What is the gig economy?
The phrase ‘gig economy’ is used to describe individuals who earn their income per task, or ‘gig’, that they complete. Examples include a car journey (like Uber drivers) or a food delivery (like Deliveroo drivers).
It has been estimated that around 5 million people in the UK work this way. The attraction for individuals is said to be the flexibility of being able to work whenever they like. Similarly, the gig economy is attractive to businesses because they only pay staff when work is available, thus avoiding staff costs when there is no work. Therefore it is no surprise that the gig economy has gained particular traction within the hospitality and transport industries, as these industries are known for their regular fluctuations in supply and demand.
Timeline of the Uber case and the central issue that it raises
In 2016, a number of Uber drivers brought claims against Uber. The central issue was that of the status of Uber drivers, namely whether they had self-employed employment status (as Uber argued) or whether they were workers. On 28 October 2016, the Employment Tribunal (ET) held that the Uber drivers are workers. Uber appealed against this decision. On 10 November 2017, Uber lost their appeal, with the Employment Appeal Tribunal (EAT) ruling that the Uber drivers are workers.
Uber recently attempted to leapfrog the Court of Appeal and go straight to the Supreme Court. However, this application was rejected and the Court of Appeal will hold Uber’s appeal sometime in 2018.
The issue of ‘status’ that the Uber case raises
Why are Uber so resistant to their drivers having worker status? The likely reason is because workers are entitled to employment rights that self-employed individuals are not entitled to, which include:
- The National Minimum Wage;
- Protection against unlawful deductions from wages;
- The statutory minimum level of paid holiday;
- The statutory minimum length of rest breaks; and
- To not work more than 48 hours on average per week or to opt out of this right if they choose.
Therefore if Uber drivers are recognised as workers, Uber will be forced to accommodate these rights (which is something that is not in their business interests).
Implications of Uber on the gig economy
The implications could be huge on the ‘gig economy’, because if their drivers are ultimately recognised as workers:
- It would force all other businesses operating within the gig economy to re-evaluate the status of the individuals working for them; and
- It could open the floodgates to individuals working within the gig economy (who previously thought they were self-employed) to bring claims against their employers alleging breaches of workers rights. The recent Supreme Court decision eradicating tribunal fees only increases the chances of this happening.
The Uber ‘warning’ on employers
This case highlights the importance of employers carrying out their due diligence before treating any staff member as self-employed, because the law does not look at the label, but what the relationship is in practice. It appears Uber made the mistake of treating their staff as self-employed when the ET and EAT after looking at the relationship in practice, concluded that their staff were workers.
When Judges are assessing whether or not an individual is a worker, there are many factors that can be considered, some of which include:
- The existence of a contract – (whether written, verbal or implied);
- Whether or not the individual is contractually obliged to perform work or services;
- The degree of control the individual is subjected to;
- Whether or not the other party is a ‘customer’ or ‘client’ of the individual; and
- Who pays the tax of the individual.
Watch this space, it will be interesting to see the outcome of Uber’s appeal, and whether this decision brings to an end the Uber saga. One would think that if the Court of Appeal rule against Uber (like the ET and the EAT), Uber will attempt to get the decision overturned by the Supreme Court. One thing is for certain, this case has brought to the fore the issue of ‘status’ and the importance of all employers to carry out their due diligence in this regard.
By Zahid Reza
Image used under CC courtesy of Alper ÇuğunRead More
Why do we need to consider the differences between UK employment law and US labour law?
With Britain and the European Union (EU) in talks for some months now after the historic Brexit vote, Britain must consider how to mitigate the problem of leaving the luxury of the single-market (which provided for the free movement of goods, capital, services and labour between EU member states). Apart from the obvious idea of trying to secure new trade deals with individual EU states, Britain might negotiate trade agreements with the US.
Therefore in light of a possible strong trade relationship post-Brexit, it is a good time to look at how UK employment law differs from that of the US. There is a common presumption that because of our shared language and relationship, American laws and practices work in symphony with UK laws. Although historically US law emanates from English common law, this assumption is far from correct and there have been many examples of businesses making critical mistakes because of this presumption.
