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Employment Law Case Update – May 2023

  • Employment,

  • 29th May 2023

Employment Law

This month’s summary includes a look at the pools used for comparison in discrimination cases, considering all the options before dismissing for redundancy, taking a look at the special circumstances where someone might be employed by two organisations and what caused a director to be disqualified for 9 years.

  • Indirect Discrimination: What constitutes too narrow a pool for comparison?
  • Unfair Dismissal: It was unfair to dismiss for redundancy instead of considering furlough during the coronavirus pandemic
  • Unfair Dismissal: A union official was not also an employee of the union for unfair dismissal purposes
  • Directors: Disqualification order for director who failed to protect funds and keep proper accounting records

Indirect Discrimination: What constitutes too narrow a pool for comparison?

In Boohene and others v Royal Parks Ltd [2023] EAT 69, the claimants were contract workers employed by a third party to work on its toilet and cleaning services contract with the respondent in London. Their minimum rates of pay were set below London Living Wage (“LLW”); this contrasted with the respondent’s direct employees, who were office-based and had a level of pay higher than LLW. The employment tribunal found that the respondent had committed to ensuring that the minimum pay of its direct employees would not fall below LLW but had decided not to accept the option of LLW as the minimum pay rate on the toilet and cleaning contract.

The claimants brought claims of indirect race discrimination in respect of their treatment as contract workers as compared to the respondent’s direct employees. The tribunal upheld these complaints as falling within the definition of indirect discrimination under section 19 Equality Act 2010, (“the EqA”), rendered unlawful by reason of section 41. The respondent appealed.

The EAT upheld the appeal, finding for the respondent. On its findings of fact in this case, the tribunal had been entitled to conclude that these claims fell within section 41(1) EqA, the respondent having exercised sufficient control as to minimum level of pay that was to be paid to workers on the toilet and cleaning contract. Although ostensibly set by the contractual term agreed between the claimants and the contractor, the tribunal permissibly found that the decision not to pay LLW was made by the respondent, the contractor had merely executed that decision; in this respect, it was the respondent that had determined the relevant term on which the claimants were to be allowed to do their work. For the purposes of section 19 EqA, the tribunal was similarly entitled to find that it was the respondent that had applied the relevant provision criterion or practice (“PCP”). The tribunal had, however, fallen into error in defining the PCP in this case and this had led it to adopt an indefensible pool for comparison. Although the claimants’ pleaded case had identified a PCP that distinguished between the respondent’s direct employees and its outsourced workers, the case at trial was put on the more limited comparison between the respondent’s direct employees and the workers on the toilets and cleaning contract. In accepting the latter case, the tribunal had improperly excluded from the pool for comparison all other outsourced workers undertaking work for the respondent. That was an error that undermined the tribunal’s approach to the comparative exercise it was required to undertake in this case. The appeal was allowed because the tribunal should have compared directly employed staff with all outsourced workers (and not just those on the cleaning contract). When analysing the impact of a PCP, the pool being considered should consist of the entire group it affects.

The respondent would not, however, have succeeded in its further challenge to the tribunal’s approach to comparability. In considering whether there were any material differences between the advantaged and disadvantaged groups, on the facts of this case, the tribunal had been entitled to find that the nature of the work and the identity of the employer were not relevant to the question whether the respondent had drawn a distinction between its directly employed staff and outsourced workers when committing to LLW as a minimum rate of pay. A further valid point of challenge had been raised in relation to the tribunal’s failure to address the case of the claimant, Mr Marro, who did not share the relevant protected characteristic. Had this point not been rendered academic by the EAT’s earlier conclusion, this final ground of appeal would also have been allowed and this question remitted to the tribunal for determination.

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Unfair Dismissal: It was unfair to dismiss for redundancy instead of considering furlough during the coronavirus pandemic

In Lovingangels Care Ltd v Mhindurwa [2023] EAT 65, the claimant was a live-in carer. The person for whom she cared went into hospital. In the normal course of events the claimant would have moved to care for another of the respondent’s clients. In the early stages of the Coronavirus pandemic there was limited scope for such movement. The respondent did not have another client for the claimant to move to because of the Coronavirus pandemic. The respondent dismissed the claimant by reason of redundancy. The employment tribunal held that her dismissal was unfair because the respondent did not consider the possibility of putting the claimant on furlough for a period while it ascertained whether the situation would improve and it would be able to place the claimant with another client; and also, because the appeal hearing was no more than a rubber-stamping exercise.

