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Does the banning of a headscarf at work constitute direct religious discrimination?

No, held the CJEU in Achbita v G4S Secure Solutions (the full judgment is not available yet, only the press summary).

G4S in Belgium operated a policy of ‘neutrality’, banning all wearing of political, religious or similar signs. A Muslim employee announced she wanted to start wearing a headscarf; she was told she could not, and she was then dismissed.

The CJEU held that G4S’s policy did not amount to direct discrimination on grounds of religion because it prohibited all religious signs, so it was not treating one religion less favourably than another.

It also held that G4S’s rule introduced a difference in treatment which was indirectly based on religion, as Muslims are placed at a particular disadvantage. It held that an employer’s desire to project an image of neutrality was a legitimate aim provided it applied only to customer-facing employees, and – more interestingly – left open the question of whether it would have been possible to redeploy Ms Achbite into a non- customer facing role (rather than dismiss her).

In an accompanying case, Bougnaoui and anor -v- Micropole SA the CJEU held that if a customer asks for a Muslim employee not to wear a headscarf, that is not a ‘genuine and determining occupational requirement’.

Can a Claimant successfully claim harassment by simply asserting s/he has a disability without establishing s/he is disabled under the Equality Act 2010?

No, held the EAT in Peninsula Business Services v Baker.

The Claimant was employed as a tribunal representative by Peninsula. In January 2014, he told his advocacy manager he had dyslexia. A psychologist’s report confirmed this and an occupational health report in August 2014 suggested he may be disabled.

Peninsula’s director of legal services grew concerned the Claimant was not devoting his time to his work and instructed external consultants to conduct covert surveillance.

The Claimant complained that being subjected surveillance constituted harassment on grounds of disability. The employment tribunal found for the Claimant but, acknowledging it was not asked to determine disability, found “on the basis that the Claimant may well have been disabled” that the trigger for the decision to engage in surveillance was an assertion of disability.

Overturning the decision, the EAT held that discrimination protection is not available to those who merely assert a disability. The protection applies only to those who have a disability, to those associated with a disabled person, or to those who are wrongly perceived to be disabled.

The Court of Appeal has delivered an important decision on employment status holding that the plumbers engaged by Pimlico Plumbers were engaged as workers not self employed contractors.

In Pimlico Plumbers Ltd and anor v Smith, the Court of Appeal has upheld the decision of an employment tribunal that a plumber who was self-employed for tax purposes was nevertheless a ‘worker’ within the meaning of S.230(3)(b) of the Employment Rights Act 1996 and the Working Time Regulations 1998 SI 1998/1833 and an ‘employee’ under the extended definition of that term in S.83(2) of the Equality Act 2010.

S was a plumber who carried out work solely for PP Ltd between 25 August 2005 and 28 April 2011. He had signed an agreement that his work would be governed by terms and conditions set out in PP Ltd’s Manual, which included stipulations as to working hours, uniform and appearance; restricted the ability of S to work for himself or other companies; obliged S to use a PP Ltd van for his work; and provided that S could only swap jobs with other PP Ltd operatives. During this period, S filed tax returns on the basis that he was self-employed. He was registered for VAT and submitted regular VAT invoices to PP Ltd. In January 2011, S had a heart attack and PP Ltd subsequently terminated its arrangement with him on 3 May 2011, following which he brought claims in the employment tribunal alleging unfair dismissal, wrongful dismissal, entitlement to pay during the period of a medical suspension and failure to provide particulars of employment. These claims all depended on S being an employee within the meaning of S.230(3)(a) ERA – i.e. employed under a contract of service. At a pre-hearing review, an employment judge held that S was not employed under such a contract, and therefore concluded that the tribunal had no jurisdiction to hear these claims.

