Employment Law Newsletter – July 2020

Cases:

  • Employment Status: Hairdresser deemed employee despite consultancy agreement
  • Agency: Long-term worker supplied to sole client can still be an agency worker if each assignment temporary
  • TUPE: Contract of transferring worker may be split between more than one transferee
  • Unfair dismissal: Claim could proceed on procedural fairness grounds, even though no prospect of monetary award
  • Disability Discrimination: Should a Tribunal apply a rigid sequential approach to interpreting the definition of disability?

Other news:

  • COVID-19: Update on Furlough Scheme
  • COVID -19: ‘Return to Normality’ ambition as local authorities given powers to force lockdowns’
  • Data Protection: Advice from the ICO regarding staying safe whilst using online conferencing
  • Data Protection: ICO produces initial guidance for businesses keeping customer logs
  • Economic Update: Key employment announcements
  • COVID-19: ONS publishes ‘Parenting in lockdown: Coronavirus and the effects on work-life balance
  • COVID-19: Lord Chancellor announces locations of ten “Nightingale Courts” to tackle case backlog
Employment Status: Hairdresser is employee despite consultancy agreement

In Gorman v Terence Paul (Manchester) Ltd ET 2410722/2019 (11 March 2020) an Employment Tribunal has found that a hairdresser who worked under a consultancy agreement with a salon for five years was, a de facto employee.

The Claimant started work as an apprentice at Terence Paul salon in 2013. Following her qualification in 2014, the salon provided her with an “Independent Contract for Services” in which it agreed to engage her as a “self-employed hairstylist“. This document confirmed that the Claimant was not, and did not wish to be, an employee of the salon.

In 2019, the salon closed. The Claimant subsequently issued a claim for unfair dismissal, sex discrimination, notice pay, holiday pay and redundancy pay. Since the salon disputed that the Claimant was an employee or worker, a preliminary hearing took place to determine this issue.

The Tribunal noted that the Claimant was 19 when she started work for the salon and that she did not understand (and was unable to negotiate) the terms of the contract. It also found that the contract did not reflect the reality of her working arrangements – a key point in any employment status case. The Claimant was subject to strict control by the salon when providing her services. There was mutuality of obligation, since her clients were allocated to her by the salon, she was obliged to perform services for them, and the salon was obliged to pay her for doing so. Although the contract theoretically allowed her to send a substitute if she could not attend work, in practice this was not possible. If she was unable to work, her clients were covered by other stylists at the salon. Further, among other things, the Claimant:

  • Had no access to information about her clients (since this was password-protected by the salon).
  • Was prevented from working for a competing salon during her contract and subject to a 12-month non-compete following termination.
  • Had to seek permission to take holiday.
  • Had 67% of her fees deducted by the salon for use of facilities.

On these facts, the Tribunal held that the tests for employee status were easily made out.

Whilst it is a first instance decision, and (as with many employment status cases) is highly fact specific, it may only be of limited precedent value. However, it is a further reminder of the approach a Tribunal will take to establishing employment status, and that the underlying contract must be considered in the context of all the other facts.

Agency: Long-term worker supplied to sole client can still be an agency worker if each assignment temporary

The EAT also held that the Tribunal had not fallen into error in failing to consider, of its own motion, whether it was an abuse of process for the Respondents to argue that the Claimants were not agency workers, having accepted in earlier litigation between the parties that they were.

In Angard Staffing Solutions Ltd and another v Kocur and others [2020] UKEAT/0050/20 the EAT has upheld the Tribunal’s decision that a worker who had an open-ended contract of employment with an agency that only ever supplied workers to one end-user was nonetheless supplied to work “temporarily” for that end-user, satisfying the definition of “agency worker” in regulation 3(1) of the Agency Workers Regulations 2010 (SI 2010/93). The issue under regulation 3(1)(a) is whether the purpose and nature of thework for which the worker is supplied is temporary.

The terms of the contract between the worker and the agency are relevant but will not be determinative of this question. The Tribunal was entitled to find that each assignment was for a defined period by reference to specific shifts, and therefore “temporary“.

