Employment Law Top Ten of 2018

Posted by Joanne Davies on
How will employers and HR professionals remember 2018? Another year dominated by Brexit? Brexit aside (hold on: weren't we saying the same thing last year?), at the end of the year, we take a moment to look back at some of the most important Employment law cases and legislation from 2018. As two of the nation's long-running, best loved series draw to a close for another year, our countdown is brought to you in the form of TV and radio game shows and quizzes…

Coach Trip

Kicking off this year at number ten is an Employment Tribunal (ET) case [1] which may not have had much publicity but serves as an important lesson in investigation and disciplinary proceedings. Mr Ball was a 61 year-old bus driver with an unblemished record. He was a diabetic and had to check his blood sugar levels every 2 hours via blood tests on his fingers. He failed a random drugs test at work as cocaine was found in his saliva. Mr Ball protested his innocence and provided a hair follicle sample with no trace of cocaine. He questioned the possibility of contamination from his fingers which regularly handled bank notes and which he sucked when they were sore. He was dismissed and appealed unsuccessfully. The ET ruled that his dismissal was not within the range of reasonable responses, despite the safety-critical nature of the role. The employer had ignored another case brought to its attention where contamination via bank notes was accepted. It ignored the hair follicle test and, in breach of its disciplinary procedure, did not consider evidence supplied by the employee. In addition, the employer failed to conduct further enquiries despite the doubts raised and Mr Ball's unblemished record. Moreover, the first dismissing manager did not have a genuine belief in Mr Ball's guilt due to his clean record and medical condition. Even for employers that do not carry out drugs tests, the case is a salutary reminder of the importance of a fair process and open mindedness in disciplinary procedures.

Countdown

One of the long-awaited decisions of this year at number nine was the question of sleep-in shift workers' entitlement to the National Minimum Wage (NMW) while they are sleeping at or near their place of work [2]. Last year, the Employment Appeal Tribunal (EAT) decided that a "multi-factorial approach" was required to decide whether the worker was "working" for the purposes of the NMW merely by being present, or had to be awake and available for work to be considered "working". The EAT found Mrs Tomlinson-Blake was working merely by being present and keeping a "listening ear" out for the people in the home she cared for even though she was rarely woken in the night. This year, the Court of Appeal overturned that ruling and held that she was only "working" for NMW purposes when she was required to be awake and available for duties. It also confirmed the case of Mr Shannon, who, it had previously been found, was only "available for work" when he slept, and not "working" for NMW purposes. Neither claimant was therefore entitled to the NMW for those hours where they were allowed to and expected to sleep. With already low profit margins and huge Government cuts, the case is an extremely important win for the care sector (although it is being appealed). It is also relevant for other sectors where staff are on-call for emergencies only, and are usually able to sleep through the night and wake up only if and when an incident requires attention. However, Unison, who supported Mrs Tomlinson-Blake, described the judgment as a mistake, particularly as it affects some of the country's lowest paid workers.   

Million Pound Drop

At number eight is a significant whistleblowing case [3] where the colleagues of an individual who blew the whistle were found to be personally liable, along with the employer, for the losses suffered when he was dismissed. Mr Osipov was employed for a matter of days as CEO of a petroleum company, but within that time made a number of protected disclosures regarding corporate governance and legal compliance. He was dismissed, but under the Employment Rights Act 1996, his claim against the employer had to be one of unfair dismissal, which succeeded. However, he also brought claims against the individual Non-Executive Directors (NEDs) for detriment for their actions which led to his dismissal. This was important because the company became insolvent. The NEDs argued that because Mr Osipov had been dismissed, there could be no claim for detriment against them, only unfair dismissal against the employer. The Court of Appeal disagreed. It ruled that the NEDs could be personally and jointly and severally liable for his losses, which, with injury to feelings, amounted to over £2m. Colleagues have always been potentially personally liable for detriment caused to whistleblowers, but this is the first successful case of a whistleblower arguing that detriment included actions up to and including the decision to dismiss. Mr Osipov could claim his substantial losses personally against the NEDs. The case could open the floodgates for personal claims against those involved in the dismissal process where there is a potential whistleblowing claim, not only where there are doubts about an employer's ability to pay compensation, but also because an injury to feelings award might also be available. Watch this space for any appeal.

