Welcome to our Employment Case Law Review of 2021.
Last year saw a flurry of important and long-awaited employment law decisions in the Supreme Court. The lower courts also provided some very useful guidance on key areas of law and best practice for those managing staff.
In our Case Law Review for 2021, we bring together ten of the most interesting and important cases from the past 12 months. These include key legal developments on the National Minimum Wage and sleep-ins, worker status, collective bargaining, and belief-based discrimination.
If you missed our recent Employment Brunch Briefing discussing some of these key cases from 2021 and changes to key employment legislation, you can access the recording through the link below.
Looking forward to the Spring, I hope you can join me and our guest speaker Ibrahim Hasan of Act Now Training for our next virtual Employment Brunch Briefing on 1 February 2022, an informative data protection law update for employers. Please click on the link below to book your free place.
Wrigleys' employment team wish all our readers a very happy and healthy New Year!
Supreme Court rules that sleep-in hours should not be counted for National Minimum Wage purposes
Article published on 26 April 2021
Workers who are permitted to sleep during the shift are not performing "time work" or "salaried hours work"
The long-awaited decision of the Supreme Court on the question of sleep-in shifts has now been issued. It confirms the decision of the Court of Appeal in 2018 that employers do not have to include all of the hours of a sleep-in shift when calculating whether workers are being paid the National Minimum Wage or National Living Wage (NMW).
The NMW rules on sleep-in shifts
The starting point is that a worker is entitled to be paid the NMW, taking into account time when they are actually working, or when they are available and required to be available at or near a place of work for the purposes of working.
But there are exceptions to this rule. A worker who is "available" for work rather than working will not have the time taken into account if they are at home or provided with facilities to sleep during that time. In that case, only time when the worker is "awake for the purposes of working" will be counted, in other words when they are actually required to respond to a call or intervene to assist a client.
Case details: Tomlinson-Blake v Royal Mencap Society
Mrs Tomlinson-Blake was employed by Mencap as a care worker supporting two people with learning disabilities living in the community. As well as her day shifts, she took some sleep-in shifts, for which she was paid a fixed allowance. She had her own bedroom in the house and was permitted to sleep during the night.
The employment contract required Mrs Tomlinson-Blake to remain in the house and to intervene to support the clients when necessary during the night. This happened only rarely (six times in 16 months). She received additional pay for time spent assisting her clients during these shifts.
Mrs Tomlinson-Blake brought a claim alleging that she had not been paid the NMW when taking into account time spent on sleep-in shifts. An employment tribunal upheld her claim, following previous case law in finding that she was actually working throughout each sleep-in shift and not merely available for work. This was on the basis that Mencap had regulatory and contractual obligations for a care worker to be in the house at all times and that Mrs Tomlinson-Blake was obliged to remain in the house and to listen out in case she was required to intervene. In other words, it was part of her work simply to be there. The EAT agreed.
The Court of Appeal did not agree. In what was an unexpected judgment at the time, Lord Justice Underhill held that Mrs Tomlinson-Blake was "available for work" during her sleep-in shift, rather than actually working. Therefore only the time when she was required to be awake for the purposes of working counted for NMW purposes.
Lord Justice Underhill stated that an arrangement where "the essence of the arrangement is that the worker is expected to sleep" falls squarely under the exception set out in the NMW Regulations, that is when a worker is available to work but provided with facilities to sleep. He did not agree with the EAT that Mrs Tomlinson-Blake was actually working simply by being present on the premises.
The Supreme Court decision
The Supreme Court has now agreed with the Court of Appeal that sleep-in hours do not have to be counted, either in the case of "time work" (where workers are paid by reference to the number of hours they work) or "salaried hours work" (where workers are paid a set salary per annum). If the worker is permitted to sleep during those hours, they will not be counted when calculating whether the NMW is being paid. Only time during which the worker is awake for the purposes of working (responding to calls for assistance) must be counted.