Therefore we thought it best to summarise some of the main areas of difference in employment and labour laws that businesses from the UK thinking of entering the US market should be aware of:
- Paid holiday leave
US workers are not legally entitled to any holiday pay, however most US employers (probably through commercial competition) will offer workers paid time off. Although the number of days off will differ from employer to employer, on average a US employer will offer 10 working days for their workers. The UK in comparison, legally entitles employees to 5.6 weeks paid holiday per year (28 days including public holidays for a full-time worker).
- Sick Pay
There is no federal law that requires workers to be offered sick leave. However many state laws require sick leave to be given. The precise terms will differ from employer to employer, and in accordance with individual state rules and regulations. By way of contrast, the UK requires all employees (provided they qualify) to be entitled to Statutory Sick Pay (SSP) and employees are entitled to this for up to 28 weeks. The current SSP rate employers must pay to employees who qualify for SSP is £89.35.
In the US, employers who have 50 or more full-time workers (full-time workers being defined as those who work 30 hours or more per week) are required to provide ‘health care coverage’ to employees (including dependants). Employers with 50 or more full-time workers who fail to provide adequate ‘health care coverage’, will owe an employer shared responsibility payment to the government. The UK has the National Health Service (NHS) which is publicly-funded; therefore employers in the UK do not need to contribute to the healthcare of employees, although sometimes private-healthcare can be added as a benefit.
- Laws governing the employment relationship
In the US, there are few laws governing the employment relationship. However UK employment law provides for pregnancy leave, sickness leave and pay, protection of employees on a sale of business (TUPE), dismissal, notice periods and redundancies to name a few.
- Employer terminating employment
In the US, there is the concept of ‘at will’ employment, which allows employers to terminate the employment relationship at any time, without notice, good cause or prior warning provided it is not a violation of a ‘protected class’ (these classes include race, sex, religion or national origin). The majority of employees in the US are ‘at will’. Under UK employment law, employees have pretty much the same lack of employment rights until they have two years’ service. Employers therefore can generally dismiss employees with less than two years’ service without notice, any prior warning or reason (provided there is no discrimination and the reason for termination is not for whistleblowing or a similar, ‘automatic’ reason).
- Written contract
In the US, there is no legal requirement for a written document or contract as proof of the employment relationship. Sometimes an offer letter is issued which address the main terms such as salary, title, bonus (if any) and holidays. UK employees must be provided with a written statement setting out the fundamental terms of the contract. Typically employees are given very detailed employment contracts.
- Age Discrimination
In the US, federal protection is given to applicants and employees who are aged 40 or over. Whereas in the UK, protection is given to employees and applicants of all ages. There is also a clear difference in the amount of money awarded for discrimination, although in both countries awards for discrimination are uncapped. In the US, discrimination claims can reach millions of dollars following long (often years) legal disputes and great expense. In the UK, discrimination awards are not that high; they rarely reach the six-figure mark.
Employers in the US can generally order an employee to do as much overtime as it wants. UK employment law limits the hours of work an employee can be obliged to work to 48-hours. So employers cannot require employees to work over this amount. However those employees who want to work more than 48-hours can sign an ‘opt-out’ agreement to work more than this, and senior staff are not covered at all. So in reality, the 48-hour week is a law without teeth.
We shall wait and see the specific terms of Brexit. However if there is a trend of UK businesses deciding to operate within the US post-Brexit, then they will need to comply with US labour laws and recognise the distinctions between US and UK employment laws.
By Zahid Reza
Image used under CC courtesy of NicolasRead More
When it comes to nannies and the National Minimum Wage, the position is usually clear. But this is not the case with live-in workers. A minimum wage claim brought by an immigrant domestic worker was recently heard by the High Court.
The case required the court to address the “family worker” exemption set out in the National Minimum Wage 2015. The provision in question is the one relating to wage “deductions” for accommodation and meals.
Mrs Ajayi, came to the UK from Nigeria in 2005. She has worked for Mr and Mrs Abu for a total of nine years and claims she was a victim of human trafficking.