TUPE: Contract of transferring worker may be split between more than one transferee

In ISS Facility Services v Govaerts (Case C-344/18) EU:C:2020:239 the European Court of Justice has held that, where there is a transfer to multiple transferees under the Acquired Rights Directive (2001/23/EC) (“ARD”), a full-time employment contract of a transferring worker can be split between the transferees into a number of part-time employment contracts, pro rata to the tasks performed by the worker.

It is for national courts to determine how the employment contract should be split. The courts could consider the economic value of the tasks to which the worker was assigned, or the time that the worker devoted to each task. The distribution of an employment contract should not be ruled out merely because it would involve the transfer to a transferee of an employment contract covering a small number of working hours.

Unfair dismissal: Claim could proceed on procedural fairness grounds, even though no prospect of monetary award

In Evans v London Borough of Brent [2020] UKEAT/0290/19 the EAT has overturned a tribunal’s decision to strike out an unfair dismissal claim even though there was no prospect of a financial award. The claimant, Dr Evans, had been dismissed for gross misconduct from his post as deputy head teacher for his part in financial mismanagement, which had resulted in him receiving unauthorised overpayments from the school and allowing unauthorised overpayments to another person. He brought an unfair dismissal claim, which was stayed pending a High Court action which led to Dr Evans being ordered to repay over £46,000 to the school. A further £200,000 was held to be irrecoverable due to limitation issues.

The Tribunal struck out the unfair dismissal claim. It held, in view of the High Court’s findings, that there were no reasonable prospects of finding that the employer did not have a reasonable belief in the misconduct, or that dismissal was outside the range of reasonable responses. Although the disciplinary process was arguably procedurally unfair, the Tribunal also struck this ground out, as any compensation would inevitably be reduced to zero, either as a Polkey reduction or due to contributory fault. Also, in view of the irrecoverable overpayments, it would not have been just and equitable to make any payment of compensation to him.

The EAT upheld Dr Evans’ appeal. The Tribunal had failed to acknowledge the potential value of a mere finding of unfair dismissal, even without a financial award. It could not be said that such a finding would be of no value, or that it is not in the interests of justice to hold an employer to account for procedural unfairness in deciding to dismiss a long-serving employee, even if that cannot lead to any financial award.

The Tribunal could still have struck out the claim if it had been an abuse of process. However, the EAT held that it is not an abuse of process to pursue an unfair dismissal claim purely on grounds of procedural unfairness, in the absence of something more (such as an express finding of bad faith).

However, national courts should consider the practical implications of dividing the employment contract in light of the objectives of the ARD. If the division of the contract proves impossible or results in a deterioration in the working conditions and rights of the  worker, the contract may be terminated. That termination must be regarded as being the responsibility & liability of the transferee(s), even if it is initiated by the worker.

Disability Discrimination: Should a Tribunal apply a rigid sequential approach to interpreting the definition of disability?

In Khorochilova v Euro Rep Limited [2020] UKEAT/0266/19/DA, the Claimant claimed she was disabled based on having a “Mixed Personality Disorder”. Section 6 of the Equality Act 2010 states:

(1) A person (P) has a disability if—

(a) P has a physical or mental impairment, and

(b) the impairment has a substantial and long-term adverse effect on P’s ability to carry out normal day-to-day activities.

At a Preliminary Hearing on this issue, the Tribunal rejected that claim and found that there was no specific evidence to substantiate her claim that her condition had a substantial adverse effect on her ability to carry out normal day to day activities. The Claimant appealed on the grounds that:

  • The Tribunal had erred in its approach to the question of impairment by considering that issue first before determining the substantial adverse effect issue; and
  • That its conclusion that there was no substantial adverse effect was one that no reasonable tribunal, properly considering the evidence, would have reached.

