over their drivers to constitute a worker relationship. This means that Uber drivers are entitled to holiday pay, minimum wage, and rest breaks. 

The Supreme Court also considered, for the purposes of any minimum wage considerations, when the drivers were deemed to be working. They found that the drivers were working as soon as they turn on the Uber app, because at that point they are available for work, in the same way, that a firefighter is considered to be working whilst they are on call. 

The implications of this judgment for Uber, and other companies operating under the same sort of circumstances, will be significant. Not only does it mean that moving forward their drivers are entitled to annual leave and other employment rights, but it could also open the door for significant back pay claims. 

The impact has already been felt by Addison Lee who operate in a similar way to Uber and have also been affected with their legal challenges regarding the employment status of their drivers being rebutted. 

In terms of the gig economy as a whole, it is not expected that this will be affected too significantly as there will still be a large number of employers who will gain significant benefits from this approach. What it does mean is that those employers trying to take advantage of the gig economy model will need to be very wary about the relationship they have with the individuals who provide work for them. The more control exercised over individuals, the more likely they will be found to be workers and not self-employed. 

 

Asda Stores Ltd v Brierley [2021] UKSC 10

This case concerned the question of equal pay. A number of female Claimants, which reached a total of 35,000 Claimants by the time the Supreme Court heard the case, had brought a claim for equal pay. 

By way of some background, the Claimants were female employees working in Asda’s retail business. The employees in the retail business were predominantly female. Asda also employs employees at its distribution centres, and those employees are predominantly men. The payment terms were more favourable in the distribution centres. The claim, therefore, centred on whether the employees working in the retail business should be paid in the same way as those working in the distribution centres. The specific question for the Supreme Court was whether the distribution employees were comparators to the retail employees.

The Supreme Court followed existing case law which stated that all that is required to establish a comparator is that the terms and conditions of employment of the comparators must be broadly the same at their establishment and the Claimant’s establishment and that if there are no comparators at the Claimant’s establishment the court considers whether the comparator’s group would have been employed on broadly similar terms to those which they have at their own establishment. The terms do not need to be identical. This leaves the court in a position where they should consider a hypothetical relocation of a potential comparator to the Claimant’s establishment and the impact this would have on their terms. If it is deemed that the terms would be unchanged by a relocation, the common terms requirement is satisfied. 

When applying the test to this case, the Supreme Court found that it had been correct for the previous courts to find that if a distribution centre employee moved to the retail business their terms would not be changed as the distribution centre employees (whose terms were established through collective bargaining) would not accept lesser terms.

It is important to note that this does not mean that the equal pay claim is successful. There is another important test relating to whether the retail employees carry out work of equal value for their claims to succeed. This will now be referred back to a tribunal to decide and Asda can raise further defences in that regard. 

What the judgment does do at this stage is highlight a potential issue for employers with separate locations and where pay at those separate locations is different, especially where the majority of employees at those different locations are of different genders. It does not mean that immediate changes are needed, but it does mean that employers will need to consider the reason for any difference in pay across locations and to make sure that the location itself is not the explanation. 

 

Judgments to Look Out for in 2022

 

Harpur Trust v Brazel 

This case was heard by the Supreme Court on 9th November 2021 with the judgment to follow. 

The case concerns the payment of annual leave to employees on permanent contracts but working for part of a year. The previous position was that employees working for a part of a year would receive an entitlement based on 12.07% of the total hours worked across the year. However, the Court of Appeal, in this case, found that where a worker has a permanent contract for the full year, they are entitled to 5.6 weeks holiday. The 12.07% method provides the worker with an entitlement which is, in theory, pro-rated, meaning it falls short of the 5.6-week entitlement. 

This means that the current position is that a part-year worker on a permanent contract continues to accrue annual leave even when they are not working during the year and will be entitled to a full-time annual leave entitlement of 5.6 weeks. Clearly, this would create difficulties for employers, particularly those with several part-year workers such as schools. 

The Supreme Court will decide whether the current approach set out by the Court of Appeal is correct, or whether employers can revert to using the 12.07% method. This could be a vital decision for several business sectors and should be watched carefully. 

 

Flowers v East of England Ambulance Trust

This is a case that has not yet been heard by the Supreme Court but should be heard next year. It concerns whether voluntary overtime must be included in the calculation of holiday pay further to other related judgments going back to 2014. 

The current position in this case, as set out by the Court of Appeal, is that voluntary overtime, if paid regularly, should be included in holiday pay calculations alongside other types of overtime that must already be included (non-guaranteed etc.). 

The Supreme Court are due to provide some further clarity on this position for employers moving forward. It may go in the employer’s favour, deciding that voluntary overtime should not be included, or it may confirm the current position. As things stand, calculations should include voluntary overtime until the Supreme Court decides otherwise. 

 

Conclusion

As with all aspects of employment law, there are constant changes which employers need to stay on top of. This year though, and moving into next year, we have seen some particularly important decisions, particularly for certain industries, such as the care sector and those employers that rely on the gig economy. 

The changes we have explored above are significant and binding on employers moving forward. There is no higher court than the Supreme Court and the decisions considered above cannot now be changed. 

Employers need to ensure, if they have not already, that they have regard to the content of these judgments moving forward. How they affect each employer is different so we would urge you to seek expert guidance and advice on your position. 

We would highly recommend having Trusted Advisers in your corner to help you. Wilford Smith’s business-focused services specialise in Employment Law, Commercial Law, Company Law, Commercial Conveyancing, Regulatory and Criminal Investigations. 

 

We can be your Trusted Adviser in all areas.

Update, we have published our Employment Law review, of what to expect in 2022:
Employment Law Changes 2022

 

 

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