UK: Employment Essentials: February 2017 Top 5

Gowling WLG's employment, labour & equalities experts bring you the latest top five employment law developments that may affect your business - what they are, and what you can do about them.

At number 1: Plumber self-employed for tax purposes a 'worker' for employment law purposes

On 10 February, we received the latest development in the 'employment status' debate. 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' under the Employment Rights Act 1996 and the Working Time Regulations 1998 (claims for unpaid holiday pay and unlawful deduction of wages) and an 'employee' under the extended definition of the Equality Act 2010 (claim for disability discrimination).

The Court of Appeal held the employment tribunal had been correct to conclude that Mr Smith was under an obligation to provide his services personally as there was no express or implied right of substitution or delegation. Also, Pimlico could not be considered to be a client or customer of Mr Smith's business but was better regarded as a principal. Mr Smith was an integral part of Pimlico's operations and subordinate to Pimlico.

This judgment builds on the judgment of the Supreme Court in Clyde and Co LLP and anor v Bates van Winklehof [2014] in that a distinction is to be drawn between:

  1. persons employed under a contract of service (employees);
  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 (self-employed contractor); and
  3. persons who are self-employed but provide their services as part of a profession or business undertaking carried on by someone else (workers).

Integration in the business appears to be a factor of increasing importance in the current wave of worker status cases. Mr Mullins (the owner of Pimlico) criticised Mr Smith for wanting to have his cake and eat it - to take the tax benefits of self-employment but also want the protection of employment law. Setting to one side the general misunderstanding by employers that employment status for tax purposes (with 2 options: employee or self-employed) equates to employment status for employment law purposes (with 3 options: employee, worker or self-employed), Pimilico could equally be accused of wanting to have its cake and eat it. Pimlico operates a business model under which operatives are intended to appear to clients of the business as part of 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.

The 'employment status' debate continues with the high-profile Uber case having recently obtained permission to appeal to the Employment Appeal Tribunal. The Taylor review on employment practices in the modern economy is now well underway. Our plea to Matthew Taylor- please address the obvious difficulties caused by the disconnect between employment status options for employment law and tax law purposes. Clarity for determining employment status is much needed, not only for employees, workers and the self-employed, but also for businesses when considering the costings of their chosen business model.

At number 2: Trade Union Act 2016 in force 1 March

The majority of the provisions of the controversial Trade Union Act 2016 come into force on 1 March.

The key changes for ballots opened from 1 March are:

  1. A new minimum ballot participation threshold of 50% of those entitled to vote.
  2. In the "important public services" of health, education, fire, transport and border security sectors there will be an additional threshold of 40% of support from all members eligible to vote to take industrial action. (The extension of this change in relation to the key public sector of nuclear decommissioning has been delayed.
  3. The ballot paper must include more information, including:
    • a "summary" of the matter(s) in dispute;
    • the specific type of action being proposed; and
    • the period within which the action is expected to take place.
  4. The minimum notice of industrial action is doubled from seven to 14 days, unless the employer agrees to seven days' notice.
  5. A new six months' time limit on the validity of each ballot (nine months with the employer's agreement).
  6. New requirements for union supervision of picketing organised or encouraged after 1 March (must appoint a picket supervisor).
  7. Restrictions on 'check-off' arrangements, requiring unions to make a reasonable contribution to the cost of administration.
  8. New publication requirements in relation to facility time in the public sector.
  9. Move to an 'opt in' rather than the existing 'opt-out' system for contributions to a union's 'political fund' for new members joining on or after 1 March 2018.

At number 3: Gender Pay Gap Reporting regulations and guidance published

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (GPGR) come into force on 6 April. Private and voluntary sector employers with 250 or more employees will be required to publish gender pay gap information by 4 April 2018 and annually thereafter.

While the publication deadline for the first GPGR reports is some way off, the reports must be based on pay data as at 5 April 2017 including bonuses paid within the 12 month period ending on 5 April 2017.

In the run up to the GPGR regulations coming into force, we have had a flurry of information from the Government Equalities Office (GEO).

On 28 January, the GEO jointly with the Advisory, Conciliation and Arbitration Service (Acas) published draft non-statutory guidance; Managing gender pay reporting in the private and voluntary sectors. The guidance sets out a step-by-step guide to complying with the regulations. In addition Acas also published two one-page fact sheets and a template letter to employees:

On 6 February the GPGR regulations were formally made and approved to come into force on 6 April. The text of the final version was unchanged from the draft published in December. See our earlier alert: Gender Pay Gap Reporting: comparison of key changes.