The Great British (and Northern Ireland) Bake-off

It's not strictly an employment law case, but at number seven the discrimination implications of the so-called "gay cake" case [4] are not to be underestimated. In 2014 Mr Lee ordered a cake with a picture of characters "Bert and Ernie" and the caption "Support Gay Marriage". Following the order, the bakery informed Mr Lee it would be unable to fulfil it because of their Christian beliefs and refunded the order. Mr Lee alleged that he had been treated less favourably on grounds of his sexual orientation contrary to Northern Ireland's laws on discrimination in the provision of goods and services (similar to the Equality Act 2010). He initially won, but the case went all the way to the Supreme Court. The Court ruled that the bakery did not refuse the order on the grounds of the actual or perceived sexual orientation of Mr Lee, nor on grounds of his association with those of a particular sexual orientation, but simply on grounds of the cake's message. The message was distinguishable from Mr Lee and his actual or perceived sexual orientation or association with it, since a heterosexual person ordering the same cake would still have had their order refused. The bakery both employed and served gay people. It was different to a previous case where Christian owners of a B&B had refused to give a double-bedded room to civil partners, because at that time civil partnership could not be disassociated from the couple's sexual orientation. This recent judgment is logical, but shows the very fine distinction between an allegation of less favourable treatment which is, as the Court put it, "something to do with the sexual orientation of some people" and the actual legal test that it must be "on grounds of" a person's actual, perceived, or association with, a particular sexual orientation.

Supermarket Sweep

With the introduction of the General Data Protection Regulation (GDPR) this year, number six is a highly topical Spanish case [5] where a supermarket installed surveillance cameras following a suspicion of theft by either customers or staff. Whilst it installed visible cameras to monitor customers, and notified staff, it also installed covert cameras behind cash desks without telling staff.  Five employees were caught on camera stealing items for themselves, colleagues and customers. They were dismissed and brought claims in the European Court of Human Rights (ECHR) for breach of their right to privacy. The Court ruled that whilst covert surveillance of specific employees already suspected of stealing over a very short period without breaking data protection laws might have been justifiable, directing covert surveillance at all staff during all working hours without a time limitation and against local data protection laws was a breach of the right to privacy. Under the GDPR employers must carry out Data Protection Impact Assessments where processing is "likely to result in a high risk to the rights and freedoms of natural persons", such as here. It is well established that staff have a right to privacy even at work and there must be justification for any CCTV monitoring, even if publicised to staff. This is balanced against the employer's need to protect property and prevent crime. Covert cameras should only be used in the rarest of cases where prior knowledge would prejudice crime detection and less intrusive means are not available. They should be directed at the fewest people possible for the shortest time possible. 

The X Factor

This year once again the so-called "gig economy" was in the spotlight, and at number five are the Pimlico Plumbers cases and others. After almost 7 years, Pimlico Plumbers Ltd v Smith [6]  finally went to the Supreme Court which looked at all aspects of the relationship between the company and the individual to decide whether Mr Smith was self-employed or a "worker" of the company. The Court focussed particularly on whether there was an obligation of personal service and whether the company could be considered a client of Mr. Smith. Firstly it found that the "dominant feature" of Mr. Smith’s contract was an obligation of personal performance, despite a limited right of substitution. Secondly, under the contract he was apparently free to turn down jobs or work for others. However, the branded uniform, branded van and contractual terms with strict conditions about when and how much he was paid, restrictive covenants, references to "wages", "gross misconduct" and "dismissal" all strongly militated against the company being his client or customer. As a result Mr. Smith was entitled to the National Minimum Wage and paid holiday. Following this, claimants at Hermes and Addison Lee were also found to be "workers" in their respective roles. The direction of travel continues…

Family Fortunes

Last year we wrote about two Employment Tribunal (ET) cases on enhancing Shared Parental Pay (ShPP). At number four, this was the year we got an answer (of sorts). Is it direct or indirect sex discrimination to enhance maternity pay but not enhance ShPP for men? The Employment Appeal Tribunal (EAT) heard the appeals in both cases and the result was: 1) a man on Shared Parental Leave (SPL) claiming direct sex discrimination could not compare himself with a woman on maternity leave [7]. Maternity leave is to protect the health and well-being of the mother, whereas SPL facilitates the care of the child (it is possible this would not apply for the entire leave). The comparator was a woman on SPL, and here both men and women on SPL were paid statutory ShPP. 2) a man on SPL might be able to claim indirect sex discrimination for failure to enhance ShPP because men do not have the choice that mothers have to remain on higher rates of maternity pay [8]. As the ET had approached the case wrongly, it was sent to be determined by a new ET and we still await the outcome for next year's instalment. For many employers, either the attraction of enhancing maternity pay diminishes, or the legal complexities of enhancing both without falling foul of discrimination law may put them off.

