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Those interested in the tests for employment status continue to be rewarded by the stream of gig economy cases working their way upwards from the Employment Tribunal (ET), the Employment Appeal Tribunal (EAT) and beyond.

In parallel, the Tax Chamber of the First-tier Tribunal (FTT) has been grappling with the issue of employment status as it arises in a legislative context colloquially known as IR35. These provisions are intended to tackle disguised employment. Briefly, if a worker contracts through a personal service company (PSC) with an end client, IR35 interposes a hypothetical contract between the contractor and the end client, and asks whether that contract would be one of employment. If the answer is “yes” then the PSC is treated as the contractor’s employer and the payments to the PSC by the end client are taxed accordingly. In this way, specialist tax tribunals have come to deal with questions usually dealt with only by the ET.

Two recent decisions, one of the EAT and one of the FTT, have considered the test for employment status and have made some interesting (though not necessarily informative) comments about mutuality of obligation.

Mutuality of obligation was the first limb of the test for employment status posed in Ready Mixed Concrete (South East) Ltd v Minister of Pensions & National Insurance [1968] 2 QB 497. Within this formulation were two separate issues:

  • Was there an obligation on the “employee” to perform work personally?
  • Was there any obligation on the “employer” to provide work and a corresponding obligation on the “employee” to accept and perform it?

It is the latter of these two with which we are concerned.

In Gascoigne v Addison Lee Ltd UKEAT/0289/17, the EAT rejected the employer’s appeal against the ET’s determination that its bicycle couriers were limb (b) workers. The main ground of appeal was that there was no sufficient mutuality of obligation.

The couriers were issued with GPS devices through which they could receive jobs from a control room. They were not obliged to accept these jobs, though there was no button to decline them and the evidence was that they would experience gentle pressure from their controllers to accept all jobs offered to them. This was said to result in an expectation that the courier would accept and perform all work offered to them.

The EAT upheld the finding of the ET that there was sufficient mutuality of obligation at all times during which the courier’s GPS device was turned on. Even though there was no explicit contractual requirement for a courier to accept a job, and where the couriers were paid by the job and not for the time between jobs, the EAT found that the expectation that work would be offered and accepted has hardened into a legal obligation, providing the requisite mutuality.

Unhelpfully, neither the EAT nor the ET informed us how one should distinguish between expectations that had hardened into legal obligations, and those that hadn’t.

Expectations also made an appearance in the FTT decision in Jensal Software Ltd v HMRC (16 May 2018). This was an IR35 case where a contractor was engaged through a PSC but found by the FTT to be self-employed upon the application of IR35. There was an added complication in that there was also an agency interposed between the PSC and the end client.

The contractor provided his services under a series of contracts between the PSC and the agency, sometimes back-to-back, sometimes with a gap in between. The contractor was paid a daily rate and had no contractually set hours; he was contractually entitled to be paid irrespective of the numbers of hours worked (a pointer away from employment). There was evidence of an internal recruitment document which passed between the end client and the agency which set out the contractor’s daily working hours as 7.5 hours (a pointer towards employment). In dismissing the relevance of this document, the FTT characterised it as no more than an expectation.

One is left to wonder which expectations are those which are relevant to mutuality of obligation and those which aren’t.

In the application of the employment status test, mutuality of obligation often plays second fiddle to other tests such as “control” and “business on their own account”, and this is perhaps reflected in the rather cursory way in which authorities such as those above deal with the matter. Coincidentally, the Taylor Review recommended a legislative rebalancing of the test for employment status, with an enhanced emphasis being placed on the issue of control.

However, until such a rebalancing takes place, whether at a legislative or judicial level, mutuality of obligation remains a key part of the test for employment status. Which is why it is worrying to see HMRC promoting an online tool for determining employment status (“Check employment status for tax“), which entirely omits to deal with the question of mutuality of obligation (as distinct from the question of personal service and rights of substitution).

HMRC claims that it will stand by the results produced by this online questionnaire for employment status as it pertains to tax issues. It is therefore troubling to see that the question of mutuality (an area where we can see the law is still developing in a less than perfectly coherent manner) is entirely excluded from consideration. The putative “employee” is being denied the opportunity to address a key limb of the test for employment status where the law is unclear and there is ample room for argument and legitimate difference of opinion.

Devereux Colm Kelly
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The Shared Parental Leave Regulations 2014 (SI 2014/3050) provide the non-maternal parent or carer (usually, but not always the father) with the right (subject to statutory conditions) to take leave from work to share in a baby’s primary care. A DBEIS press release earlier this year suggested take-up of shared parental leave (SPL) may be as low as 2%. There may be many reasons for this, such as:

  • The longstanding cultural status quo that childcare is the mother’s role.
  • Fear of workplace repercussions.
  • Gender pay gaps rendering the male partner the more likely principal breadwinner.
  • Lack of knowledge of the right.
  • Complexity of the forms.

One possible reason derives from the asymmetry between contractual maternity leave pay provisions and those for SPL.

In the recent EAT cases of Capita Customer Management Ltd v Ali and Hextall v Chief Constable of Leicestershire Police, Slade J considered whether less generous contractual pay provision for SPL amounted to direct or indirect discrimination. Direct discrimination was the focus of the Ali appeal, while Hextall focused on indirect.

Narrowing issues for future arguments

Slade J’s judgments raise a number of questions, and this blog concentrates on the judgments’ potential role in future justification arguments in indirect discrimination claims. I need to explain first why that is my focus.

It is hard to see a direct discrimination claim based on differential pay under contractual maternity leave and SPL regimes succeeding. This is not due to the main line of reasoning in Ali (concerning maternity leave’s primary purpose) but the more muted (and far simpler) line. While maternity leave is only open to women, SPL is open to both men and women. Those women are not only mothers who have curtailed their maternity leave, but also, for example, the same-sex wife or civil partner of the maternal parent. There is thus no exact correspondence between the protected characteristic (sex) and the ground of less favourable treatment (pay at a lower contractual level for SPL than for maternity leave). That lack of exact correspondence must be fatal to a direct discrimination claim (see the Supreme Court’s reasoning in Taiwo v Olaigbe).

