eBrief: Gordons Legal Employment Update – 27 October 2016

Thursday 27th October 2016

The ‘gig-economy’ dilemma: Inquiry launched

Further developments have arisen with the issues surrounding workers in the ‘gig economy’ and the employment law sphere as a whole. Most importantly, the Commons Select Committee on Business, Energy and Industrial Strategy have launched an inquiry into ‘the future world of work and rights of workers.’ The terms of reference are as follows:

  • Is the term ‘worker’ defined sufficiently clearly in law at present? If not, how should it be defined?
    • What should be the status and rights of agency workers, casual workers, and the self-employed (including those working in the ‘gig economy’), for the purposes of tax, benefits and employment law?
  • For those casual and agency workers working in the ‘gig economy’, is the balance of benefits between worker and employer appropriate?
  • What specific provision should there be for the protection and support of agency workers and those who are not employees? Who should be responsible for such provision – the Government, the beneficiary of the work, a mutual, the individual themselves?
  • What differences should there be between levels of Government support for the self-employed and for employees, for example over statutory sick pay, holiday pay, employee pensions, maternity pay?
    • How should those rights be changed, to ensure fair protection for workers at work?
    • What help should be offered in preparing those people who become self-employed (with, for example, financial, educational and legal advice), and who should be offering such help?
  • Is there evidence that businesses are treating agency workers unfairly, compared with employees?
  • Should there be steps taken to constrain the use by businesses of agency workers?
  • What are the issues surrounding terms and conditions of employees, including the use of zero-hour contracts, definitions of flexible contracts, the role of the Low Pay Commission, and minimum wage enforcement?
  • What is the role of trade unions in representing the self-employed and those not working in traditional employee roles?

After a year of negative press stories for a swathe of ‘innovative’ firms, the inquiry and resultant developments will hopefully provide employers with some direction on the rapidly changing employment market. There are a number of firms highlighted by The Guardian that are likely to fall further under the scrutiny spotlight:

  • Asos and Sports Direct – whose working practices have been heavily scrutinised by both politicians and the media.
  • Uber – have 30,000 self-employed drivers and are awaiting an imminent tribunal judgement on the classification of those that provide their services for them.
  • CitySprint, Excel, Addison Lee and eCourier – all are facing tribunal cases but argue that the individuals that work for them are ‘independent subcontractors’.
  • Deliveroo – have 3,000 riders they employ on a ‘freelance’ basis. They have already made concessions to a controversial pay-per-delivery pilot scheme.
  • Hermes – referred for investigation by the HMRC for paying less than the minimum wage to their self-employed drivers.

The Committee Chair for the inquiry, Iain Wright has stated:

‘In recent months we’ve seen growing evidence of agency workers and those working in the ‘gig economy’ being exposed to poor working conditions. This growing trend raises questions over employment status and lack of worker rights.’

Comment: It seems there has been a concentration of employment law news surrounding the ‘gig economy’ in the past months. Major tribunal cases are coming to a head with the decision on the status of Uber drivers expected by the end of this week. This new inquiry into modern working practices shows the government’s attempts to “protect the soft flesh of Britain’s underbelly,” as Theresa May described it.

However, it is important to note that the ‘gig economy’, in all its various guises, can be positive for workers. It allows flexibility and adaptability and, in most cases, provides remuneration over the national minimum wage. Any balance that allows flexibility and economic innovation whilst protecting bare essential rights will certainly be welcomed. It’s refreshing to see that the Committee Chair, Iain Wright, has directly recognised this at the outset of the inquiry.

It would be prudent for employers to work out the true status of individuals working for them as soon as possible. This will then need to be reviewed in light of future legal developments.  It can be a complex task to establish exactly what classification an individual should have as has been shown with the numerous ongoing tribunals. Potential consequences for improper classification could include fines, HMRC investigations, litigation and reputational damage.

Does breach of safety representative’s right to time off constitute injury to feelings award?

According to obiter comment (a comment made in passing and not legally binding because the Claimant was not permitted to raise this specific issue at appeal) by HHJ Eady QC in the EAT in Rowe v London Underground, compensation for injury to feelings is not available for breach of a safety representative’s right to paid time off.