However, S had additionally made claims for unpaid holiday pay and unlawful deductions from wages. For these purposes he did not need to show that he was an employee, merely that he was a ‘worker’ within the meaning of S.230(3)(b) ERA and Reg 2 WTR – i.e. he was employed under a contract ‘whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual’. He also claimed against both PP Ltd and its owner, M, for direct disability discrimination, discrimination arising from disability and failure to make reasonable adjustments. For these purposes, he needed to be an employee within the extended definition in S.83(2) EqA, which includes those employed under ‘a contract personally to do work’.

The employment judge held that S was a worker and an employee in the extended sense. The main purpose of the agreement signed in 2005, and a subsequent agreement containing updated terms which S signed in 2009, was for S to personally provide work for PP Ltd. The Manual obliged him to work 40 hours per week (M’s evidence was that the minimum week in practice was 36 hours per week), and although there was some flexibility, he was required to agree the hours he would work with PP Ltd.  There was not an unfettered right to substitute at will: there was no such right given to S by the contractual documents and no evidential basis for such a practice. Even though in practice engineers with PP Ltd swapped jobs around between each other, and also used each other to provide additional help where more than one person was required for a job or to do a job more quickly, and there was evidence that external contractors were sometimes required to assist a job due to the need for further assistance or to conduct specialist work, the fact was that S was under an obligation to provide work personally for a minimum number of hours per week or on the days agreed with PP Ltd. S had a degree of autonomy in relation to the estimates and work done, but PP Ltd exercised very tight control in most other respects. These factors led the judge to conclude that PP Ltd could not be considered to be a client or customer of S’s business.

The EAT upheld the employment judge’s decision, leading PP Ltd to appeal further to the Court of Appeal, where the Master of the Rolls (Sir Terence Etherton) gave the lead judgment. He began by observing that ‘the case puts a spotlight on a business model under which operatives are intended to appear to clients of the business as working for the business, but at the same time the business itself seeks to maintain that, as between itself and its operatives, there is a legal relationship of client or customer and independent contractor rather than employer and employee or worker’. Citing the judgment of Lady Hale in the Supreme Court in Clyde and Co LLP and anor v Bates van Winklehof (Brief 1000), he stressed that in the context of S.230(3)(b) ERA, Reg 2 WTR and S.83(2) EqA, ‘a distinction is to be drawn between (1) persons employed under a contract of service; (2) persons who are self-employed, carrying on a profession or a business undertaking on their own account, and who enter into contracts with clients or customers to provide work or services for them; and (3) persons who are self-employed and provide their services as part of a profession or business undertaking carried on by someone else’. The question posed by the appeal was whether the employment judge was correct to hold that S fell in category (3) rather than category (2).

In the Master of the Rolls’ view, the employment judge had been correct to conclude that S was under an obligation to provide his services personally. Unlike earlier decisions of the EAT and Court of Appeal in which it had been held that an express right of substitution or delegation was incompatible with an obligation of personal performance, the facts here indicated that there was no such express right. Nor was there any scope for the Court to imply such a right. Furthermore, having found that S was obliged under the terms of his agreements with PP Ltd to do a minimum number of hours per week, the employment judge concluded, and was entitled to conclude, that the degree of control exercised by PP Ltd over S was also inconsistent with PP Ltd being a customer or client of a business run by S. In particular, the judge was entitled and right to place weight on the onerous restrictive covenants in the agreement, precluding S from working as a plumber in any part of Greater London for three months after termination.

 

http://www.bailii.org/ew/cases/EWCA/Civ/2017/51.html

Is a ‘perfunctory and insensitive’ redundancy consultation likely to make a redundancy dismissal unfair? Yes, held the EAT in Thomas v BNP Paribas Real Estate, upholding an appeal against the finding of a fair dismissal. The Claimant had over 40 years’ service, ending up as a Director of the Respondent’s property management division. After a strategic review, the Claimant was put at risk of redundancy and immediately put on ‘garden leave’ and told not to contact clients or colleagues. The Respondent then made a number of procedural errors, including getting the Claimant’s first name wrong in a letter. However, the employment tribunal found that the dismissal was fair. The EAT quashed the decision, remitting the claim to a different employment tribunal. The EAT criticised the decision to put the Claimant on garden leave and to prohibit contact with colleagues during the consultation period. The EAT found it ‘particularly troubling’ that the employment tribunal had found the manner of consultation perfunctory and insensitive, yet considered that it was reasonable, without saying why. Such a process would not necessarily be unreasonable, and hence unfair, but one would expect to find some form of reasoning from the employment tribunal to explain why matters that gave rise to criticism of the process did not render the consultation unreasonable.