The focus should thus be on indirect discrimination. The EAT decision in Hextall does not take us very far. Slade J held the ET failed properly to identify the particular disadvantage. This meant that the analysis of the remaining elements of indirect discrimination was flawed. It becomes clear on proper characterisation of the particular disadvantage, namely that mothers can choose between SPL and the preferential pay of maternity leave while fathers have no choice, that justification is likely to be the main battleground.

In Hextall, the ET (obiter) found against the police on justification. There was no cross-appeal against that finding, though presumably justification will be at large on remission.

Primary purpose of maternity leave and its impact on justification

Without indicating her own view, Slade J considered that material differences between taking maternity leave and SPL may be relevant to the justification exercise. That is the likely context of future battles on Slade J’s analysis of maternity leave’s purpose.

That analysis is to be found in the judgment in Ali. Slade J relies heavily on the Pregnant Workers Directive (PWD), which:

  • Provides a right to continuous maternity leave of at least 14 weeks.
  • Emphasises repeatedly the protection of the mother’s health and safety post-childbirth.

Those elements of the PWD convinced Slade J that maternity leave’s primary purpose (both during and after compulsory maternity leave) is to protect the new mother’s health and safety, rather than to care for the new-born baby.

Coincidentally the maternity leave policy under Mr Ali’s contract provided for 14 weeks’ full pay, corresponding to the minimum period of maternity leave under the PWD, so Slade J did not need to consider for how long the health and safety primary purpose applies. In Ali, Slade J was open to the possibility, suggested by Working Families (intervening), that after 26 weeks the purpose of maternity leave may change. That raises a number of questions:

  • First, what is the magic in 26 weeks? It is the length of ordinary maternity leave in the UK, but there is no suggestion it was picked to harmonise with biological recovery. Why does acceptance of the logic on change of purpose after 26 weeks not apply equally on exhaustion of the 14-week minimum entitlement under the PWD?
  • Second, both the PWD and domestic rights entitle the commencement of maternity leave before childbirth. The PWD specifies no limit, while domestically maternity leave can commence from the eleventh week before the expected week of childbirth. The PWD thus anticipates entitlement to less than 14 weeks between giving birth and returning to work. How is that consistent with holding the PWD period of maternity leave is for biological recovery?
  • Third, when to commence maternity leave is the mother’s prerogative and is decided prior to childbirth. The endpoint of the leave entitlement post-childbirth is not governed by the mother’s biological needs.
  • Fourth, a protective purpose is difficult to square with the entitlement after the compulsory two-week period to curtail maternity leave and to return to work.
  • Fifth, Slade J’s judgments are arguably out of synch with EU legislative moves. In particular, on 26 April 2017 the European Commission put out a proposal for a directive on work-life balance for parents and carers. The proposal’s two specific objectives include an increase in the take-up of family related leave and flexible work arrangements by men. It also recognises that a main cause of the gender employment gap is the unbalanced design of leave between genders.
  • Finally, while special features of maternity leave may explain why employers contract to pay above statutory maternity pay, it is difficult to see how those features can also justify not paying men on SPL on a like basis. Employers may have great difficulty establishing justification defences that are not impermissible cost-based defences.

It may well be that future tribunals decide differential pay provision for the different forms of leave is justified, but it will be interesting to see whether Slade J’s judgment in Ali forms the central plank of justificatory reasoning or whether, as I suspect, her analysis is chipped away at as time and social convention moves on.

(With thanks to Chris Milsom (counsel for the intervener in both appeals) for his assistance on this article)

Field Court Chambers Jason Braier
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It is common in litigation for a witness to be in “purdah” during a break in their evidence. The witness is warned not to discuss their evidence with anyone during any such break. While this is usually observed, Chidzoy v BBC UKEAT/0097/17 shows what can happen when it is not.

The facts

The claimant worked for the BBC, and brought claims of discrimination. She gave evidence at the final hearing, and during various breaks was given the usual warning against discussing her evidence. During the last such break, the respondent’s lawyers spotted the claimant speaking with a journalist. They raised the issue with the tribunal and the claimant’s solicitor gave an account of what happened.

The tribunal adjourned over the weekend. On resumption the respondent adduced statements from their solicitor, counsel and a witness. The claimant’s side did similarly. No oral evidence was heard.

The tribunal found the claimant’s account lacked credibility and concluded that she had been discussing her evidence with the journalist. They struck the claim out, concluding that a fair trial was no longer possible. The conversation and the surrounding circumstances had caused the tribunal’s trust in the claimant to be “irreparably damaged”: she had acted in “flagrant disregard of clear and repeated instructions from the tribunal”. There was a risk of her evidence being contaminated, and the discussion had concerned evidence given in cross-examination that morning. The tribunal considered whether there were any alternatives to striking out the case, but concluded that none were viable.

The appeal

 On appeal, the claimant contended that the tribunal had erred:

  • It was wrong to consider that the claimant’s conduct was unreasonable, especially whether her evidence had really been corrupted.
  • The procedure adopted by the tribunal was inadequate as it had only considered written, not oral, evidence.
  • It was in any event wrong to conclude that a fair trial was no longer possible on the basis of irreparable damage.
  • Striking out the case was in any event an inappropriate sanction.