There was no dispute over the fact that Mrs Ajayi was an employee over the alleged period, but there was a disagreement on her hours and pay. In this kind of situation, the employee’s word is generally believed unless the employer has kept records.
The defence initially relied on the “family worker” exemptions for live-in workers who are treated as members of the family. This obviously includes nannies and the national minimum wage would not need to be paid. For this defence to be successful, however, the employer cannot make the employee pay for food and accommodation. This was the issue that the court had to decide.
The court ordered Mr & Mrs Abu to provide a detailed spreadsheet with a breakdown of monthly salary, “expenses” and the net payments made to Mrs Ajayi. The spreadsheet they submitted showed how expenses had been deducted from Mrs Ajayi’s salary for “lodging” and “feeding”.
At this point they realised that this scuppered their defence and claimed that the document was unreliable. Unsurprisingly, they were held to the spreadsheet they had provided and their defence was rejected. The court said that the Claimant’s “very little pay was the produce of effectively making her pay for the ‘free’ accommodation and meals”.
It is now for the courts to decide how much Mrs Ajayi is to be awarded, with an additional claim of harassment to now be considered.
By Matthew Wheatley
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The ‘Dying to Work Charter’ (Charter) is a voluntary charter which lays down guidance for employers in how to support workers with a terminal illness at work.
The TUC wants terminal illness to be recognised as a ‘protected characteristic’. Their idea is for terminally ill workers to enjoy a ‘protected period’ where they cannot be dismissed as a result of their condition. Royal Mail is the most recent employer to sign up to the Charter, meaning that now over 500,000 workers are now covered by this Charter.
Frances O’Grady, TUC General Secretary, said:
“Your job should be the least of your worries when you get a terminal diagnosis. Royal Mail has shown real leadership in this area, working with unions like the CWU to guarantee fair treatment for terminally-ill workers. Over half a million workers are now covered the Dying to Work charter, and we expect more employers to commit in the coming months.”
Dr Shaun Davis, Royal Mail Group Global Director of Safety, Health, Wellbeing & Sustainability, said:
“Everyone experiences terminal illness in a unique way, and at Royal Mail we want to ensure that any of our people diagnosed with such an illness is supported at work through a tailored and flexible approach. Signing up to the Dying to Work Charter builds on the policies and guides we already have in place to help employees, and their direct families, if they receive such a diagnosis.”
The current legal position for terminally ill workers is that some employers will expect them to continue working after a diagnosis. Some will dismiss after what they consider to be a reasonable period of absence; others will offer early ill-health retirement. We are aware of a case where Sainsbury’s gave £8,000 to an employee with a diagnosis of bone cancer and a 2 year prognosis, although it had no legal entitlement to do so This helped her to take time to deal with the diagnosis and put her affairs in order.
The TUC have not added any detail as to how long the protected period would be. Determining how long a terminally ill worker would be protected before an employer can dismiss may be seen as more of a moral question. This would require balancing the worker’s interest of support and protection with the employer’s interest in recruiting a suitable replacement so to maintain the smooth running of their business.
Additionally, if terminal illness was to be a protected characteristic it is likely that many workers bringing a claim will die whilst doing so. In that case, the law would provide that the family of the employee bringing a ‘terminal illness at work claim can collect any settlement or compensation.
The TUC’s idea would not be good for employers because introducing another protected characteristic would increase the number of claims. This, coupled with the recent scrapping of employment tribunal fees could result in employers dealing with many more tribunal claims from their workforce.
It will be fascinating to see whether more employers join the Charter, because if they do then this will only increase the chances of the TUC’s idea coming to fruition.
By Zahid Reza, Employment Paralegal
Image used under CC courtesy of Howard LakeRead More
A discrimination tribunal case earlier this month made an important decision on the ‘burden of proof’ provisions in the Equality Act 2010. These give the benefit of the doubt to the claimant in certain parts of discrimination claims and they are a cornerstone of the discrimination regime.
The claimant in this case was a postman. He had graduate and post-graduate level qualifications in IT and had applied unsuccessfully for over 30 IT-related jobs within the Royal Mail. He believed that the rejections were due to a case of direct discrimination on the grounds of race.