The EAT dismissed the appeal, and held that in respect of ground (1), the Tribunal did not err in considering the issue of impairment first. It was stated in J v DLA Piper LLP [2010] ICR 1052 that the Tribunal should not apply a rigid sequential approach to the questions under Section 6 of the Equality Act 2010. However, that did not mean that the Tribunal necessarily erred in dealing with the questions in the order they appear in the statutory provisions. The Tribunal did go on to consider the question of substantial adverse effect in any event. As to ground (2), the Tribunal’s conclusion that there was no substantial adverse effect cannot be said to be perverse. Whilst there was some evidence relating to the kinds of matters identified in the Guidance, that it would be reasonable to treat as having a substantial adverse effect, that evidence was somewhat thin, and it was open to the Tribunal, in the circumstances, to conclude that the requirement of substantial adverse effect was not made out.

Other News:

COVID-19: Update on Furlough Scheme

On 17 July, HMRC updated its guidance on which employees can be furloughed under the Coronavirus Job Retention Scheme (CJRS) to clarify that claims can be made in respect of the contractual notice periods of furloughed employees. Previously, the position had been unclear as the relevant guidance referred to statutory notice periods only. Consequently, there was some concern that HMRC had intended to make a deliberate distinction between statutory and contractual notice periods (albeit that there was nothing in the Treasury directions to support such a distinction).

The updated guidance now states that employers can continue to claim for a furloughed employee who is serving a statutory or contractual notice period. As a result, any uncertainty has been removed. It is anticipated that HMRC will update the rest of its related guidance to reflect this clarification.

COVID-19: ‘Return to Normality’ ambition as local authorities given powers to force lockdowns

On 17 July, Boris Johnson made an announcement that it was the UK government’s ambition for a “significant return to normality” by the end of the year. He stated that, from 1 August, the government will no longer tell people to work from home where possible, but will give employers “more discretion” to make decisions about working safely. The government has accordingly amended its FAQs for England to state, “Employers will have more discretion, in consultation with their employees, on how to ensure people can work safely – working from home is one way to do this, but workplaces can also be made safe by following COVID-19 Secure guidelines.

From 25 July sports facilities and venues (such as indoor gyms, studios and swimming pools) are now able to open. The FAQs also give details of the staged re-opening of certain workplaces in England on 1 August, 1 September and 1 October 2020, and the possible scaling back of social distancing measures in November 2020. The document also states that the clinically extremely vulnerable will no longer need to shield from 1 August, although they should still take particular care to follow social distancing guidelines. Updated shielding guidance has been issued reflecting this change to SSP eligibility from 1 August 2020, when shielding ends in England. Employers may therefore need to make different arrangements for any former shielders returning to their workplace on 1 August than for other non-vulnerable staff, as they may need to keep two metres away from those outside their household or bubble wherever possible.

On 18 July 2020, the Health Protection (Coronavirus, Restrictions) (England) (No 3) Regulations 2020 (SI 2020/750) came into force. The Regulations give local authorities in England the powers to restrict movement in relation to certain premises, events and open public spaces, declaring “local lockdowns”. Under the Regulations a local authority can only impose local restrictions if it is satisfied that they are a necessary and proportionate means of responding to a serious and imminent threat, and it must reassess whether this is still the case every seven days.

Data Protection: Advice from the ICO regarding staying safe whilst using online conferencing

Are your staff using video conferencing software? It seems pretty likely. If only we’d all bought shares in ‘Zoom’ back in March… Anyway, if your staff are using video conferencing software, the ICO has produced a short list of things you need to be aware of – such as checking the privacy and security settings, being aware of phishing risks in video chat and ensuring the software is up to date. Ian Hulme, the ICO’s Director of Regulatory Assurance has written a short blog piece, giving business owners, employers and managers advice about how to safely roll out the latest video conferencing technology. 

Data Protection: ICO produces initial guidance for businesses keeping customer logs

Many businesses will now have re-opened with new safety measures in place to help get back to business as usual, and stop the spread of Covid-19. These measures may include collecting personal data to support contact tracing. The ICO published a statement with initial guidance to help businesses comply with data protection laws, and has also published a further set of Q&As on its coronavirus online hub to give more detail. There is now more comprehensive guidance on data collected for contact tracing available.