The EAT rejected that appeal:

  • The tribunal was entitled to consider that there had been unreasonable conduct. The claimant was warned repeatedly not to discuss her evidence, yet chose to do so. The discussion was of a matter related to a specific complaint, as opposed to something of only peripheral relevance. That was unreasonable and “very serious conduct”. The purpose of the tribunal’s warning was clear: influence over evidence by contact with others will taint it “in a way that is hard to assess and might thus prejudice the fair determination of the case.”
  • The application had been conducted in a procedurally fair manner. Both parties’ accounts accepted that the respondent had heard terms used that had formed part of the cross-examination earlier that day. As the respondent had only heard “snatches of conversation”, it was difficult for them to cross examine as they would be unable to advance a positive case. The tribunal was therefore entitled to conclude that there had been discussion of the evidence on the basis of the material before it.
  • The tribunal was entitled to conclude that a fair trial was no longer possible. This conclusion was reached not just because of the discussion with the journalist, but also:
    • the claimant’s failure to bring the matter to the attention of the tribunal herself; and
    • the differing accounts she had given of events to the tribunal.
  • Tribunals should exercise caution and not assume that a case should be struck out before considering alternatives. Here, however, the possible alternatives were ineffective: there was no way of avoiding the fundamental issue of trust in the claimant.

Dealing with witness contact

This is primarily an appeal about factual conclusions rather than an error of law, but raises useful points for practitioners when faced with the possibility of impermissible witness discussions during a break in evidence.

The warning given to witnesses is not a formality, but a significant protection against contamination of evidence. The tribunal’s concern was about the wider loss of trust, and the particular difficulty of being able to detect (and therefore account for) the effect of any such contamination. A firm approach is likely to be taken by any tribunal faced with this issue.

Strictly speaking, the prohibition is only on witnesses discussing their evidence with other people, rather than a blanket ban on witness contact. Nevertheless, the practical view is likely to be that any witness contact is dangerous. It can be difficult for lay witnesses to police the boundary between what is and is not permissible, and it is easy for misunderstandings to arise on either side. It is therefore advisable to avoid any form of contact other than when strictly necessary. Where such contact is necessary, it should be raised in advance with the other side or the tribunal as appropriate to ensure transparency and avoid misunderstanding. Any such discussion should be supervised by a member of the legal team.

If, despite all efforts, some discussion does happen, this need not be fatal. The tribunal and the EAT were clear that striking out was a last resort, and decided on in this case because the claimant’s side failed to raise the issue themselves or give a candid account of what was discussed. Had the claimant taken a different approach, it is entirely possible that the claim might not have been struck out in its entirety. The next steps taken are therefore likely to be critical to whether the effect is harmful to or destruction of your client’s case.

It is important for a party faced with such an issue to raise the allegation themselves at the first possible opportunity and to give a full and frank account of what exactly was discussed. This is likely to be the only means of preserving, or regaining, a sufficient degree of trust from the tribunal to avoid the case being struck out. A ready admission and candid explanation is still likely to do harm to your case, but that harm is less likely to be as severe as that of your client’s case being struck out in its entirety.

Littleton Benjamin Gray
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The decision of the employment tribunal in Lingard v Leading Learners ET/2401985/17 will impact on assertions of legal advice privilege (LAP) in the context of HR consultants employed by a law firm. In this blog, Nicholas Siddall (who acted for the claimant) analyses the decision and its implications.

The facts

At an earlier preliminary hearing it had been determined that litigation privilege did not apply up to a certain date. In the light of that finding, the respondent sought to assert LAP as regards communications between it and an HR adviser predating that date. The complication was that the HR adviser was an employee of a firm of solicitors. The solicitors in question offered their clients what they described as a comprehensive package where they would provide HR advice and also specialist employment advice on the basis of a single annual retainer. The issue was the effect, if any, that this had on the ability of the respondent to assert LAP.

The previous law

It is settled law that LAP is the exclusive purview of lawyers (R (Prudential plc and another) v Special Commissioner of Income Tax and another [2013] 2 AC 185). Thus a “pure” HR consultant cannot be the basis of a valid assertion of LAP (New Victoria Hospital v Ryan [1993] ICR 201). It is also settled law that the onus is on the party seeking to assert privilege (Rawlinson and Hunter Trustees SA v Akers [2014] EWCA Civ 136).

The issue

The issue is whether the Ryan rule was to be relaxed when the HR consultant worked in a legal setting. This was a point on which there is no previous authority.

The employment tribunal’s judgment

The employment tribunal held that LAP was not available to the respondent. This was principally on the basis that the respondent had not called evidence to address the precise operation of the department in which the HR consultant worked and the degree of supervision to which she was subject.

However on a point of wider application, the employment tribunal accepted that the correct statement of the position in law as to whether LAP applied was that found in Phipson on Evidence (19th ed):

“Practical problems may arise where staff who are not legally qualified are involved in the giving of advice in a department supervised by qualified lawyers. The unqualified staff may be paralegals working supervised in a department. So long as the paralegals are properly supervised in accordance with solicitors’ regulatory requirements, the advice will be the advice of the firm or the legal department rather than the advice of the paralegals themselves and thus will be privileged. Or the department may be a combination of accountants and lawyers giving tax advice. In this example, the issue is whether the advice is sought and obtained from lawyers professionally consulted in that capacity, or from accountants. In the former case, it is privileged, in the latter not. That means whether the advice is privileged is likely to be determined by an analysis of the regulatory and professional organisation of the department.” (Paragraphs 23-38.)

Conclusions

In circumstances where a law firm offers an HR function, the availability of LAP will depend on the regulatory and professional organisation of the department. This is an issue which parties must be able to evidence in order to make a viable assertion of LAP.

Littleton Nicholas Siddall
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It has never been more important for the country to have a strong, confident and effective equalities regulator. A cursory look at social media tells you why. Whether it’s allegations of sexual harassment in Parliament, or of racism at the Football Association, or the gender pay gap at the BBC, discrimination is everywhere.

As we might expect, the most overt and crude forms of discriminatory behaviour and harassment have been widely condemned. Following revelations about its recent charity dinner, the President’s Club was denounced in Parliament, disavowed by the charities it supported and shut down almost immediately.