The burden of proof part of the Equality Act provides that if there are facts which suggest discrimination (in the absence of any other explanation) then it becomes for the respondent to prove that it did what it did because of non-discriminatory reasons.
The explanatory notes to the Act say “the burden of proving his or her case starts with the claimant. Once the claimant has established sufficient facts, which in the absence of any other explanation point to a breach having occurred, the burden shifts to the respondent to show that he or she did not breach the provisions of the Act”. The Act itself says that the burden in a discrimination tribunal case passes “if there are facts from which the tribunal could decide, in the absence of any other explanation, that discrimination has occurred”.
The Employment Appeal Tribunal (EAT) held that the Employment Tribunals have been getting the law wrong since 2010. When this happens at the employment tribunal, the parties have to get a new ruling from the employment tribunal, which sometimes means another trial. Tribunals have been relying on a two-stage test from the previous case of Igen v Wong which was decided under previous discrimination legislation. Employment solicitors have treated this as sound law for many years, even after the Equality Act regime took over.
The EAT acknowledged that s136(2) is clear and does not require the claimant to prove anything at the beginning. Instead, the tribunal must consider all the evidence, from all sources, so as to make a decision on the facts ‘as a whole’. These sources could be the documents available at trial, witness evidence, well-known facts or common sense inferences, even if none of the lawyers in the case thought it was important.
So, it is probably no longer sensible to talk about the burden of proof in a discrimination tribunal case being the claimant’s in the first instance.
The EAT said that an effect of this case is that submissions of no case to answer (i.e that the claimant has failed to get over the first hurdle by the half-way point of the trial) are now effectively a thing of the past. This is because what the respondent says also feeds into the question of whether the claimant has discharged the ‘burden of proof’. Employers should now be even more careful to call relevant evidence when defending discrimination claims. In this case, the respondent had not volunteered any evidence about the race or national origins of the successful job applicants. Nor had it brought the recruiting managers as witnesses. So it was not in a good position to defend the claim.
The logic behind the decision results in this case being an important authority on how to correctly adhere to s136(2) which plays a vital role at the heart of many discrimination cases. This outcome is solely because the wording of the Equality Act 2010 is different from what the old legislation used to say. We don’t think that this difference was intended by the House of Commons when they passed the Equality Act.
This decision could ensure that future tribunals place a responsibility on the respondent to give evidence in discrimination tribunal cases, which will no doubt give some claimants the edge.
Case report: Efobi v Royal Mail Group Ltd
By Ryan Wheatley
Since the revelation that “49% of self-employed workers (4.8 million people) earned less than £310 a week”, the Resolution Foundation have published its opinion that the minimum wage should apply to the self-employed.
The Resolution Foundation says:
“The UK’s labour market has been very successful at creating jobs in recent years. However, far too many of those jobs offer very low pay and precious little security….This is especially true of the growing army of the self-employed. While many are higher earners who benefit from significant flexibility, around half fall below the low pay earnings threshold of just £310 a week
“The government can start by extending minimum wage protections to those self-employed people whose prices are set by a firm. This would mean that self-employed people in the gig economy would be given protection against extreme low pay for the first time ever”.
Because this can stop employers from making individuals purposely self-employed just to avoid the need to pay them the minimum wage. Therefore if the minimum wage does apply to self-employed individuals, this will likely reduce exploitation in the UK workforce generally. Additionally, some may say that if the basic premise of the minimum wage is to ensure all individuals earn enough to live, then this protection should apply no matter whether such individuals are employees or is self-employed.
It will be interesting to see whether this recommendation comes to fruition. If it does then it may open the door for other rights, such as the compulsory 20 minute break (for a working day that is six hours or longer) and a 48 hour maximum working week, rights currently enjoyed by employees. Additionally, if these recommendations become implemented, this may be a step towards the UK having a single stand-alone category of worker, rather than the three types (‘employee’, ‘worker’ and ‘self-employed’) that we have today.