Lady Arden noted that the Low Pay Commission's (LPC) 1998 recommendations, which were taken into account by the Court of Appeal, could be presumed to have been implemented in the NMW Regulations 1999. This was because the Government was bound to implement them unless it provided reasons to Parliament for not doing so, which it did not do. The LPC recommendations were that workers who were required to be on-call and sleep on their employer's premises (such as those working in residential homes) should not have the sleep-in hours counted for NMW purposes and that employers should agree an allowance for such work. Lady Arden comments in her judgment that the LPC "did not contemplate that a person in the position of a sleeper-in could be said to be actually working if he was permitted to sleep".
Lady Arden made clear that: "If the employer has given the worker the hours in question as time to sleep and the only requirement on the worker is to respond to emergency calls, the worker's
time in those hours is not included in the NMW calculation for time work unless the worker actually answers an emergency call. In that event the time he spends answering the call is included.It follows that, however many times the sleep-in worker is (contrary to expectation) woken to answer emergency calls, the whole of his shift is not included for NMW purposes. Only the period for which he is actually awake for the purposes of working is included."
This decision has been long-awaited and brings to an end a period of uncertainty and the risk of claims for very large pay-outs for historic arrears relating to sleep-ins, particularly for care sector employers.
Of course, many such employers changed the way sleep-ins were paid to comply with previous case law decisions, amended HMRC guidance and the HMRC Social Care Compliance Scheme which followed those decisions.
Mencap, in its response to the judgment published on its website, has called for care workers to be paid more, stated its intention to continue paying top ups for sleep-in shifts, and for local authorities to fund these in their contracts.
Employers using sleep-in arrangements may now seek to change the way they are paid to reflect the decision of the Supreme Court. The pay structure for workers sleeping-in will depend on the wording of the contract in each case and will not simply change because of this ruling. Any changes to contractual arrangements must be agreed with the employee, or, where relevant, through collective agreement with trade unions. Employers seeking to impose such changes without employee agreement should be aware of the risks of unfair dismissal and unlawful deduction
from wages claims which could follow. Having a sound and well-evidenced business reason for the change, which is clearly communicated to employees and their representatives and meaningfully consulted on, will reduce the risks and assist employers in defending claims if they are brought. It will not be enough to cite the Supreme Court's decision in this case as the reason for the change.
Supreme Court confirms that Uber drivers are workers after denying appeal
Article published on 26 February 2021
Decision brings long-running case on key aspects of workers status to an end.
Almost since it started operating in the UK, the Uber taxi-hailing app has drawn questions about the employment status of the drivers who provide their services via the app. Uber has always maintained that it is merely a technology platform designed to connect self-employed drivers to customers. However, questions have arisen as to the accuracy of this position given how the drivers operate and are controlled by Uber when engaged to provide their services via the app.
The three categories of relationship are independent contractor, worker and employee - see our article covering the distinctions on these roles (available from our website news page here) for more information.
Employers may wittingly or unwittingly mislabel a worker as a self-employed contractor. In turn, individuals may argue that they are in fact workers because worker status brings rights to paid holiday, rest breaks, and the National Minimum Wage, amongst other things. An employee has additional rights, for example in relation to unfair dismissal.
In the case of Uber, a group of drivers brought claims in the employment tribunal arguing that they were engaged by Uber as workers whilst they provided taxi services via the Uber app. To benefit from the associated rights, the drivers would need to establish that they were workers for the purpose of the Employment Rights Act 1996 (ERA), the Working Time Regulations 1998 (WTR) and the National Minimum Wage Act 1998 (NMWA). Uber argued that drivers engaged via the app did not meet the definition of a worker within the meaning of the ERA and equivalent provisions in the WTR and NMWA. Uber's argument was that the drivers entered the contract in business for themselves and could not be workers.