In Bandara v British Broadcasting Corporation the EAT has upheld the decision of an employment tribunal that an employer had not been entitled to rely upon an existing final written warning when considering whether to dismiss an employee for further misconduct because the decision to issue the existing warning was ‘manifestly inappropriate’. However, the EAT went on to hold that the tribunal erred in finding that the dismissal was nonetheless fair. The tribunal had wrongly posed the hypothetical question of what would have happened had the existing warning been an ordinary, as opposed to a final, written warning. Instead, the tribunal ought to have considered the extent to which the employer relied on the final written warning and, given the employer’s reasoning, whether the dismissal fell within the range of reasonable responses under S.98(4) of the Employment Rights Act 1996.

B worked as a Senior Producer in the BBC’s Sinhalese Service. Until 2013, he had an unblemished disciplinary record going back almost 18 years. In August 2013, he was subject to disciplinary proceedings in respect of two incidents which had taken place earlier that year. The first, for which he was charged with abusive behaviour and refusing to follow a reasonable management request, concerned an occasion in March when he had shouted at a senior manager, S. He had apologised to S by e-mail the following day and no further action was taken at the time. The second, for which he was charged with a breach of editorial guidelines, related to his decision, on 23 July 2013, to prioritise coverage of the 30th anniversary of Black July – a sombre date in Sri Lankan history ­– over that of the birth of Prince George the previous day. The disciplinary decision-maker, I, considered that both incidents potentially constituted gross misconduct, and decided to impose a final written warning.

Shortly thereafter, B was subject to further disciplinary proceedings, which concerned various allegations of bullying and intimidation, being abusive towards colleagues and refusing to obey management instructions. G, the disciplinary decision-maker in these proceedings, found most of the allegations proved or partially proved, and concluded on 15 August 2014 that B should be summarily dismissed. B’s claims of race discrimination and unfair dismissal were dismissed by an employment tribunal, notwithstanding the tribunal’s finding that the earlier final written warning was manifestly inappropriate. B appealed against the dismissal of his unfair dismissal claim, and the BBC cross-appealed against the tribunal’s finding on appropriateness of the earlier warning.

The EAT noted that, in general, earlier decisions by an employer should be regarded by the tribunal as established background that should not be reopened. However, an earlier disciplinary sanction can be reopened if it is ‘manifestly inappropriate’, i.e. if there is something about its imposition that, once pointed out, shows that it plainly ought not to have been imposed. In the present case, the EAT considered that the tribunal had been entitled to conclude that the earlier final written warning should not have been imposed. As the tribunal found, the misconduct in question plainly did not amount to gross misconduct, either by reference to the BBC’s disciplinary policy or by generally accepted standards.

However, the EAT held that the tribunal had erred in concluding that B’s dismissal was nonetheless fair. Where an employee is dismissed for misconduct following a final written warning that the tribunal considers manifestly inappropriate, the tribunal should not put forward a hypothesis of its own, but should examine the employer’s reasoning and see whether or not the decision to dismiss was reasonable having regard to equity and the substantial merits of the case. This will include consideration of the extent to which the employer relied on the final written warning. In the EAT’s view, if the employer treated the warning as no more than background or as indicative of the standard to be expected of an employee, and in fact dismissed for the misconduct alleged in the new proceedings, then it may be that the dismissal was fair. If, however, the employer attached significant weight to the warning, for example starting from the position that because the employee was already subject to a final written warning, he or she should be dismissed for any significant further misconduct, it is difficult to see how the employer’s decision could be reasonable.