The respondent appealed against the finding of unfair dismissal. There was no error of law in the decision of the employment tribunal. Determining a claim of unfair dismissal in respect of a dismissal that occurred in circumstances related to the Coronavirus pandemic does not require any variation to the law of unfair dismissal, which is robust enough to deal with such exceptional circumstances.

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Unfair Dismissal: A union official was not also an employee of the union for unfair dismissal purposes

In Fire Brigades Union v Embery [2023] EAT 51, the EAT found that there is a broad principle that a person cannot simultaneously have two employers, subject to an exception for the case of a person having two ‘compatible’ employments. On the facts of this particular claim for unfair dismissal by a fire-fighter, the claimant was not employed by the union as well as by the fire brigade.

The question of whether a person can have two employers for the same job is an unusual one. It is often seen in the context of vicarious liability for torts but not in the context of employment rights, such as unfair dismissal, as here. This case concerned a fire brigade employee who was subsequently elected as a regional union official and was released from fire-fighting duties to work full-time on union duties. The EAT reviewed the case law on dual employment and identified a broad principle that a person cannot simultaneously have two employers for the same job. The EAT noted the exception to this principle identified by the EAT in Gough for the case of a person having two ‘compatible’ employments. It cast doubt on the reasoning in that judgment which relied on the vicarious liability case of Viasystems. The EAT in this case found that to be of ‘little assistance’ given the different policy context. It held that this was not an unusual or exceptional case in which the claimant could have been employed by the Fire Brigades Union (FBU) as well as by the London Fire Brigade (LFB).

The employment tribunal held that the claimant was an employee of the FBU and had been unfairly dismissed (but not discriminated against). In determining that the claimant was an employee the tribunal held that:

  • he received substantial remuneration in the form of the ‘top up’ of around £7,000 ‘as no doubt a sweetener to encourage people into full time Union roles’ plus his LFB salary which was ‘covered by the Union’;
  • the FBU had substantial control over his work. He could have been removed from office if his duties were not performed satisfactorily, he had to perform his work personally, he had to work full-time and only for the FBU and he was provided with equipment and expenses, and a car allowance;
  • if he failed to abide by the FBU rules there was a process which could effectively lead to his dismissal, as in this case; and
  • when working for the union he was not under the control and direction of LFB.

The union appealed on the basis that, in finding that the claimant was an employee of the FBU and not the London Fire Brigade, the employment tribunal had erred in that it:

  • ignored and/or did not apply the material law;
  • failed to explain its application of the law; and
  • reached a decision which was not open to it on the facts, applying the material law (the ‘perversity’ ground).

The EAT dismissed the union’s appeal and substituted a decision dismissing the claim for unfair dismissal.

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Directors: Disqualification order for director who failed to protect funds and keep proper accounting records

In Secretary of State for Business, Energy and Industrial Strategy v Joiner [2023] EWHC 1032 (Ch) the Chancery Division ruled on the claimant Secretary of State’s application for a disqualification order under section 6 of the Company Directors Disqualification Act 1986 against the defendant. The claimant alleged that the defendant: (i) had failed to ring-fence and protect certain funds which were held by the company called Team Property Management Limited (Team) for the account of a major customer called the Quadrangle RTM Company Limited; and (ii) had failed to ensure that Team kept proper accounting records, or at least had failed to deliver them up to the official receiver. The court held, among other things, that the defendant had failed to appreciate and observe the duties attendant on the privilege of conducting business with limited liability, and he had demonstrated a serious lack of commercial probity and a lack of insight as to the unacceptability of his business practices. Accordingly, the court had agreed with the claimant’s assessment of the appropriate disqualification period, and it had decided that a nine-year period of disqualification should be made.

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Further Information:

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

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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.

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Employment News – Case Update April 2022

  • Employment,

  • 27th April 2022

Employment Law

A round-up of the most significant employment law cases to be published over the last month including more definitions between workers and self-employed contractors,  indirect discrimination and harassment, unfair dismissal and TUPE.

  • Worker Status: Ryanair pilot was a worker and an agency worker, not a self-employed contractor
  • Indirect Discrimination: Comparison pool for claims must relate to precise PCP pleaded by claimant
  • Harassment: When does perception turn conduct into harassment?
  • Unfair Dismissal: Tribunal erred when striking out unfair dismissal claim by employee who volunteered for redundancy
  • TUPE: ACAS settlement was wide enough to cover transferee’s failure to provide information to transferor

Worker Status: Ryanair pilot was a worker and an agency worker, not a self-employed contractor

In Lutz v (1) Ryanair DAC and (2) MCG Aviation Ltd (2022) ET/3201452/2020, an employment tribunal has held that a pilot placed with Ryanair by MCG Aviation Ltd (MCG) was a worker of MCG and an agency worker for the purposes of the Agency Workers Regulations 2010 (SI 2010/93).

