Employment Law Alert UK – May 2022

Litigation Process

• Parties may apply for transcripts of recorded proceedings. The Claimant brought claims of direct race discrimination and victimisation arising from an unsuccessful job application. A full merits hearing took place and the Tribunal delivered an oral decision dismissing the Claimant’s claims. Although not yet commonplace in the Tribunal, the hearing was audio-recorded by HMCTS. The Claimant applied for a transcript of the hearing. The Tribunal refused the Claimant’s application, on the basis that there is no express right to apply for a transcript under the Tribunal Rules 2013 (“2013 Rules”). The EAT disagreed and held that the transcript should be provided. It held that the fact that the 2013 Rules are silent on transcripts is indicative of the fact that audio-recording is only just starting to become more common but does not prevent an application being made. The EAT emphasised one important caveat - there is no right to a transcript of a Tribunal’s oral decision, given that a written decision is also produced, which is not required to be a verbatim transcript of the oral reasons. Following the decisions of Frewer v Google and Guardian v Rozanov, parties should be mindful that Tribunal documents and records may increasingly be in the public domain. (Kumar v MES Environmental Ltd)

• Guidance on taking evidence from witnesses located abroad. On 27 April 2022 the Presidents of the Employment Tribunals in England and Wales and Scotland issued Presidential Guidance on taking oral evidence by video or telephone from witnesses located abroad. Following the decision in Agbabiaka (Evidence from Abroad, Nare Guidance) 2021 UKUT 286 (Immigration and Asylum Chamber), the guidance states that where an individual intends to give evidence from a foreign state, enquiries must be made to ascertain whether there is any objection from that state. The Foreign, Commonwealth and Development Office has established the ToE Unit which will be responsible for establishing the stance of different overseas governments to oral evidence being given from their territory. Parties potentially seeking to rely on oral evidence given abroad should inform the Tribunal as soon as this becomes apparent (but need not inform the other party) so that HMCTS can arrange for the ToE unit to make enquiries of the relevant state. It is noted that this may take months. It is hoped that in time there will be a maintained list of countries who have permitted the giving of oral evidence.

• National Archive to publish court judgments. On 19 April 2022 the Ministry of Justice and HMCTS announced that judgments from the UK Supreme Court, Court of Appeal, High Court and Upper Tribunals will be available on the National Archives Find Case Law website. The judgments will be machine readable and searchable by citation, party name, Judge’s name, court or chamber and date.

Employment status

• Contracted pilot was agency worker, rather than self-employed contractor. The Tribunal has ruled that Mr Lutz, who was placed with Ryanair by MCG Aviation Ltd (MCG) was an agency worker for the purposes of the Agency Worker Regulations 2010. When Mr Lutz secured his position as a pilot with Ryanair, he was requested to set-up a personal service company and was informed that he would be engaged as a self-employed “contracted pilot” through MCG. The Tribunal was not persuaded that Mr Lutz was a self-employed contractor. The Tribunal referred to the Uber decision and the importance of not letting a document (which is often driven by the party with greater bargaining power) determine the factual reality of the situation. Although Mr Lutz’s contract with MCG contained a substitution clause, the Tribunal found that this did not create an unfettered right of substitution, and, in reality, Mr Lutz had a contract with MCG to supply his services personally. This case is likely to have significant implications for the many purportedly self-employed pilots but is also a useful reminder of the importance of a genuine right of substitution where there is no intention of creating a contract for personal service. (Lutz v (1) Ryanair DAC and (2) MCG Aviation Ltd)