In the present case, the tribunal had wrongly considered the hypothetical question of whether the dismissal would have been fair had B been subject to an ordinary, as opposed to a final, written warning. Its decision therefore could not stand. As the tribunal had not made clear findings on the extent to which the BBC in fact took account of the existing final written warning, the EAT could not establish for itself whether or not B’s dismissal was fair, and the case was remitted to the tribunal for determination of this point.

Link to transcript: http://www.bailii.org/uk/cases/UKEAT/2016/0335_15_0906.html

 

In Aslam and ors v Uber BV and ors, the London Central Employment Tribunal has held that drivers engaged by Uber are not self-employed contractors, but fall squarely within the legal definition of ‘worker’ under S.230(3)(b) of the Employment Rights Act 1996 (and equivalent definitions in the Working Time Regulations 1998 and the National Minimum Wage Act 1998) with the result that they are legally entitled to the national minimum wage, paid annual leave, and whistleblower protection. The tribunal’s judgment sets out a scathing critique of Uber’s submissions that it is a technology platform as opposed to a transport provider and that its drivers are self-employed contractors offering their services to passengers via the Uber app. In the tribunal’s view, any driver who has the app switched on, is within the territory in which he or she is authorised to work, and is able and willing to accept assignments is – for so long as those conditions are satisfied – working for Uber under a worker contract.

The tribunal highlighted that Uber runs an enterprise whose central function is the carrying of people in cars from one point to another and that it operates in part through a company that is regulated as a private hire vehicle operator, but that it resorts in its documentation to ‘fictions’, such as fake invoices that it generates on behalf of its drivers but that are never sent to passengers, and ‘twisted language’ in its contracts with drivers. The tribunal considered that the ‘remarkable lengths’ to which Uber had gone to compel agreement with its legal analysis merited ‘a degree of scepticism’. Moreover, the tribunal noted that in other correspondence, for example in submissions to the Greater London Authority Transport Scrutiny Committee, Uber had boasted of providing job opportunities and potentially generating tens of thousands of jobs in the UK, and paying its drivers on a commission basis. The tribunal also agreed with the findings of the North California District Court, in a similar case brought by Uber drivers in California, that ‘Uber does not simply sell software; it sells rides.’

In the tribunal’s view, the case put forward by Uber did not correspond with the practical reality. The notion that Uber in London was a mosaic of 30,000 small businesses linked by a common platform was ‘faintly ridiculous’. Save for a few individuals who operate more than one vehicle on their Uber account, each such business consisted of an individual with a car seeking to make a living by driving it. In addition, Uber’s case was dependent on the assertion in its terms and conditions that the driver enters into a contract with each passenger to provide the transportation service – but this would be absurd, since neither party knows the identity of the other, the route is set by Uber and the price is calculated by and paid to Uber. The tribunal therefore considered that the driver/passenger contract was a pure fiction.

With regard to the nature of the relationship between Uber and its drivers, the tribunal noted in particular that: the terms for passengers contradict themselves insofar as they state that Uber is the drivers’ agent but at the same time asserts ‘sole and absolute discretion’ to accept or decline bookings; Uber interviews and recruits drivers; Uber controls key information as to the passenger’s identity and intended destination and does not share this with drivers; Uber requires drivers to accept and/or not to cancel trips and enforces this requirement by logging off drivers who breach it; Uber sets the default route for each trip and the driver may face deductions from his or her fare if he or she departs from it; Uber fixes the fare and the driver cannot agree a higher sum with the passenger; Uber imposes conditions on drivers, instructing them on how to do their work and controlling them in the performance of their duties; Uber subjects drivers through its rating system to what is effectively a performance management/disciplinary procedure; Uber determines issues about rebates for passengers, sometimes without involving the driver affected; Uber used to operate a scheme guaranteeing minimum earnings for new drivers; Uber accepts the risk of loss, for example where a passenger soils a vehicle or in the case of fraud, which if the drivers were genuinely in business on their own account would fall on them; Uber handles passenger complaints; and Uber reserves the right unilaterally to amend drivers’ terms.