At the same time, our research suggests that disturbing attitudes towards some forms of unlawful behaviour remain widespread. A recent survey by YouGov on behalf of the EHRC, showed that many British employers are decades behind the law when it comes to recruiting women: nearly six in ten private sector employers agreed that a woman should have to disclose that she is pregnant during the recruitment process. So it’s not at all surprising that workplace discrimination problems aren’t confined to the cases that hit the press. They are the tip of a giant and resilient iceberg.

Pay gaps extend beyond the BBC and beyond gender. Recent figures calculate the ethnic minority pay gap at 5.7% and the disability pay gap at 13.6% across Britain. Look further and we see that disabled people are less likely to be in employment than non-disabled people. The causes are complex, but these are real inequalities that need to be addressed. We also know from new research for the EHRC that will be released in March that sexual harassment in the workplace remains a significant problem for very many people, not just those in politics or the film industry.

Against this backdrop, some workers struggle even to establish that they are protected from discrimination in law. The growth of the “gig economy” has thrust questions over the employment status of those with atypical work relationships to centre stage. And the European Union (Withdrawal) Bill removes from law the Charter of Fundamental Rights, which protects rights important to all of us, including protections for workers.

EHRC: our role and remit

These are just some of the reasons why the EHRC‘s role is vital. Established by the Equality Act 2006, the EHRC is Britain’s independent national equality body and national human rights institution.

Our remit covers equality and human rights issues across a wide spectrum, including education, access to services and participation, justice and detention, living standards and health. For example, we are highlighting the human rights and equality dimension of the Grenfell Tower fire, we are working to improve disabled access at Premier League football grounds, and our Brexit work seeks to make sure Britain’s status as a world leader on equality and human rights can be maintained and strengthened after we leave the EU. But employment issues remain very high on our agenda.

We drive improvement in many different ways: by providing information to help people understand their rights and obligations, using our expertise to influence public policy, monitoring the effectiveness of equality and human rights law and enabling organisations to achieve positive change. For example, we’re calling on organisations of all sizes to join Working Forward. This is our nationwide campaign, backed by some of the UK’s leading businesses and industry bodies, to make workplaces the best they can be for pregnant women and new parents.

Our website is a rich source of advice and guidance, not just for individuals and business, but also for advisers. We’ve recently launched a legal helpline for the advice sector, solicitors, trade unions, ombudsman schemes and other organisations providing advice to individuals. EHRC Adviser Support helps to ensure that these agencies have access to high quality advice on equality and human rights issues from EHRC experts.

Enforcement

All of these functions serve to challenge discrimination in different ways, but importantly, we also have strong enforcement powers to protect people against serious and systemic abuses of their rights. We can conduct investigations, enter into binding agreements and enforce compliance with the public sector equality duty. We can fund individual legal cases of strategic importance to clarify or reinforce people’s rights, or challenge policies or practices that cause significant disadvantage, sometimes across a whole sector.

We can intervene in ongoing legal proceedings to make additional submissions to help the court. We did this successfully in the landmark case of UNISON v Lord Chancellor, in which the Supreme Court agreed that employment tribunal fees were unlawful and discriminatory. We can make applications to court to restrain unlawful acts and we have power to take action against employers who may have made unlawful enquiries about a work applicant’s disability or health.

In relation to pay gaps, we’ve recently consulted on our planned approach to enforcing the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. These regulations require employers with 250 employees or more to publish gender pay gap data every year. Reporting helps organisations understand the size and causes of their pay gaps and identify any issues that need to be addressed. If companies fail to publish their data, we will take enforcement action to compel them to do so.

Get in touch

If you are a legal representative or adviser dealing with discrimination issues, please get in touch.

Of course, we can’t promise to get involved every time. We focus our limited resources on areas where we think we can have the most impact. Currently, in the employment sphere, we are prioritising cases relating to religion or belief, discrimination in recruitment and career progression (particularly disability and race), the “gig” economy and employment status, and access to support, assistance and justice for victims of modern slavery. We are also running a legal support programme funding cases on discrimination in education, housing and social security.  But even where we can’t help directly, we’ll use the information you give us to inform our future priorities.

The EHRC’s work is vital to building a fairer Britain. Whether you work in Parliament, the FA, the BBC, or any other workplace anywhere in the country, we think you should be able to work with dignity and respect, free from discrimination. We know we won’t achieve this alone but with your help, we can make a difference.

Elizabeth Prochaska
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In Otero Ramos v Servicio Galego de Saúde (Case C-531/15) EU:C:2017:789, the ECJ held it was directly discriminatory for an employer to fail to conduct a risk assessment compliant with Article 4(1) of the Pregnant Workers Directive (92/85/EC) (PWD) to assess the risks posed to a breastfeeding worker by their work.

This judgment requires a re-evaluation of the UK’s statutory protections for breastfeeding mothers and the case law interpreting those protections. As a consequence, advice to employers on the extent of the risk assessment duties to breastfeeding mothers should be revisited.

Direct discrimination under the Equality Act 2010

The Equality Act 2010 (EqA) recognises that treating a woman less favourably because she is breastfeeding constitutes direct sex discrimination (section 13(6)(a)). However, the EqA expressly disapplies that protection in the workplace (section 13(7)). That restriction surely cannot now survive and ought either to be repealed entirely or at least amended to correspond with Otero Ramos. Until then, section 13(7) can no longer provide solace to employers.

Requirement to conduct a risk assessment: proactive or reactive?

Perhaps of greater practical significance, the Otero Ramos judgment suggests domestic case law is wrong about when an obligation arises to conduct an Article 4(1) risk assessment.

Article 4(1) specifies that an employer must conduct an assessment “For all activities liable to involve a specific risk of exposure to the agents, processes or working conditions of which a non-exhaustive list is given in Annex I”. The Annex includes some industry-specific risks and others of general application, for example:

  • Handling of loads entailing risks.
  • Movements and postures.
  • Mental and physical fatigue.