On 22 February, the GEO jointly with Acas published four additional brief sets of GPGR guidance aimed at assisting affected employers to comply with the new requirements:

  1. Gender pay gap reporting: verview;
  2. Gender pay gap reporting: data you must gather;
  3. Gender pay gap reporting: make your calculations;
  4. Gender pay gap reporting: what employers must publish.

At number 4:  Court of Appeal guidance on subject access requests

The Court of Appeal has provided some important guidance on subject access requests for data controllers in Dawson-Damer v Taylor Wessing LLP, a case in which the Information Commissioner has intervened.

The backdrop to the case is a dispute between Mrs Dawson-Damer and her two children (the data subjects) and the Trustees of a family trust held in the Bahamas. Taylor Wessing (the data controller) had in the past acted for the trustees of the Bahamian trust. The data subjects made subject access requests (DSAR) under section 7 of the Data Protection Act (DPA) to Taylor Wessing. Taylor Wessing declined to respond to those requests, relying on the legal professional privilege (LPP) exception as a general answer.

The case addresses three issues:

Issue 1 - Extent of the LPP exception: The LPP exception applies only to documents which carry legal professional privilege for the purposes of English law or the law of any part of the UK. As argued by the Information Commissioner, exemptions must be interpreted strictly.

Issue 2 - Disproportionate effort: The Court of Appeal agreed with the Information Commissioner that the fact that the process of finding personal data would be costly or time-consuming is not a reason for not complying with a DSAR. Taylor Wessing could not properly say at the outset that it would do nothing. The DPA was intended to put power into the hands of the data subject and compliance with the DSAR might involve considerable work.

This is not to say that there is no element of proportionality. For example, it may be disproportionate to require a controller to conduct further searches "for some remote strand of data which may not even be held".  But it is not open to a data controller to avoid substantive compliance by simply saying that work would be expensive or time-consuming. It is for the data controller to show that it has taken all reasonable steps to comply with a DSAR. The cost of compliance is the price data controllers pay for processing data.

Issue 3 - Collateral Purpose/Motive: As stated in the Information Commissioner's Code of Practice there is nothing in the DPA that limits the purposes for which a DSAR may be made, or which requires the requester to say what they want the information for.

A data subject-friendly judgment, whether it will lead to even greater use of DSARs we wait to see. And more Court of Appeal guidance on collateral motives and the domestic purposes exemption is expected shortly in the awaited reserved judgments of Deer v University of Oxford and Ittihadieh v 5-11 Cheyne Gardens.

At number 5: Single act of negligent omission can amount to gross misconduct meriting immediate dismissal

In Adesokan v Sainsbury's Supermarkets Ltd  the Court of Appeal reaffirmed the principle that gross negligence can amount to gross misconduct justifying an employer's decision to dismiss without notice. Whereas dishonesty or other deliberate actions can be gross misconduct, so too can negligence, which similarly damages the relationship and warrants immediate dismissal. Intentional wrongdoing or dishonesty is not required

In this case, the employer operates an annual survey where employees are encouraged to give confidential candid feedback on their working environment. The survey is considered to be a critical part of its strategy for achieving motivated staff and improved customer service. The results also influence career progression and decisions about pay, bonus and staff deployment.

Mr Adesokan was the Regional Manager accountable for the survey in his region. It came to his attention that the HR partner he worked with sent an email to the store managers in his region, the contents of which compromised the integrity of the survey. Other than telling the HR partner to send a further email to 'clarify' the earlier misleading email, he took no further steps to rectify the situation. This remained the case even after learning that the 'clarifying' follow up email was never sent. When the email came to the attention of head office, Mr Adesokan was immediately dismissed for gross misconduct.

The Court of Appeal held that the employment tribunal was entitled to find that Mr Adesokan's failure to take active steps to remedy the situation amounted to gross misconduct. Negligent omission can amount to gross misconduct and intentional wrongdoing or dishonesty is not required. Mr Adesokan was a senior manager who knew the critical role this survey played. It was his duty to ensure that the e-mail undermining the integrity of the survey was rectified.

Not every negligent failure to act will amount to gross misconduct, as ever, each case will turn on its own particular facts. The critical factors in this case were the seniority and nature of the employee's role in relation to the survey which the employer could show was an important part of its workforce plan.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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