The tribunal concluded that the wording of S.230(3)(b) ERA was fully applicable to the drivers in the instant case and that the guidance in the principal authorities favoured its view, rather than that put forward by Uber. It considered that the problem stemmed from the unequal bargaining positions of the parties, noting that many Uber drivers do not have English as a first language and will not be accustomed to interpreting ‘dense legal documents couched in impenetrable prose’, which the tribunal considered simply misrepresented the true rights and obligations on both sides. However, the tribunal noted that nothing in its reasoning should be taken as doubting that Uber could have devised a business model that did not involve it employing drivers; it was simply that Uber’s chosen model failed to achieve that aim.

Uber has confirmed that it will be seeking to appeal the decision.

Link to judgment: https://www.judiciary.gov.uk/judgments/mr-y-aslam-mr-j-farrar-and-others-v-uber/

Settlement sum representing injury to feelings was taxable

In Moorthy v Commissioners for HM Revenue and Customs, the Tax and Chancery Chamber of the Upper Tribunal has held that a sum paid to an employee under a settlement agreement in respect of injury to feelings was not exempted from income tax under S.406 of the Income Tax (Earnings and Pensions) Act 2003. Although S.406 takes payments made in respect of injury to an employee outside the charge to tax, ‘injury’ in this context did not include injury to feelings. The EAT’s decisions to the opposite effect in Vince-Cain v Orthet Ltd (Brief 770) and Timothy James Consulting Ltd v Wilton 2015 ICR 764 were wrongly decided.

After M was made redundant by JE Ltd in March 2010 he brought proceedings for unfair dismissal and age discrimination. Following mediation, he reached a settlement agreement with JE Ltd under which it agreed to pay him ‘an ex gratia sum of £200,000 by way of compensation for loss of office and employment’. JE Ltd treated the first £30,000 as exempt from tax by virtue of S.403 ITEPA but deducted income tax at the basic rate from the remainder. When M completed his tax return he treated the whole sum as being tax free. HMRC disagreed and issued a closure notice. On appeal, the First-Tier Tribunal (FTT) found that the whole of the settlement sum had been paid in connection with the termination of M’s employment under S.401 ITEPA and so was chargeable to tax pursuant to S.403. M appealed against that decision to the Upper Tribunal. Among other things, he argued that the settlement sum was taken out of S.401 by S.406(b) ITEPA, which exempts from income taxation a payment or benefit made ‘on account of injury to’ an employee.

The Upper Tribunal dismissed the appeal. It agreed with the FTT that the entirety of the £200,000 settlement sum fell within S.401 as a payment made in connection with the termination of M’s employment. The section applies to payments made even where the termination was fair and lawful and includes non-pecuniary awards, such as damages for injury to feelings. Even if the sum paid might exceed the statutory maximum that could be awarded for unfair dismissal, that did not mean that the excess was unconnected with the termination of the employment.

As for the exemption in S.406, the Tribunal could not accept that, insofar as the sum represented damages for injury to feelings, it was a payment on account of ‘injury’. The meaning of ‘injury’ in S.406 ITEPA is context-specific. It could not be read as exempting all payments made by an employer in respect of an injury to an employee; rather, it was intended to apply to injuries that led to the termination of employment or to a change in duties or level of earnings. In so holding, the Tribunal stated that the EAT was wrong to decide that injury to feelings was covered by S.406 ITEPA in Vince-Cain v Orthet Ltd and Timothy James Consulting Ltd v Wilton. The obiter reasoning of the Chancery Division in Horner v Hasted (Inspector of Taxes) 1995 STC 766 was to be preferred.