Article 4(1) must be read in the light of guidelines produced by the European Commission under Article 3. In Otero Ramos, the court confirmed the guidelines must be taken into account in interpreting Article 4(1), as they serve as the basis for the assessment referred to in that Article.

As the court notes, the guidelines describe a risk assessment as “a systematic examination of all aspects of work in order to identify the probable causes of injuries or damage and to establish how these causes can be contained in order to eliminate or reduce risks.” They set out three required phases for an assessment to be PWD compliant:

  • Identification of hazards.
  • Identification of worker categories (that is, pregnant workers, those who have given birth and those who are breastfeeding).
  • Risk assessment in both qualitative and quantitative terms.

The guidelines are clear in emphasising the employer’s “obligation” to conduct a risk assessment for all female workers who fulfil the criteria laid down in Article 2 of the PWD. This includes breastfeeding workers. Moreover, as the court recognised, the guidelines emphasise the requirements for the risk assessment to be individualised, taking specific account of the worker in question, and to be regularly reviewed.

Article 4(1) is transposed into UK law by regulation 16(1) of the Management of Health and Safety at Work Regulations 1999 (SI 3242/1999). That regulation only requires an Article 4(1) risk assessment for a breastfeeding worker where the work is of a kind which “could” involve risk to the mother or her baby. In Madarassy v Nomura International Ltd [2007] EWCA Civ 33, the Court of Appeal held there was no obligation under regulation 16(1) to conduct a risk assessment for a new or expectant mother absent evidence of potential risk to health and safety. This decision was then followed by the EAT in O’Neill v Buckinghamshire County Council [2010] IRLR 384. Surprisingly, the guidelines drawn up under Article 3 of the PWD are not mentioned in either judgment (nor in the EAT judgment in Madarassy UKEAT/0326/03).

The ECJ in Otero Ramos appears to take a more expansive view of the Article 4(1) requirement, seeing it as a proactive obligation. There is no suggestion it is only activated where risk is identified. This is unsurprising in the light of the emphasis the guidelines give to the obligation.

The court’s approach to the evidence needed to shift the burden of proof under Article 19 of the Equal Treatment Directive (2006/54/EC) is instructive. Ms Otero Ramos’s hospital produced a statement from the HR director that an A&E nurse was on a list of risk-free jobs, and a report from a doctor who examined Ms Otero Ramos and (without providing reasons) declared her fit to carry out the tasks relating to her work. The hospital’s risk assessment went no further than that. By way of contrast, Ms Otero Ramos’s line manager (the hospital’s senior A&E consultant) wrote a letter identifying a variety of risks to a breastfeeding worker and her child. The court held that letter constituted evidence capable of showing the risk assessment did not take account of Ms Otero Ramos’s individual situation and thus failed to comply with Article 4(1). The court made no mention of the letter satisfying the burden by showing potential risk to activate the obligation to carry out an individualised risk assessment, as per domestic authority. That the obligation was activated was taken as read, the court concentrating on failure to comply with the specific requirements of the obligation.

What to advise employers

As a consequence of Otero Ramos, employers who have previously awaited presentation of evidence of potential risk before carrying out an Article 4(1) risk assessment should be advised to adopt a proactive approach or risk a direct discrimination claim. The assessment should:

  • Take the individual worker’s personal situation into account.
  • Consider any relevant medical reports provided.
  • Be kept under regular review.

In terms of what to look for, there is no better reference than the risk assessment tables produced as part of the European Commission’s guidelines.

Field Court Chambers Jason Braier
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Last month’s revelations about the Presidents Club fundraising dinner, at which female hostesses were reportedly harassed by male guests, has raised questions about the third party harassment provisions under the Equality Act 2010 (EqA 2010). While the relevant provisions were repealed from 1 October 2013, there has been some suggestion that they should be re-enacted. Until Parliament intervenes, what protection is currently available to employees and which steps should employers consider taking?

Position before EqA 2010

Until 2003, it was considered to be the position that where an employer could have prevented an act of discrimination committed by a third party against its employees, the employer would be liable for discrimination. In Burton v De Vere Hotels Ltd [1997] ICR 937, a hotel was held to have discriminated against its waitressing staff where they were subjected to racial harassment in the form of racist “jokes” by the comedian Bernard Manning and insulting conduct by guests at the function.

However, this authority was held to be wrongly decided in Pearce v Governing Body of Mayfield Secondary School [2003] UKHL 34: the House of Lords held that the failure to take reasonable steps to prevent an employee from racial or sexist abuse was discrimination only where the reason for that failure to act amounted to discrimination. This was subsequently doubted in Equal Opportunities Commission v Secretary of State for Trade and Industry [2007] IRLR 327, in which the High Court held that aspects of Pearce were not compatible with the Equal Treatment Directive.

Following this, the government amended the harassment provisions in the Sex Discrimination Act 1975 so that employers could be liable for third party sex harassment. The other strands of discrimination legislation were not amended. However, the EAT held in Sheffield City Council v Norouzi [2011] IRLR 897 that public sector employers could find themselves liable for third party harassment, on grounds other than sex, by means of application of EU law. Consequently, statutory protection for employees was somewhat asymmetric.

EqA 2010 and third party harassment

The EqA 2010 extended statutory protection from third party harassment to all the protected characteristics, except for marriage/civil partnership and pregnancy/maternity (section 40(2)(a)). There remained high hurdles for an employee to overcome. An employer was not liable unless it knew that the employee had already been harassed by a third party on at least two occasions, in circumstances where the third party could be a different person on each occasion (section 40(3)). Arguably, the actual knowledge of an employer was required: the statutory language could be contrasted with other provisions under the EqA 2010 where constructive knowledge is permissible. Moreover, an employer was not liable where it took reasonably practicable steps to prevent the harassment (section 40(2)(b)).

