Gordons Employment Update - 30 November 2018
Friday 30th November 2018
Use it or lose it losing its usefulness
According to the ECJ in the cases of Kreuziger v Berlin and Max-Planck-Gesellschaft zur Forderung der Wissenschaften eV (‘MPG’) v Shimizu, national legislation which precludes a worker from receiving payment in lieu of untaken holiday is incompatible with the Working Time Directive 1998 (‘WTD’), and is unlawful.
Article 7 of the WTD broadly provides that every worker is entitled to a least four weeks paid leave per year, and that this minimum period must not be replaced by an allowance in lieu, except upon termination of the employment relationship.
Mr Kreuziger was a legal trainee who took no annual leave during the final few months of his traineeship. When his employment terminated, he asked for an allowance in lieu of his accrued, but untaken, holiday. This was refused by his employer.
Mr Siminzu was invited by MPG to take his annual leave (totalling 53 days) two months before the employment relationship ended. MPG did not specify when the leave should be taken, and Mr Shiminzu took only two days during this time. He requested the remaining days be paid in lieu, which was also refused.
Both cases were referred to the ECJ on appeal to the national courts.
Decision and comment
The ECJ held that a worker will not automatically lose their right to an allowance in lieu of untaken leave upon termination, or at the end of a particular reference period, unless the employer has provided them with sufficient information about their right to paid holiday and given them the opportunity to take such leave.
For employers this means that it is no longer appropriate to adopt a blanket use it or lose policy. Holiday will only be lost where the employer can show that it has ‘exercised all due diligence’ in allowing the worker to take their leave, and they still refuse it while knowing the consequences.
A holiday policy in a handbook is a good opening position, but it would be advisable to also offer reminders and updates at appropriate periods during the holiday year. This will be particularly the case for workers with significant holiday entitlement remaining. It will also be important to plan ahead where employers stipulate times that cannot be taken as leave, for example December for retail and hospitality businesses.
Fly me to the… Court of Appeal
In British Airways plc v Pinaud, the Court of Appeal has considered less favourable treatment of a part time worker under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000.
Part time workers have the right not to be treated less favourably than a comparable full time worker in the terms of their contract. The same right applies where they are subjected to a detriment by any act, or deliberate failure to act, by their employer. In most cases, ‘less favourable treatment’ will be assessed by reference to the equivalent benefit enjoyed by a comparable full time employee, with the pro rata principle applied.
The employer can defend less favourable treatment if it can show objectively it was a necessary and appropriate means of achieving a legitimate aim.
Ms Pinaud was employed by British Airways plc (‘BA’) as a cabin crew purser. When she returned from maternity leave in 2005 she agreed a flexible working arrangement. Within this she would receive 50% of a full time salary and would be expected to work 53.5% of the days of a full time colleague. On taking voluntary redundancy in 2015, she brought a claim alleging less favourable treatment.
Decision and comment
The Court of Appeal found that on the face of it Ms Pinaud was treated less favourably because of the imbalance in her salary compared with her required availability for work. The Court did note that the additional advantages for Ms Pinaud may justify the less favourable treatment, but that this was a matter for the tribunal to consider, with statistical evidence as required.
For BA this has wide ranging implications as a test case for 628 similar claims that are stayed pending the present outcome. For employers more generally it is a reminder to assess any working arrangements which may disadvantage part-time workers, consider whether these are justifiable, or seek alternative approaches.
Worker status: Private hire drivers are not contractors
The EAT has upheld an earlier Tribunal decision and found that the drivers in Addison Lee Limited v Lange and others are workers. In so finding, the EAT followed the trend since Autoclenz and looked at how the contract operates in the real world, rather than only examining contractual terms.
‘Workers’ are a class of individuals who work under a contract of employment, or any other contract where (broadly speaking) one party to the contract provides services to another, in a relationship that is not that of client or customer. Workers benefit from a number of key employment protections, including holiday pay, and national minimum wage.
The three claimants were drivers for the respondent private hire firm, under a ‘Drivers Contract’. They claimed that rather than being independent contractors as purported in the contract, they were actually workers. In making this claim they relied on various facts including: an in depth recruitment process, experiencing long working hours and six day weeks, obvious branding on the cars that they rented from Addison Lee, and the dress code standards. Significantly for the EAT, whenever a driver was logged onto the Addison Lee hand-held computer system, he would be deemed by the respondent company to be available to work.
(Additionally at some point the Chief Executive noted publically that ‘our employees are full-time professional drivers, and we recruit, vet and train them’, which may have served to undermine the respondent’s argument somewhat).
Decision and comment
This decision is not a great surprise in the context of recent ‘worker’ cases. Judgment is also awaited from the Court of Appeal in Uber BV v Aslam, dealing with similar themes so we will no doubt return to this topic in the coming months. Longer term, a government response to the Taylor Review is awaited, and may change the existing employment status tests.
In the meantime, employers can be reassured that every case will be decided on its own facts. A business model that exerts less control over its operatives than in the present case will not necessarily lead to a finding of worker status. However, they should also be aware that the tribunal will apply a ‘realistic and worldly wise’ approach so that where the contract does not properly reflect the actual agreement between the parties, will look at the reality of the situation. Attempts to exploit workers with complex schemes will not prevent a tribunal from looking beneath the surface.
Return to tribunal fees considered
Followers of our E-Brief will of course recall the Supreme Court decision in R (Unison) v Lord Chancellor which abolished Employment Tribunal fees. In light of recent Ministry of Justice comments, it appears the government is considering the reintroduction of a fee regime.
On 2 November 2018, Richard Heaton, Permanent Secretary at the Ministry of Justice, said ministers are considering a new fee scheme that would be ‘proportionate, progressive and maintain access to justice’, but that there were ‘no immediate plans’.
No further details were given, and in the context of Brexit, and lingering criticisms of the previous Fees Orders, it is unlikely to be a priority for the government at the moment. Additionally, as we noted back in August 2017, any fees are likely to be at lower levels than previous.
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.