Link to transcript: http://www.bailii.org/uk/cases/UKUT/TCC/2016/13.html

Monitoring Employees’ Use of the Internet

Is the right to respect for private life and correspondence breached if employers monitor employees’ personal communications at work? No, subject to reasonableness/proportionality, according to the European Court of Human Rights in Barbulescu v Romania. Mr Barbulescu was an engineer who used his business Yahoo Messenger account to send and receive personal messages with his fiancee and his brother, including messages about his health and sex life.  This was in breach of his employment contract.  His employer, discovering this accidentally, dismissed him.  Mr Barbulescu argued that the Rumanian courts should have excluded all evidence of his personal communications on the grounds it infringed his Convention rights to privacy.

In summary:

  • any dismissal of a zero hour contract employee is automatically unfair, if the principal reason is that s/he breached a contractual clause prohibiting him/her from working for another employer
  • no qualifying period is required to bring such an unfair dismissal claim; and,
  • it is also unlawful to submit a zero hour worker (note: worker not employee) to detriments if they work for another employer in breach of a clause prohibiting them from doing so.

The Exclusivity Terms in Zero Hour Contracts (Redress) Regulations 2015

In Cooper Contracting Ltd v Lindsey, the EAT has given a useful summary of the principles that tribunals should apply when considering whether a successful claimant’s compensation should be reduced to reflect failure to mitigate loss following unfair dismissal. Mr Justice Langstaff, President of the EAT, confirmed that it is not for the claimant to prove that he or she has mitigated his or her loss, the burden of proof is on the wrongdoer, and that it must be proved that the claimant acted unreasonably.

L worked as a carpenter for CC Ltd for 21 months until it dispensed with his services in December 2013. He claimed unfair dismissal. Although CC Ltd argued that L had worked for it on a self-employed basis, the tribunal found that he was in fact an employee and went on to uphold his claim. When it came to assessing compensation, the tribunal noted that, since his dismissal, L had chosen not to seek alternative employment but had been working as a self-employed tradesman. It found that this was a reasonable course of action and that it should not limit L’s compensation for loss up to the date of the hearing on the basis of failure to mitigate. However, it noted that there were other opportunities for employed work at higher remuneration, if L wished to look for them, and considered that this justified limiting his future loss to three months. CC Ltd appealed against the compensation award to the EAT. It argued, among other things, that the tribunal’s finding that better-paid alternative employment was available to L should have led to a finding that he had failed to mitigate his loss.

The EAT dismissed the appeal. Mr Justice Langstaff, President of the EAT, rejected the suggestion that the duty to mitigate is a duty to take all reasonable steps to lessen the loss. He went on to summarise the principles governing mitigation of loss as follows: (1) the burden of proof is on the wrongdoer – a claimant does not have to prove that he or she has mitigated his or loss; (2) the burden of proof is not neutral and if no evidence on the point is put before the tribunal by the wrongdoer then the tribunal has no obligation to find it; (3) what has to be proved is that the claimant acted unreasonably; (4) there is a difference between acting reasonably and not acting unreasonably; (5) what is reasonable or unreasonable is a matter of fact; (6) it is to be determined taking into account the views and wishes of the claimant as one of the circumstances, although it is the tribunal’s assessment of reasonableness and not the claimant’s that counts; (7) the tribunal is not to apply too demanding a standard to the victim; (8) the test may be summarised by saying that it is for the wrongdoer to show that the claimant acted unreasonably in failing to mitigate; and (9) in a case in which it may be perfectly reasonable for a claimant to have taken on a better paid job that fact does not necessarily satisfy the test. It will be important evidence that may assist the tribunal to conclude that the claimant has acted unreasonably but it is not in itself sufficient.

Applying these principles to the tribunal’s judgment, Langstaff P was satisfied that there was no error of law. The tribunal had given adequate reasoning for its finding that it was reasonable for L to re-enter the job market as a self-employed tradesman; and the decision to limit future loss to three months was within the tribunal’s ‘just and equitable’ discretion in the amount of compensation to be awarded under S.123 of the Employment Rights Act 1996.

http://www.bailii.org/uk/cases/UKEAT/2015/0184_15_2210.html