By Zahid Reza, Paralegal
Image courtesy of Resolution FoundationRead More
From time to time we will tell you about a Birmingham employment law case we have recently dealt with. This is the story of Jason, a factory worker, and his settlement agreement that followed age discrimination.
Jason, 64 years old, was a production controller in a clothing factory.
Jason was in charge of cutting textiles which produced garments and managing the cutting room operations. Over the course of one year, his employer removed parts of his role, accusing him of not doing his job properly (which wasn’t the case). Jason was asked on several occasions whether he was planning to retire. He wasn’t. Instead of retiring, he had planned to reduce his hours to three days a week on reaching 65. the company have stated they were enquiring as they would need to have a sufficient amount of time to employee a replacement.
The employer had said that they were unsure whether this was going to be possible due to lack of work for Jason and they had asked whether he would reduce his hours to two days a week instead. It was implied that if he didn’t agree to working two days a week, an “alternative route” would be followed. He thought that this was an implicit threat to manage him out of the business.
The employer demoted him, told a client he was on his way out and this caused him a lot of anxiety.
Jason put in a flexible working request when he reached 65, declining the offer to work only two days a week. Out of the blue the employer held a ‘settlement meeting’ with him, asking him to leave and take a £3,000 pay-off.
He felt that this may be cause to resign and claim constructive dismissal, but our page on settlement agreements to see why this might not have been the case. But we advised him that because it was linked to his age, it might be an act of age discrimination.
On our advice, Jason raised a grievance complaining about how he had been treated, claiming he had been forced out of work due his employer’s assumptions about what should happen to employees over 65. This is age discrimination. There is no such thing as forced retirement any more. The grievance was heard and Jason was told that an investigation would be carried out. In the meantime, the employer denied his flexible working request.
Jason took legal action and we wrote to the business accusing them of discriminating. The grievance outcome denied all his complaints, which is usual.
Unfortunately, Jason fell at home whilst gardening due to lack of concentration as a result of being filled with worry over his work situation and was unable to work out his notice.
We helped Jason to bring a claim of unfair constructive dismissal, age-related harassment and age-related discrimination and victimisation. We took the claim to a hearing and the other side settled on the day of the trial for £25,000 to cover his loss of income, personal injury and injury to feelings for age discrimination. Ironically, the matter was tied up with a settlement agreement.
By Emma Bonehill
Image used under cc courtesy of Senorhorst JahnsenRead More
From time to time we tell you about a Birmingham employment law case we have recently dealt with. Our other stories are here. This is the story of Harry, his heart condition and his disciplinary.
We helped Harry to get his employer to remove a first written warning following a disciplinary meeting.
Harry works for a construction company and has over three years’ service. Harry also has a heart condition which he disclosed to his employer at the start of his employment. He is a forklift driver.
One day, Harry was having chest pains and suffering from a shortness of breath. He told his line manager, who just told him to get back to work. He did this but was suffering pain throughout his shift. At the end of his shift, Harry told his line manager that he felt he needed to go to hospital. At this point, the company started taking him seriously. Two colleagues from health & safety told Harry that he could either go to the hospital himself or someone from the company could take him.
Harry had lost confidence in his employer’s ability to deal with the situation, so said he would go on his own. Upon arriving at the hospital, the doctors were very concerned because they could not feel Harry’s heartbeat. Once Harry had informed them of his heart condition, the hospital did a series of tests the next day and concluded that he was fine but that the symptoms could be life-threatening in the future.
Despite knowing where Harry had been on the day of the incident and the next day, the employer took the absences into account in giving him a warning for taking too much time off sick. After an investigation and disciplinary hearing, Harry was given a first written warning which was to stay on his record for 12 months.
We assisted Harry in his appeal against the disciplinary sanction and helped him to lodge a grievance. This did the trick because the employer then removed the sanction completely, leaving Harry with a clean disciplinary record.