The third party harassment provisions were repealed with effect from 1 October 2013 by the Enterprise and Regulatory Reform Act 2013, as part of the coalition government’s “regulatory bonfire”. However, there is growing pressure on the government to re-enact the provisions in some form following the Presidents Club scandal, including a petition which has been signed by more than 100,000 people. The Fawcett Society has also recommended reducing the knowledge requirement to one incident only and extending protection to individuals with the protected characteristics of marriage/civil partnership and pregnancy/maternity.

What protection remains available to employees?

A third party harassment claim could be brought against an employer directly under section 26 of the EqA 2010. A loose causal link is required: harassment can occur where conduct is “related to”, rather than “on grounds of”, a protected characteristic. An employee could argue that an employer’s inaction is itself unwanted conduct related to their protected characteristic which violated their dignity or created a proscribed environment. There would be no need to show that the employer knew of any prior harassment by a third party.

However, it may be difficult to show that an employer’s inaction in the face of third party harassment actively “created” a hostile environment. Furthermore, in Norouzi, the EAT commented that there are some environments, such as prisons, care homes or schools, where employees may be subject to harassment which is a “hazard of the job”. In such cases, the employer should not be found liable unless the tribunal identifies what steps could have been taken by the employer to prevent the harassment. Therefore, a tribunal is obliged to consider the wider circumstances, such as the type of work undertaken by the employee and nature of their clients or service users.

Employees should also take care where they have signed a non-disclosure agreement (NDA) with respect to the nature of their work or conduct by third parties. Usually, this does not prevent an employee from making disclosures as required by law, HMRC or any regulatory body. However, bringing a claim in a tribunal may amount to a breach of confidentiality in respect of which an employer may claim damages. That said, an employer is unlikely to seek to enforce an NDA if the information is already in the public domain. This stance has been taken by the staffing agency which hired the hostesses for the Presidents Club dinner: the hostesses have been informed that they may disregard the NDAs they signed in order to report any alleged criminal behaviour to the police.

Employers should continue to ensure they take reasonable steps to prevent any harassment by third parties. The EHRC Employment Statutory Code of Practice recommends the following steps, depending on the size and resources of an employer:

  • A harassment policy.
  • A public notice reminding third parties that harassment is unlawful.
  • An express term in contracts with third parties requiring them to adhere to the harassment policy.
  • A suitable reporting and investigation mechanism.

 Harassment of third parties by employees

Equally, employers should take reasonable steps to prevent any harassment by employees of third parties. For example, there have been instances of delivery drivers allegedly using personal data of customers to send unsolicited messages. A harassment claim could be brought against the service provider under section 29(3) of the EqA 2010, as anything done by an employee in the course of their employment is treated as having been done by the employer, regardless of whether the employer knew or approved of the act (section 109(1) and (3)). The phrase “in the course of employment” is given its ordinary meaning, rather than the meaning used to establish vicarious liability in tort. Consequently, the determination of whether an employee’s act was done in the course of their employment is highly dependent on the facts.

Moreover, as the implementation of the General Data Protection Regulation ((EU) 2016/679) approaches, employers must take steps to ensure a reasonable level of protection for personal data of customers, which includes ensuring that such data is not misused by its employees. A failure to do so could result in a complaint to the Information Commissioner’s Office or fines. Consequently, an employer should consider taking similar steps as outlined above to prevent harassment of third parties by its employees.

Devereux Marianne Tutin
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Two recent decisions of the European Court of Human Rights (ECtHR) have considered how the privacy rights of employees can be protected during covert disciplinary investigations. Here we explain those cases and the guidance that can be taken from them.

Email monitoring

Barbulescu v Romania [2017] IRLR 1032 considered the investigation of an employee’s personal emails. Mr Barbulescu’s employment contract forbade any personal use of the employer’s computer system. Contrary to this, Mr Barbulescu had used a Yahoo Messenger account intended for client communications for personal messages. When asked about this, he lied and stated that he had used Yahoo Messenger only for work purposes. The employer then produced a 45 page transcript of messages sent to his brother and fiancée, including messages of an intimate nature and messages addressing medical issues. That transcript was read by numerous colleagues involved in the disciplinary process.

In September 2017, the Grand Chamber of the ECtHR held that this was disproportionate and a breach of Mr Barbulescu’s Article 8 right to privacy.

The ECtHR confirmed that “private life” within the meaning of Article 8 is a broad term, not susceptible of exhaustive definition, and held that the concept of private life may include professional or business activities and activities taking place in public. It expressly ruled that emails sent from work are protected under Article 8, as well as information derived from monitoring an employee’s internet use.

Stating that “proportionality and procedural guarantees against arbitrariness are essential”, the court set out factors to be taken into account when reviewing measures taken by employers:

  • Whether the employee has been notified of the possibility of monitoring and its nature.
  • The extent of monitoring and the degree of intrusion into the employee’s privacy.
  • Whether the employer has provided legitimate reasons to justify monitoring and accessing the content of communications, with the latter requiring more weighty justification as it is more intrusive.
  • Whether less intrusive methods could have been used.
  • The consequences of monitoring for the employee and the use made by the employer of the results of monitoring, in particular whether the results were used to achieve the declared aim.
  • Whether the employee was provided with sufficient safeguards, which should ensure that the employer cannot access the actual content of communications unless the employee has been notified in advance.

Video surveillance

 In Lopez Ribalda v Spain, heard by the ECtHR in December 2017, supermarket cashiers were suspected of theft. The employer set up cameras which it told the employees about, and additionally put in place hidden cameras. The camera footage showed the cashiers stealing and was relied on by the employer first to dismiss them, and later as evidence to justify their dismissals to the Spanish employment tribunal. The employees contended that their Article 8 right to a private life was infringed by both the video surveillance itself and its use by the employer in deciding to dismiss them.