• Mutuality of obligation and control do not create a presumption of an employment relationship. The Court of Appeal considered the test for employment status in a case regarding the tax treatment of a radio presenter providing services through a personal services company. HMRC was successful in its appeal, arguing that the arrangements were caught by IR35. But the Court of Appeal decided that there was no presumption of employment notwithstanding a finding that there was mutuality of obligation and control; the court should go on to examine all the relevant factors to determine employment status for tax purposes. The Court of Appeal remitted the case to the Upper Tribunal. The IR35 regime seeks to prevent the avoidance of income tax and NICs where there is an (artificial) intermediary between an individual and an end-client (if an employment relationship between the individual and client might otherwise have existed). In HMRC v Atholl House Productions Ltd an individual was engaged to present a radio show for the BBC through a personal service company. HMRC asserted that IR35 applied to the arrangements and that the service company was liable to pay income tax and NICs in respect of the individual’s earnings. The First-tier Tribunal and Upper Tribunal both reached the conclusion that the relationship was not consistent with employment and IR35 did not apply (their reasoning differed, but their conclusion was the same). However, the Court of Appeal has upheld HMRC’s appeal (finding that the reasoning of the Upper Tribunal and First-tier Tribunal was flawed) and remitted the case to the Upper Tribunal.

  The Court of Appeal clarified that the existence of mutuality of obligation and control do not create a presumption that there is a contract of employment. Rather, once a court has considered mutuality of obligation and control, a court must then examine all relevant factors to make an overall assessment about whether an employment relationship exists. Further, the Court of Appeal considered that it may not be appropriate to apply the principle of Autoclenz v Belcher (that contractual terms may be disregarded if they do not accurately reflect the genuine agreement of the parties in practice) in the context of a tax dispute such as this; the normal principles of contractual construction should apply. (HMRC v Atholl House Productions Ltd)

Employment Relations processes

• Claimant’s perception not determinative for harassment finding. The EAT has held that the Claimant’s perception is just one of the matters for the Tribunal to take into account when considering if conduct amounts to harassment. The Claimant, who worked as a security guard at Heathrow Airport, claimed that he had been harassed by a ‘test object’ included in a security check with the words "Allahu Akbar" written in Arabic. The Claimant who is Muslim, claimed that the incident amounted to harassment on the grounds of his religion. The Tribunal found that it was not reasonable for the Claimant to perceive the conduct as having an effect falling within s26(1)(b) Equality Act 2010, given recent incidents in which the phrase had been used by terrorists and that the ‘test object’ was not designed to associate Islam with terrorism. This case serves as a useful reminder of the objective and subjective elements of section 26(4) of the Equality Act 2010. (Ali v Heathrow Express and Redline Assured Security Ltd)

• Employee who volunteered for redundancy could still have been unfairly dismissed. The Claimant carried out reception and administrative work for a care home operator part-time. She was provisionally selected for redundancy, after which she requested voluntary redundancy. The Claimant subsequently argued that the redundancy process was a sham (another individual was employed on a full-time basis shortly before the redundancy process commenced) and that she had been targeted for dismissal. The EAT found that the Tribunal was wrong to strike out the Claimant’s claim. It held that given there was a factual dispute in relation to the fairness of the process which was carried out it was not an appropriate case for summary determination. The Tribunal had given undue weight to the Claimant’s request for redundancy without considering the background matters supporting the Claimant’s contention that the situation had been deliberately manufactured. The case was remitted to the Tribunal for reconsideration. (White v HC-One Oval Ltd)

• Employment Tribunal failed to properly apply the last straw doctrine. The Claimant worked as a bus driver for the Respondent. In 2019, following a period of sickness absence he made various complaints in relation to his treatment and pay. He raised a grievance which was upheld on appeal and concluded that he was owed £6,144 in back pay, payable in the next payroll on 19 July. When the Claimant was still not paid on this date he resigned, claiming that this failure to pay was the “last straw” following a pattern of poor treatment. The Tribunal characterised this non-payment as a ‘last-minute hitch’ finding that the back pay issue had been addressed through the grievance process. The EAT disagreed and held that there had been a failure by the Tribunal to engage with the factual allegations and issues. The case was remitted to the Tribunal to be reheard. (Craig v Abellio)

Covid

• Health and Safety Executive (HSE) publishes updated guidance. On 31 March 2022, the Health and Safety Executive (HSE) published revised guidance reflecting the relaxation of Covid-19 measures across the UK. Whilst employers are no longer required to have specific Covid-19 measures in place, employers should continue to have regard to available guidance on protecting those who are at higher risk of Covid-19 and on vaccinations. The guidance was due to be reviewed on 30 April 2022.