Mr Lutz applied to be a pilot for Ryanair, was successful and was then passed to MCG, which managed Ryanair’s pool of “contracted pilots” who work alongside their employed pilots. MCG organised the setting up of a service company, so that Mr Lutz could operate as self-employed. MCG entered into a five-year fixed-term contract with the service company, under which all work was exclusively for Ryanair, and Mr Lutz “or an agreed acceptable and qualified nominated substitute” would perform the work.

The tribunal held that Mr Lutz was not a self-employed pilot with Ryanair as a customer of his service company. Mr Lutz was never a shareholder, director or employee of the service company, into which MCG had installed him, and Ryanair had no dealings with the service company. Nor was he an employee of Ryanair as there was no contract of employment between them. Since he was not in business on his own account and MCG were the intermediary through which Ryanair dealt with its contracted pilots, the tribunal concluded that MCG supplied Mr Lutz to Ryanair as an agency worker. To be an agency worker, the work must be temporary. The tribunal held that the five-year fixed-term contract between the service company and MCG was not indefinite and was therefore temporary.

In deciding that Mr Lutz was an agency worker, the tribunal found that he had a contract with MCG to supply his services personally and not though the service company. The tribunal’s view was that his ability to swap shifts was not substitution but a rearrangement of the day and time when personal service was required. In any event, there was no unfettered right of substitution. Only another Ryanair pilot could take the shift and permission from Ryanair was required. The contractual documentation purporting to show that it was not a contract for personal service was a sham. Every aspect of the engagement was structured as Ryanair dictated and Mr Lutz’s independence was entirely notional, with Ryanair rostering his flights and requiring him to wear their uniform.

As the tribunal noted, this case has wide implications due to the many purportedly self-employed pilots in the aviation industry engaged under similar arrangements.

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Indirect Discrimination: Comparison pool for claims must relate to precise PCP pleaded by claimant

In Allen v Primark Stores Ltd [2022] EAT 57, the EAT has confirmed that the comparison pool for an indirect discrimination claim must be constructed by accurate reference to the precise provision, criterion or practice (PCP) pleaded by the claimant.

Ms Allen worked for Primark Stores Ltd as a department manager in the Bury store. Following her return from maternity leave, she requested flexible working for childcare reasons. Primark considered her request and offered some accommodation for it. However, it refused to agree that she would not have to work Thursday late shifts.

Ms Allen brought a claim for indirect sex discrimination. She argued that Primark applied a PCP that department managers had to guarantee their availability to work Thursday late shifts, that this PCP put women at a disadvantage because of childcare responsibilities, and that she had been put at this disadvantage. To assess the discriminatory impact of the PCP, the employment tribunal constructed a comparison pool which included all department managers in the Bury store who might be asked to work Thursday late shifts. Amongst others, this pool included two department managers, Zee and Imran, who it was accepted had an implied contractual right not to work Thursday late shifts but did so in emergencies. Having considered the pool, the tribunal concluded that the PCP affected two men (Zee and Imran) and one woman (Ms Allen) and therefore did not put women at a disadvantage. Ms Allen’s claim was rejected. She appealed to the EAT.

The EAT upheld the appeal. It found that, in constructing the pool, the tribunal had redefined Ms Allen’s complaint. The PCP she had identified was not simply that she was being “asked” to work Thursday late shifts, but that she was being required to guarantee her availability to do so. Zee and Imran were not subject to this availability requirement and therefore were in a materially different situation to Ms Allen. By failing to properly engage with the PCP, the tribunal had allowed itself to include within the comparison pool two individuals to whom the disadvantage to which the PCP gave rise did not apply. It was insufficient for the tribunal to consider whether individuals might be “asked” to work the late shift without going on to determine whether there was an element of compulsion in the making of such a request. The tribunal’s decision was set aside and the case remitted.

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Harassment: When does perception turn conduct into harassment?

In Ali v Heathrow Express and Redline Assured Security Ltd [2022] EAT 54 Mr Ali was working for Heathrow Express, and Redline Assured Security Ltd (Redline) was responsible for carrying out security checks at the airport and the stations. Part of this was to leave suspicious objects around to see how security officers responded to them. One such object was a bag containing a box, some electric cabling and, visible at the top, a piece of paper with the words “Allahu Akbar” written in Arabic. Mr Ali, who is a Muslim, was among a group of Heathrow Express’s employees who were circulated with an email reporting on the results of the test and including images of the bag and the note.