The ECtHR readily found that covert video surveillance was a “considerable intrusion” into the employees’ private lives, as it was a recorded and reproducible documentation of their conduct at work which, being contractually obliged to go to work, they could not evade.

The ECtHR took into account that the data obtained from the cameras entailed the processing of personal data, thus engaging data protection legislation and the requirement to obtain consent. The fact that the employees had a right to be informed of the existence and purpose of the video surveillance under the data protection legislation meant that they also had a reasonable expectation of privacy for the purposes of Article 8.

In ruling that covert surveillance was not a proportionate means of protecting the employer’s legitimate aim of preventing theft, the ECtHR took several factors into account:

  • All staff were subject to the surveillance and not merely those most likely to be responsible for the thefts.
  • The surveillance took place over a prolonged period;
  • The surveillance had not been carried out in accordance with the data protection principles.
  • Less intrusive means were available, as the aim of preventing further thefts could still have been achieved if the employer had informed the employees in advance of the installation of cameras and of their personal data rights.

Implications for employers

Neither decision imposes a ban on monitoring or even covert surveillance. Although investigating misconduct is a legitimate aim, both cases show clearly that even criminal misconduct will not justify excessively intrusive investigations.

Good policies are, as ever, the starting point. Policies should address internet usage, potential monitoring, any surveillance measures and the employee’s rights. Employers who have CCTV or other recording systems should have a clear policy explaining the nature and extent of recordings and the employee’s rights. It is always helpful to provide employees with a point of contact for any queries.

Note that, once the GDPR is introduced on 25 May 2018, employers will not be able to rely on blanket contractual consents to the processing of personal data. Instead, employers will have to justify processing on other grounds, including the legitimate interests of the business.

There are several points to be extracted from these judgments for employers embarking on an investigation in relation to suspected misconduct:

  • Each case needs to be considered on its own merits. Note that the GDPR requires appropriate organizational methods to ensure that the data protection principles are followed. Employers should develop protocols for monitoring and surveillance measures, ensure managers involved are recording steps taken and provide for senior managerial oversight.
  • Employers should be wary of proceeding to monitor or investigate without having a clear reasonable basis for suspecting misconduct.
  • When considering the scope of an investigation, the employer should determine the aims of the investigation and what steps need to be taken to support those aims. There may be significant differences in the scope and approach of:
    • investigations into identifying those responsible for ongoing conduct;
    • investigations to establish past conduct by an already identified employee; and
    • investigations into how the conduct of numerous employees can be improved or redirected in the future.
  • Monitoring should be restricted to only those employees in relation to whom reasonable suspicion arises. Record the reasons why each employee is suspected before embarking on any investigation or surveillance.
  • Employers should consider the impact of monitoring from the employee’s perspective and the possibility that it could intrude on their privacy.
  • Consider whether there are less intrusive steps that could be taken. The more intrusive the steps to be taken, the more those reasons need to be compelling.
  • Employers must follow the data protection principles in handling the evidence obtained from investigations. Personal data should be stored in a secure manner, and only viewed and shared to the extent necessary for the identified purpose of the investigation. The GDPR requires a record to be kept of how data has been processed.
  • Evidence collected from monitoring or surveillance should only be used for its intended purpose and should be deleted or destroyed once that purpose has expired.

Further guidance can be obtained from the Information Commissioner’s Employment practices code.

Littleton Lucy Bone
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Employee data and monitoring. The ECtHR has held that a University’s installation of surveillance cameras in student auditoriums violated Article 8 of the ECHR. Privacy must be interpreted broadly, to include the right to lead a private social life, which applied in this case because lecturers not only taught, but interacted with students in the auditoriums.

The High Court has found that an employer can be vicariously liable for the deliberate and criminal disclosure of personal data by an employee. As the first ever data breach class action, the case will have a far-reaching impact on data controllers who may face substantial financial liabilities.

Trade unions. The EAT has held that an employer’s attempt to bypass a recognised trade union by negotiating directly with its employees amounted to an unlawful inducement. The EAT confirmed that even if only one term of employment is determined by direct agreement it will be sufficient to amount to an unlawful inducement.

Meanwhile, Sir Ken Knight has published his Independent Review of Electronic Balloting for Industrial Action. Sir Ken recommended thorough testing of the measure to ensure it could withstand outside interference and manipulation. Sir Ken also proposed the appointment of independent auditors to provide impartiality throughout the end-to-end balloting process. The government has not set a date for its response.

Termination of employment. The EAT has held that an employment tribunal had erred in excluding evidence of pre-termination negotiations in an unfair dismissal claim. As the exclusion only applies to negotiations taking place before employment has terminated, it cannot be invoked until the effective date of termination has been determined.

Transfer of undertakings. The EAT has held that an outstanding equal pay claim can count as arrears of pay for the purposes of an insolvency claim from the National Insurance Fund (NIF). Claimants are entitled to up to eight weeks’ pay (subject to the statutory limit on a week’s pay) from the NIF, with liability for any excess transferring to the new employer if there is a relevant transfer.

An Advocate General has decided that there was no transfer of an undertaking when a service terminated and was resumed by another contractor after five months, even though the same premises, instruments and resources were used by the new contractor.

Whistleblowing. The EAT has held that an employee who raised a compliance issue out of concern for her own potential liability did not make a protected disclosure. She had no reasonable belief in the public interest and the reason for her dismissal was in fact the rude manner in which she communicated her concerns and her other conduct including her inability to work with others or take on board what they had to say.

Immigration. On 7 December 2017, the government announced changes to the Immigration Rules which will mostly come into force on 11 January 2018. The European Commission has also published a Q&A on the common understanding between the UK and EU on the rights of UK and EU citizens post-Brexit.

Brexit. The government has published two sets of draft regulations which illustrate how the powers under clause 7 of the European Union (Withdrawal) Bill may be used to correct employment law post-Brexit.