Diversity & Inclusion

• Comparison pool for indirect discrimination claim must relate to the specific PCP pleaded. In this case, the Claimant argued that her employer applied a PCP that managers had to guarantee their availability to work late shifts at particular times and that this put women at a disadvantage because of childcare responsibilities and that she had been put at such a disadvantage. The EAT (allowing the Claimant’s appeal) set aside the Tribunal’s decision because it had constructed a comparison pool that included managers who might be asked to work late shifts, but who were not required to guarantee their availability. In doing so, the Tribunal had redefined the Claimant’s complaint, not constructed a pool by reference to the specific PCP pleaded by the Claimant. The Claimant worked for Primark Stores Ltd as a department manager. Following a period of maternity leave she made a flexible working request. Her childcare responsibilities meant that she was unable to guarantee her availability for late shifts (10:30am – 8:30pm). Whilst Primark offered some accommodation for her request it refused to agree that the Claimant would not have to work late shifts on a Thursday. She resigned and claimed constructive dismissal and indirect sex discrimination. At first instance, the Tribunal included all department managers in the Bury store who might be asked to work a late shift in the comparison pool. Given that two men (who had an implied contractual right not to work Thursday late shifts but did so in emergencies) were included in the pool the Tribunal concluded that the PCP did not put women at a particular disadvantage. The EAT disagreed with the pool identified by the Tribunal, finding that there was a material difference between being “asked” to work a late shift and having to guarantee availability to do so. The case was remitted to the Tribunal for re-hearing. (Allen v Primark Stores)

• Annual D&I disclosure requirements for listed companies. On 20 April 2022 the FCA published its final rules requiring the disclosure of data in relation to diversity on listed company boards and executive committees (PS22/3). Companies must disclose annually whether they meet diversity targets on a ‘comply or explain’ basis. The targets are: (i) at least 40% of the board are women; (ii) at least one senior board position is a woman; and (iii) at least one board member is from a minority ethnic background. Companies to be given flexibility to determine how to report on those self-identifying as women.

  Reporting should start to appear in annual financial reports published early 2023. For a more detailed look at the FCA’s final rules see our Insight here.

• More than 600 employers sign Menopause Workplace Pledge. Wellbeing for Women is championing the campaign which requires signatories to commit to open, positive and respectful workplace dialogue about the menopause and to take active steps to support employees affected by the menopause.

• Department for Health and Social Care launches consultation on improving mental health and wellbeing. The discussion paper highlights the important role which employers can play in supporting mental health and refers to the findings of the review of mental health and employers published in 2017: Thriving at Work. Employers are identified as an important source of support for employees who may not need "clinical" early interventions. The consultation closes on 5 July 2022. The Solicitors Regulation Authority is also consulting on proposed changes to its rules that would reinforce its powers to deal with risks to clients and the public when these stem from a poor work culture in law firms. The consultation runs until 27 May.

Other

• Labour market enforcement. The new Director of Labour Market Enforcement has issued a call for evidence on the Labour Market Enforcement Strategy for 2023 to 2024, seeking stakeholder evidence on emerging issues around compliance and enforcement in the UK labour market. The call for evidence closes on 31 May 2022.

• Employment Bill update. A government official is reported to have said that the long-anticipated UK Employment Bill is unlikely to be included in the Queen’s speech on 10 May. The Bill was first proposed in December 2019 but has been repeatedly delayed. It is expected to include:

  • Right to request flexible working from day one.
  • Right to carers’ leave.
  • Extension of redundancy protection for women and new parents.
  • Creation of a single enforcement body for employment rights.

• Government gives update on reviews of retain EU law and Retained EU Law Bill. On 28 April 2022, the House of Commons European Scrutiny Committee published a letter from the government providing an update on its review into retained EU law. The letter confirmed that the ‘substance’ review is almost complete and that the government intends to publish a full list of retained EU law. The government will also undertake a retained EU law ‘status’ review to consider the status of retained EU law and how this affects and interacts with other legislation. The Retained EU Law Bill (also known as the Brexit Freedoms Bill) will not be published until these reviews have been completed.