However, when the case came before an employment tribunal, it determined that when it looked past the contractual relationship at the reality of the relationship between the drivers and Uber, the drivers were not self-employed. Pointing to numerous factors, including that Uber controlled the drivers' levels of pay, communication with customers, and whether or not they could continue to operate under the app, the tribunal concluded that the relationship was that of a worker and employer and that the individual driver's claims should be allowed to proceed.
The EAT and Court of Appeal both denied Uber's appeals before Uber finally appealed to the Supreme Court.
The Supreme Court unanimously dismissed the appeal and therefore upheld the decision that Uber drivers are workers for the purposes of ERA, WTR and NMWA. In its decision, the court pointed out that it was critical to understand the rights being asserted by the claimants in this case were not contractual rights, but rights created by legislation. Therefore, the court upheld the employment tribunal's approach which was to determine whether or not the drivers were workers within the statutory interpretation rather than to determine their relationship via the contractual documents in place between the drivers and Uber.
Going further, the court noted that when interpreting statutory provisions, the requirement was to give effect to the purpose of the legislation, which is ultimately to protect individuals who have little or no say over their pay and working conditions because they are subordinate to an employer exercising control over their work and are therefore vulnerable to abuse.
The court emphasised several aspects of the employment tribunal's findings which justified the conclusion that the claimants were working for Uber:
- Where a ride is booked through the app, it is Uber that sets the fare and drivers are not permitted to charge more - it was therefore Uber who dictated how much drivers were paid for the work they do;
- The contract terms on which drivers performed their services are imposed by Uber and drivers have no say in them - this did not indicate that the drivers were in business for themselves as otherwise they would be able to negotiate terms;
- When a driver had logged into the app, the driver's choice about whether to accept jobs was controlled by Uber. The court and tribunal had highlighted one way that this was done was via monitoring the driver's rate of acceptance and cancellation of jobs and imposing what was, in effect, a penalty if too many trip requests were declined or cancelled;
- Uber exercises significant control over the way in which drivers deliver their services, such as by the use of a rating system that may lead to warnings and even termination of the driver. In effect, this gave Uber rights to impose disciplinary sanctions on the drivers; and
- Uber restricted communications between passengers and the driver to the absolute minimum required to perform a particular ride and took steps to prevent drivers from establishing
any relationship with a passenger which could exist beyond an individual ride. This further undermined opportunities for drivers to operate as an independent business and the argument that the driver entered into a separate contract with each passenger.
The court noted that drivers were therefore in a position of subordination and depended on the app and Uber to the extent that they had little or no ability to improve their economic position through professional or entrepreneurial skills. In practice, this meant the only way they could increase their earnings was by working longer hours while constantly meeting all of the various measures Uber put in place to review their performance.
Another key decision from the court was that it upheld the tribunal's conclusion that drivers were working for Uber for all of the time in which they were actually logged into the Uber app within the territory in which the driver was licenced to operate and that they were ready and willing to accept jobs. This constituted "working time" for the purpose of the WTR and "unmeasured work" for the purpose of the National Minimum Wage.
The decision of the Supreme Court to deny Uber's appeal has settled one of the longest-running and possibly most consequential employment law cases of modern times. Several key principles used to determine worker status have now been clarified by the Supreme Court which may prove useful to workers and employers alike in assessing their employment relationships.
Of primary importance is the clear assertion that the first obligation on courts and tribunals in cases such as these is to consider the employment status of an individual within the meaning of legislation based on the actual working relationship between the parties. Although the written contractual terms set out between the parties remain important, courts and tribunals have significant discretion to ignore or disapply terms and conditions stated in contractual documents if they find that these do not represent the reality of the working relationship or the intentions of the parties.
Although the decision of the court in this case carries significance, it has ultimately underlined the widely understood point that worker status cases will ultimately turn on the facts of their case.
This has already been well established, even within seemingly similar industries where individuals have been found to be independent contractors or workers within parcel and food delivery courier services.
As for the impact on Uber, the company has claimed that the decision only impacts on a small group of drivers it engaged prior to 2016, which may yet be disputed by drivers who joined the platform since.
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.