Gordons Legal Employment Update – 7 December 2017

Holiday pay claims – judgment from the CJEU

The European Court of Justice (CJEU) has given a preliminary judgment in the case of Sash Window Workshop Ltd v King which is likely to have far-reaching consequences for the rights of workers seeking to claim backdated holiday pay.

Mr King worked as a window salesman for Sash Window Workshop for 13 years on a ‘self-employed commission-only contract’ until he retired in 2012.  Upon retirement, he made a claim for payment for both taken and untaken annual leave covering the entire period of his engagement.  The Employment Tribunal found him to be a ‘worker’ despite being described as ‘self-employed’, and upheld his claim; Sash Window Workshop appealed.

The Employment Appeal Tribunal found for Sash Window Workshop, concluding that Mr King’s right to payment in lieu of annual leave did not ‘carry over’ into the following leave year indefinitely.  Mr King appealed to the Court of Appeal, who remitted the case to the CJEU to give a preliminary ruling on questions regarding the compatibility of UK and EU law and the operation of the law in circumstances where a worker has no facility to take paid annual leave.

The CJEU judgment, given on 30 November 2017, confirms that:

1. Where there is a dispute as to whether a worker is entitled to paid annual leave, he is not obliged to take unpaid leave before establishing his right to be paid for it (i.e. he can bring a claim for unpaid holiday pay in respect of annual leave he hasn’t taken); and
2. Where a worker has not taken annual leave because he would not be paid for it, his right to paid annual leave carries over and accumulates indefinitely until the termination of his employment.

Comment:      This judgment from the CJEU has huge implications for some employers because it suggests that workers who have been incorrectly designated as ‘self-employed’ will be entitled to claim unpaid holiday pay dating back to when their ‘worker’ status was established, potentially as far back as 1996 when the original European Working Time Directive came into force.

The judgment also puts the onus on the UK government to amend domestic legislation to entitle workers to bring a claim for unpaid holiday pay without first having to take leave without pay.

Select Committees to Publish Draft Bill on Worker Status

The Work and Pensions (WP) and Business, Energy and Industrial Strategy (BEIS) Committees have published a joint report, entitled ‘A framework for modern employment,’ and accompanying draft bill in response to July’s Taylor Report on modern working practices in the UK.

The Committees’ most notable recommendations include:

1. Legislation should provide clearer definitions of employment status to reduce the need for courts and employment tribunals to adjudicate on this point.
2. Employment status should be that of ‘worker’ by default to reduce the burden on workers to have to bring claims to correct companies’ questionable ‘self-employment’ models.
3. A pilot scheme should be introduced whereby workers who do not have guaranteed hours are compensated in the form of a premium being paid on top of the National Minimum Wage.
4. Employment tribunals should consider imposing higher fines and costs orders against employers who have lost similar cases in the past.
5. All agency workers should be entitled to the same treatment as permanent employees once they have completed 12 weeks’ service.  The option to opt-out of equal pay entitlement should be removed.

Comment:      As new business models built around flexible work on digital platforms become more prevalent, the Committees’ report advocates significant reforms to employment law to prevent companies from gaining a competitive advantage from exploiting their workforce.  While the proposed reforms appear to swing the pendulum in favour of workers’ rights at the expense of employers, it is important to note that the report does not represent government policy and it remains to be seen how the government responds to the report’s recommendations.

Uber Appeal to be Heard by Court of Appeal

In our Legal Employment Update dated 24 November 2017, we reported that Uber had appealed directly to the Supreme Court against the Employment Appeal Tribunal finding in Uber BV and Others v Aslam and Others that its drivers are workers and therefore qualify for entitlements such as the National Minimum Wage and paid annual leave.

The Supreme Court has refused Uber’s application for the appeal to ‘leapfrog’ directly to the Supreme Court and as a result the appeal will be heard by the Court of Appeal on a date to be confirmed in 2018.  We will report and provide analysis on the Court of Appeal’s judgment when it is published.

New Acas guidance on sexual harassment in the workplace published

With the issue of sexual harassment currently in the headlines and under the spotlight, Acas has published timely new guidance on what constitutes sexual harassment in the workplace, how it can be reported and how investigations into allegations of sexual harassment should be handled by employers.

The guidance confirms that sexual harassment is unwanted conduct of a sexual nature, and can take the form of:

• Written or verbal comments of a sexual nature such as remarks about a colleague’s appearance, questions about their sex life or offensive jokes
• Displaying pornographic or explicit images
• Sending or forwarding on emails that contains content of a sexual nature
• Unwanted physical contact and touching
• Sexual assault – this is also a criminal offence

Acas states that any worker who feels they have been sexually harassed or has witnessed sexual harassment can make a complaint, and employers should ensure there are policies in place to facilitate such a complaint.

The guidance reminds employers that experiencing sexual harassment can be extremely distressing and that any complaints should be handled sensitively. This may include:

• Allowing plenty of time to discuss the matter
• Using a private space to meet
• Allowing the worker to be accompanied to any grievance meeting by a colleague, a trade union representative, or even a friend or family member if the employment contract allows it or at the discretion of the employer

Comment:      It is beneficial for employers and employees alike for organisations to have adequate procedures in place to properly investigate and deal with allegations of sexual harassment, particularly given the current high profile of the issue.  The full Acas guidance can be found at: http://www.acas.org.uk/index.aspx?articleid=6078

Burden of proof in discrimination claims

In our Legal Employment Update, dated 29 September 2017, we reported on the case of Efobi v Royal Mail Group Limited, in which the Employment Appeal Tribunal (EAT) held that, in discrimination claims, a tribunal should consider the entirety of the evidence from all sources before concluding whether (in the absence of an explanation from the Respondent) discrimination had occurred.  The judgment was controversial because it ran contrary to the traditional understanding of how the burden of proof operates in discrimination claims, which is to place the initial burden on the Claimant to prove his case.

The Court of Appeal has now confirmed in Ayodele v Citylink Ltd that the initial burden of proof remains on the Claimant in discrimination claims and that the EAT in Efobi was wrong to hold otherwise.

Mr Ayodele, a black man from Nigeria, brought claims of discrimination on the grounds of race against his former employer, Citylink, following termination of his employment.  The employment tribunal found for Citylink because Mr Ayodele was unable to discharge the initial burden of proof and the EAT confirmed the tribunal’s decision.  Mr Ayodele appealed to the Court of Appeal on the basis that the judgment in Efobi was authority for the fact that the tribunal had incorrectly imposed an initial burden of proof on him to show a prima facie case of discrimination.

In dismissing Mr Ayodele’s appeal, the Court of Appeal determined that it must be for the Claimant to initially make his case, otherwise there would be nothing for the Respondent to respond to; it must be for the Claimant to show there is a case to answer.

Comment:      The judgment in Ayodele reaffirms the conventional view of how the burden of proof operates in discrimination claims.  It is helpful for respondents because it confirms that a tribunal cannot draw adverse inferences from a respondent’s failure to adduce evidence to show its actions were not discriminatory.