Economic Update: Key employment announcements

On 8 July, the Chancellor delivered the ‘Summer 2020 Economic Update’ setting out various measures designed to stimulate the economy following the damage done by COVID-19. The announcements that will be of interest to employers include:

  • Ending of furlough scheme and new retention bonus. While the furlough scheme remains due to finish at the end of October 2020, businesses will be paid a one-off bonus of £1,000 for each furloughed worker they bring back to work and retain in employment until at least 31 January 2021. The bonus will apply to workers who are paid at least the lower earnings limit for national insurance purposes.
  • Kickstart scheme. A new “kickstart” job creation scheme will be established for young people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment. The government will pay the wages of new workers meeting these criteria for a period of six months, while they complete a “job placement”. The wages will be paid from an initial fund of £2 billion and there will be no cap on the number of placements available. For each new placement, the government will cover the cost of 25 hours’ work a week at the applicable National Minimum Wage rate. Employers may top up the government’s contribution. The scheme will open for applications in August, so the first placements can start in the Autumn. The scheme will cover England, Scotland and Wales, with funding to be provided to Northern Ireland for a similar scheme.
  • Training and apprenticeships. The number of Jobcentre work coaches will be doubled, in addition to further investment in traineeships and sector-based work academy placements to triple the number of placements available during 2020 and 2021. There will be a £32 million investment in the National Careers Service. New apprenticeships will be supported by bonuses, with employers entitled to a payment of £2,000 for each young apprentice they take on under the age of 25 and £1,500 for each apprentice aged 25 or over.

Various measures to encourage individuals to engage with the tourism and hospitality sectors were also announced, as well as a £5.8 billion investment in “shovel-ready” construction projects. The aim is to protect and create jobs in these sectors as far as possible.

COVID-19: ONS publishes ‘Parenting in lockdown: Coronavirus and the effects on work-life balance

Figures released by the Office for National Statistics on 22 July show that working parents were nearly twice as likely to be furloughed (13.6%) compared to those without children (7.2%). Women provided 77% more hours of childcare than men during lockdown, while men were more likely than women to have been unable to work from home due to the nature of their jobs.

COVID-19: Lord Chancellor announces locations of ten “Nightingale Courts” to tackle case backlog

On 19 July 2020, Robert Buckland QC MP (Lord Chancellor and Secretary of State for Justice) announced the locations of ten “Nightingale Courts”, which have been set up to tackle the impact of COVID-19 on the justice system. The announcement follows the update on recovery plans for courts and tribunals in response to the COVID-19 outbreak published on 1 July 2020.

The Nightingale Courts will hear civil, family and tribunals work as well as non-custodial crime cases. The confirmed sites are:

  • Former county court at Telford, Shropshire.
  • Hertfordshire Development Centre, Stevenage.
  • Swansea Council Chambers, Swansea.
  • Cloth Hall Court, Leeds.
  • Middlesbrough Town Hall, Teesside.
  • East Pallant House, Chichester.
  • 102 Petty France, London.
  • Prospero House, London.
  • Former magistrates’ court at Fleetwood, Lancashire.
  • Knights’ Chamber and Visitor Centre, Bishop’s Palace, Peterborough Cathedral.

The Nightingale Courts are one of several measures proposed by the Lord Chancellor to help tackle the number of outstanding cases. Other proposals include options to stagger and extend court and tribunal operating hours and continuing to use video technology to hear cases where appropriate.

All ten Nightingale Courts are expected to be up and running by August 2020. In addition to these ten sites, work is ongoing to find more potential locations to help to alleviate the pressure on courts and tribunals impacted by the COVID-19 outbreak.

Further Information:

If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on: advice@dixcartlegal.com.

The data contained within this document is for general information only. No responsibility can be accepted for inaccuracies. Readers are also advised that the law and practice may change from time to time. This document is provided for information purposes only and does not constitute accounting, legal or tax advice. Professional advice should be obtained before taking or refraining from any action as a result of the contents of this document.