Big Break

Will there be one year which doesn’t feature a holiday pay case? Not yet. This year at number three it was the interesting European Court of Justice (ECJ) ruling [9] that an employer could not refuse carryover of holiday to the following year, and therefore payment in lieu of untaken holiday when employment ended, unless it could show that it had given the worker the opportunity to take outstanding holiday. Unlike other cases, it did not involve sick leave or family leave. One employee had even been invited to use up holiday two months before the end of the holiday year but had decided to take only 2 days. The ECJ ruled that because of the imbalance in power, it is for the employer to encourage the worker to take outstanding leave in good time and inform them accurately of the risk and consequences of losing it. Only if the employer can prove that the worker deliberately, knowingly chose not to take holiday, can it refuse to allow carryover and therefore a payment in lieu on termination. Despite the UK's "use or lose it" statutory holiday law, HR departments must now actively monitor build-up of holiday towards the end of the holiday year, and communicate relevant information to affected workers, especially any due to depart in the next holiday year. 

I'm Sorry, I Haven't a Clue

It will simplify the tax on termination payments, said the Government. All payments in lieu of notice (PILONs) will be taxed creating fairness, said the Government. This year's number two is the sledgehammer-cracking-nut legislation introduced in April to change the way termination payments are taxed (aka "Post-Employment Notice Pay" – PENP). Is it simple? It's simple as long as you understand that "basic pay" includes salary sacrifice but doesn’t include overtime or allowances, but might include car allowances; that the "pay period" will be different for each employee; that sometimes the calculation is in months and sometimes in days; that it will sometimes depend on how many days there are in a month; that it still matters whether a PILON (or part of it) is contractual; that it is never based on the employee's notice period even if they have resigned; and that it can come up with a different figure even if you are already taxing a contractual PILON. The net difference in the taxable amount can sometimes be nothing, sometimes less than £30, or sometimes quite a lot. Was it worth it? It was probably not for the drafters of the legislation to reason why when the final provisions, definitions, and late guidance from HMRC were produced. Nevertheless, it is the law, and many to date have ignored it or not been aware of the difference it can make to Settlement Agreements and severance negotiations. It will be interesting to see the extent to which this will be enforced where employers have complied with the spirit of the legislation but made minor errors in the calculation.*

Big Brother

And so to this year's Christmas number one. The biggest change most employers will have dealt with this year is, from 25 May, the GDPR and the Data Protection Act 2018 (DPA). While many organisations were making sure that client, marketing and third party "data processing" aspects were compliant, employers had to produce privacy notices for job applicants and their own staff, relying on entirely different lawful reasons for processing. Consent is rarely appropriate due to the imbalance of power in the employer/staff relationship. The DPA also introduced the concept, still not clarified by the Information Commissioner's Office (ICO) of an "appropriate policy document" on "special categories" of personal data and criminal offence information. Special categories may not always be held about clients, but they will be held about staff. Even "I'm off sick with 'flu today" will be special category data about a person's health. For some employers it was a sea change in processing criminal offence information or using automated recruitment processes. Along with the new documents came changes to contracts, handbooks, existing data protection policies and HR and IT policies and procedures. With so much work and the last-minute introduction of the DPA, it is no wonder that many organisations are still getting their house in order – including the ICO which has yet to produce helpful employer guidance. Watch this space – with potential fines of up to €20 million or 4% of worldwide annual turnover, and potential individual compensation claims for breaches, employers cannot afford to turn a blind eye, either to external or internal compliance.

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* We are looking at running regional training sessions in the New Year on this topic and the proposed changes to off-payroll working in the private sector for those engaging contractors. If you are interested please contact cathy.bryant@blakemorgan.co.uk


[1] Ball v First Essex Buses Limited Employment Tribunal 3201435/2017

[2] Royal Mencap Society v Tomlinson-Blake; Shannon v Rampersad (t/a Clifton House Residential Home) [2018] Court of Appeal Civ 1641

[3] Timis and another v Osipov [2018] Court of Appeal Civ 2321

[4] Lee v Ashers Baking Company Limited and others [2018] Supreme Court 49

[5] López Ribalda and others v Spain (Application nos. 1874/13 and 8567/13) European Court of Human Rights

[6] Pimlico Plumbers Ltd and Mullins v Smith [2018] Supreme Court 29

[7] Capita Customer Management Ltd v Ali and another EAT/0161/17

[8] Hextall v Chief Constable of Leicestershire Police and another EAT/0139/17

[9] Max-Planck-Gesellschaft zur Forderung der Wissenschaften eV v Shimizu (C-684/16) European Court of Justice:C:2018:874

About the Authors

Joanne is the head of the firm's Employment, Pensions and Immigration group.

Joanne Davies
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029 2068 6121

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Ruth provides guidance for clients and keeps them up to date with the fast pace of change in employment law.

Ruth Christy
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023 8085 7374

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