Mr Ali complained to the employment tribunal that Redline’s conduct amounted to either direct discrimination against him or harassment of him, as defined in the Equality Act 2010, by reference to his religion, that Redline had acted as Heathrow Express’s agent, and that, accordingly, both parties were liable to him in that respect.

The tribunal concluded that the conduct amounted neither to direct discrimination nor to harassment by effect. As to harassment, this was because, applying section 26(4) of the 2010 Act (i.e. in deciding whether conduct has the effect of harassment each of the following must be taken into account: (a) his perception; (b) the other circumstances of the case; and (c) whether it is reasonable for the conduct to have that effect) it was not, in all the circumstances, reasonable for Mr Ali to perceive the conduct as having an effect falling within section 26(1)(b) (i.e. that the conduct has the purpose or effect of violating his dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment for him).

In particular, the tribunal considered that Mr Ali should have understood that, in using this phrase, Redline was not seeking to associate Islam with terrorism, but, in the context of recent incidents in which the phrase had been used by terrorists, had used it in order to produce a suspicious item based on possible threats to the airport. The tribunal decided that it therefore did not need to determine the agency point, nor a defence which invoked section 192 (national security).

Mr Ali appealed against the decision on the harassment complaint on the grounds that it was either perverse or insufficiently reasoned. The appeal on both grounds was dismissed on the basis that a person’s perception is just one of the issues for the tribunal to consider when looking at whether conduct amounted to harassment as defined by s.26 of the Equality Act 2010.

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Unfair Dismissal: Tribunal erred when striking out unfair dismissal claim by employee who volunteered for redundancy

In White v HC-One Oval Ltd [2022] EAT 56, the EAT has held that an employment tribunal was wrong to strike out a claim for unfair dismissal on the basis that it had no reasonable prospect of success because the claimant had requested redundancy.

In September 2018, care home operator HC-One Oval Ltd announced it was reducing the number of employees carrying out reception and administrative work. Ms White was provisionally selected for redundancy. Subsequently, she requested voluntary redundancy, which was accepted.

After termination of her employment, Ms White submitted a claim for unfair dismissal. She alleged that:

  • In July 2018, she had raised a grievance about having to cover the duties of an absent colleague as well as her own, without extra pay.
  • During the redundancy process, an administrative role had become available. This should have been offered to her but was not.
  • The outcome of the redundancy process was that a receptionist recruited just before it began, who had no childcare responsibilities, had been offered a full-time role while the two part-time receptionists had been dismissed. The process had been manufactured to achieve this.

For these reasons, Ms White argued that the redundancy process was not genuine and that she had been targeted for dismissal. The employer disputed Ms White’s allegations. It contended that she had been fairly dismissed for redundancy at her own request and therefore that her claim should be struck out because it had no reasonable prospect of success.

The employment tribunal struck out the claim. It held that, because Ms White had requested redundancy, the employer would be able to establish the reason for, and reasonableness of, her dismissal. However, the EAT found that the tribunal had erred in law. Had the tribunal engaged with Ms White’s case at its highest, as required, it could not have found that there was no reasonable prospect of success. If Ms White’s account of the background to the redundancy was accepted, the facts known to the decision maker might well be found to include matters other than just Ms White’s redundancy request. In addition, Ms White alleged that the redundancy process was a sham. Even if the tribunal was satisfied with the reason for dismissal, it would still need to consider the fairness of the process. There was a factual dispute here which was not suitable for summary determination. The case was remitted to the tribunal for consideration by a different judge.

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TUPE: ACAS settlement was wide enough to cover transferee’s failure to provide information to transferor

In Clark v Middleton and another [2022] EAT 31, the EAT has held that an employment tribunal was correct to find that, in a claim for a failure to inform and consult under the Transfer of Undertakings (Protection of Employment) Regulations 2006, no award could be made against the transferee for its failure to provide information to the transferor about measures it proposed to take in connection with the transfer, under regulation 13(4). This was because of an earlier withdrawal of claims against the transferee following an ACAS-conciliated settlement between the claimant and the transferee, which the EAT considered was wide enough to encompass the transferee’s liability for failure to provide that information.

However, the tribunal had erred in making a zero award in respect of the transferor’s failure to notify the transferring employee of the identity of the transferee company on the basis that this was merely a “technical breach”. It matters to know the name and identity of the unique legal person who will be the employer, and the tribunal should not have viewed this as a mere technicality. The EAT remitted the claim to a fresh tribunal to decide the remedy.

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Further Information:

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

Back

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.

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