In other news, the government has revealed that it still has £31 million to refund following the full roll-out of its scheme for refunding tribunal and EAT fees and has outlined its strategy to address the workplace, welfare and the health system (including changes to the Fit for Work Service in England and Wales). Uber’s “leapfrog” application to appeal directly to Supreme Court has been refused, Addison Lee has been accused of “blacklisting” a worker who sued a rival company for workers’ rights, Ryanair’s working practices will be scrutinised by two parliamentary committees, and 16,000 workers will receive over around £1.7 million in minimum wage arrears. The UK’s largest company, Shell, has published its report showing a 22% gender pay gap, Clydesdale and Yorkshire Bank is seeking to address its 37% pay gap by linking executive pay to the achievement of diversity targets, and the EHRC is consulting on its draft enforcement strategy for pursuing large private, voluntary and public sector employers who fail to comply with the GPG Regulations. The EHRC has also urged companies to do more to tackle sexual harassment at work. A Green Paper has been published by the FRC on proposed revisions to the UK Corporate Governance Code and the government has also published its response to the call for evidence on the taxation of employee expenses. Lastly, the Law Commission has published its 13th Programme of Law Reform and has pledged to review Employment law hearing structures and the Immigration Rules.

In our blog, Diya Sen Gupta examines who owns the emails sent by employees from their work email accounts, and Colm Kelly evaluates the significance of contractual substitution clauses in determining worker status in two recent gig economy cases.

Next month

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Practical Law Employment has a number of tools to help keep you updated on anticipated developments in employment law:

Ryan Clarke Mark Tarran
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2017 has seen a series of cases concerning limb (b) worker status arising from the ‘gig economy’. Putative workers have claimed entitlements to be paid the minimum wage, holiday pay and so on, on the basis that they meet the definition of a ‘limb (b)’ worker, viz. a person working under a contract “whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.” (Section 230(3), Employment Rights Act 1996. See the similar definitions in the Working Time Regulations 1998, the National Minimum Wage Act 1998, Employment Relations Act 1999 and the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000.)

In many of the gig economy cases, it has been conceded that the contract was one for personal services (for example Aslam v Uber BV  [2017] I.R.L.R.4; Gascoigne v Addison Lee Ltd ET/2200436/2016), or the tribunal has made a finding to this effect with little discussion (for example Lange v Addison Lee Ltd). However, in two recent cases, the tribunals concerned have examined the issue of substitution and personal service in some detail, but taken rather different approaches to the issue.

The cases

Both cases concern bicycle deliveries. In Dewhurst v CitySprint UK Ltd ET/2202512/2016 the Employment Tribunal (ET) heard a claim by a bicycle courier who claimed that she was a limb (b) worker and was therefore entitled to two days’ holiday pay in respect of leave taken but not paid for. In IWGB v RooFoods Ltd (t/a Deliveroo TUR1/985(2016)) the Central Arbitration Committee (CAC) determined an application by a union for recognition for collective bargaining purposes. Deliveroo maintained that its delivery bikers were neither employees nor limb (b) workers, so there could be no recognition.

The contracts

Both contracts dealt with substitution, but the manner in which they were treated differed significantly. First, the contract in CitySprint provided “The Contractor may at his own cost provide a substitute to perform any particular Job.”

However, the substitute had to satisfy a variety of criteria such that CitySprint would have been willing to enter into a contract with them. The courier was also required to give notice in writing in advance.

In Deliveroo, the contract provided “Deliveroo recognises that there may be circumstances in which you may wish to engage others to provide the Services. Deliveroo is not prescriptive about this and you there have the right, without the need to obtain Deliveroo’s prior approval, to arrange for another courier to provide the Services (in whole or in part) on your behalf.”

In contrast to the CitySprint contract, the Deliveroo contract merely provided that the substitute could not be somebody with whom Deliveroo had previously terminated an agreement. Responsibility for ensuring that the substitute was adequately trained remained with the original courier.

Differences in outcome

In construing the contracts, both tribunals referred to Autoclenz Ltd v Belcher [2011] UKSC 41 but came to different conclusions about how the substitution clauses operated in reality.

In CitySprint, the ET found that, due to the manner in which courier jobs were allocated and accepted, the possibility of substituting could only arise once the courier was on circuit and available to accept jobs. There was therefore an internally contradictory aspect to the substitution clause, as there was no realistic opportunity to arrange a substitute. While couriers did not have an unfettered right to cancel jobs once accepted, it made no practical sense for a courier to attempt to arrange a substitute, rather than contact their controller and ask to return the job. The reality of the situation was such that couriers could not substitute.

In Deliveroo, the CAC perceived a different reality, which led it to find that there was a genuine right to substitute, but also emphasised different points in its analysis. A significant feature of the reality of the courier’s experience was that they could refuse to accept jobs and could cancel jobs once accepted, without incurring any penalty. For that reason, there was no practical reason why they would ever wish to substitute (the ET called this the ‘substitution conundrum’). Nevertheless, the CAC found that the right was a real one, for which there was evidence of at least one genuine substitution. The fact that practicalities rendered the right superfluous did not render the right a sham.

The significant difference between the cases seems to be that, although the right was impractical to exercise in both, in Deliveroo, there was at least some convincing evidential foundation for the use of the right.

A further difference

There is a further intriguing aspect to Deliveroo, dealt with only briefly in the decision of the CAC. The CAC stated that the fact that Deliveroo, by permitting substitution, might be opening itself to prosecution for failure to comply with food hygiene legislation, did not alter the reality of the right to substitute. Regulatory requirements were not relevant to the construction of a contractual right.

Contrast this with the finding of the Employment Appeal Tribunal in Uber BV that legislative regulatory requirements which, in effect, required personal service by cab drivers, were not irrelevant to the construction of the contractual relationship between the parties.

Regrettably, the CAC only dealt with this issue in passing, and resolution of the possible conflict between these two decisions will have to wait for a future occasion.

Devereux Colm Kelly
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