In this case, the Claimant was a safety representative for RMT union and employed as a train operator by the Respondent.  The Claimant was initially refused paid time off in June 2014 to undertake a health and safety investigation into a dangerous workplace occurrence.  However, the Respondent changed its mind in September 2014 and allowed the Claimant time off.  Despite this, the Claimant brought a claim for breach of his right to paid time off as a safety representative.  The Tribunal made a declaration that the Respondent was in breach of the Claimant’s right but decided not to award any compensation. The Claimant subsequently appealed to the EAT on the basis that the tribunal had erred and compensation should have been awarded.

The EAT found that the Tribunal did not err in its approach and it had regard to what it considered to be just and equitable. All the cases in which injury to feelings awards have previously been awarded have involved some form of discrimination. It was not appropriate in this case, as the breach of the safety representative’s right to paid time off did not involve any form of discrimination.

Comment:  These obiter comments by HHJ Eady QC reaffirm the current position and serve as a useful reminder as to the protections awarded to union representatives and, more specifically, the remedies for breach. It also confirms the situations where injury to feelings compensation is appropriate.

RAC unfairly dismiss employee but compensation is substantially reduced

The RAC have been ordered to pay an ex-employee a sum of £1,425 following his unfair dismissal. Mr Monteith worked as the head of accidental management for the automotive services company before losing his job in an apparent redundancy.

Mr Monteith’s representative argued that the redundancy was nothing more than ‘window dressing’. She argued that a ‘pre-determined’ decision to dismiss Mr Monteith had been made. She further argued that his employer had failed to inform Mr Monteith that he was at risk of losing his job and provided no consultation or a score assessment chart.

When giving the judgement of unfair dismissal, the Tribunal judge stated that, although a fair redundancy procedure had not been followed, had the RAC adopted a fair redundancy procedure, Mr Monteith would have been dismissed in any event. As such, he awarded reduced compensation accordingly.

Comment: The outcome of this case highlights some important points. Firstly, it shows that fair procedures need to be undertaken in a redundancy situation to avoid a successful unfair dismissal claim. Secondly, it highlights the principle that if an employee would have still been made redundant if a fair procedure had been followed, compensation will be reduced to reflect this.

Statistics on Pay

Amidst the fast-crashing pound and a prospering FTSE market it seems, as always, that money is all the rage. Below we’ve collated employment-relevant statistics relating to wages and pay gaps:

  • The Trade Union Council (TUC) has reported that the gender pay gap is widest for women in their 50s. According to the analysis, a full-time 18-year old woman earns on average £1,395 a year less than her male peers. This disparity rises to £8,504 a year by the time women reach their 50s.
  • Meanwhile, the Office of National Statistics (ONS) has reported that the gender pay gap has grown wider in the civil service despite the national gap slowly decreasing. The figures also showed that women were paid less than men on average at every level in the profession.
  • The average pay gap in the education sector is reported to be 25% by the ONS – significantly higher than the national average of 19.2%.
  • The Resolution Foundation report that almost five million UK workers are self-employed (a growth of 45% since 2001-02). However, they also state that those workers are ‘now earning less than in 1995’ with a weekly earnings drop of £60. The rise of lower-paid jobs and the financial crisis are said to be to blame.
  • Further analysis by the TUC indicates that between 2007 and 2015, real wages (adjusted for inflation) fell by 10.4%. Meanwhile real wages grew in other countries (Poland by 23%, Germany by 14% and France by 11%). Only Greece and Portugal joined the UK in seeing their real wage fall.
  • The Resolution Foundation (a non-partisan think tank) found that millennials earn £8,000 less in their 20s than the generation before them.
  • If you’d like to see the average 2015 earnings in your area, please click here.

Comment: Many statistics are pessimistic about rates of pay and there are mixed views on the impact of Brexit on rates of pay.  Gender pay gap statistics remain of concern.  It will be interesting to see what impact gender pay reporting has on these statistics.

Social Mobility Employers’ Index Launch

The Social Mobility Commission and Social Mobility Foundation has launched a Social Mobility Employers’ Index. The index will rank companies on how effectively they recruit and promote people from underprivileged backgrounds.

This benchmarking initiative is targeted at ‘elite’ sectors which, traditionally have low rates of social mobility, such as law, accountancy, media, banking, finance and the sciences.  The aim is to encourage firms to recruit the best candidates regardless of background.

Firms will be asked about their practices and procedures and will be ranked by a panel of experts.

Comment: As yet there is limited information available about how this will work in practice.  It seems that the process will require firms to be open and honest about their processes and procedures.

If you require any further information on the above developments please do not hesitate to get in contact with a member of the Employment Team, on the following number 0113 227 0100.