Employers should always be aware that a disciplinary process must be fair and impartial for employees with more than two years’ service. This is because an unreasonable decision can breach the implied term of ‘trust and confidence between an employer and employee’, which can allow eligible employees (with two years’ continuous service) to claim constructive unfair dismissal. Those with less than two years’ service may rely on their disability rights under the Equality Act, including the right to reasonable adjustments to the disciplinary process. An unreasonable decision can support a discrimination claim. Therefore, employers should always deliberate carefully as to what is a reasonable decision based on the information obtained throughout the disciplinary process.
Harry was satisfied with the outcome and because the employer reversed its decision on appeal, he was willing to still work for them. His heart condition is not currently causing him any problems.
By Zahid Reza
Image used under CC courtesy of AJC
Note: a subsequent legal change has affected the accuracy of this material.
A UK Brexit will allow Parliament to disapply EU legislation, meaning that many employment rights that people take for granted (e.g. minimum wage, working time directive, human rights) could be modified or removed by Parliament.
The upcoming general election due in June 2017 will undoubtedly have an effect on employment rights as they exist today.
The three major parties, Labour, Conservative and Liberal Democrats, have all published their manifestos. This article summarises the main employment law implications of each manifesto.
The Conservative Party manifesto will:
- Ensure workers will enjoy the same rights after Brexit as they do currently under EU law;
- Consider watering down human rights law;
- Ensure that the National Living Wage will continue to be increased in line with the target of reaching 60% of average earnings by 2020; and
- Introduce a new right for all employees to request unpaid time off for training.
The Labour Party manifesto:
- Ensures all current EU rights will be guaranteed after Brexit;
- Bans zero hours contracts;
- Promises to work with trade unions to ensure that there are fair rules to prevent the exploitation of migrant workers;
- Abolishes employment tribunal fees; and
- Extends the time period for a maternity discrimination claim from 3 to 6 months.
The Liberal Democrats manifesto promises:
- A second Brexit referendum;
- A right for workers on zero hours contracts to request a fixed term contract;
- To abolish tribunal fees;
- To end the NHS pay freeze; and
- To guarantee the rights of all NHS and social care staff from the EU to stay in the UK.
As you can see from the above, the precise effect this election will have on employment law will vary considerably depending upon the result of the election. It will be fascinating to see what happens in the election and how quickly any changes get introduced.Read More
Employees may be dismissed with no religious discrimination if they breach a uniform policy that bans headscarves (and other religious symbols), says the European Court of Justice (ECJ). This is the court to which employees and employers can currently appeal tribunal decisions after exhausting the UK courts.
This was a ruling in the conjoined cases of a Belgian receptionist who was dismissed by G4 for breaching the union-agreed dress code after she started wearing a headscarf, and of a French IT consultant who was told to remove her scarf after a client complained, and then dismissed when she refused.
These religious discrimination cases have taken eight years to work their way to the top of the legal system.
In France and Belgium, more than the UK, there is a strong public feeling that religious displays are not a cultural and historical fit.
Until now, we have advised employer clients that a ‘one size fits all’ policy (like a dress code that bans religious displays or head coverings) is likely to be indirect religious discrimination unless there is a very good reason for it. And that there is unlikely to be a good reason.
Indirect religious discrimination means it affects certain groups (eg Muslims, Jews, Sikkhs) more than others. Good reason means that no less discriminatory way exists to achieve what you reasonably want to achieve. We have advised that a teacher may validly be told not to cover her face, because that can impair the sight of lips and sound of the voice which are crucial for teaching. But we wouldn’t have advised it in the case of a secretary or IT worker.
Understanding the decision
This case shows that the devil is in the detail. It was a question about what constitutes the employer’s exception – the ‘good reason’ mentioned above. It is now considered a ‘good reason’ if the employer wants to “project an image of neutrality, notably where the employee is client-facing”.
There is currently (the full judgment is not yet available) no word on what “neutrality” means. Our view is that the court may be referring to religious neutrality. There is no word yet on why it might be reasonable to want to achieve this, as opposed to, say, having a policy that all people of all religions and none are to be treated the same, regardless of what they choose to wear.
To avoid confusion, employees can still be religious and pray in their own time, but can be asked to keep it hidden from clients. We don’t know if they can be asked to keep it hidden from colleagues. The employer must first have a religion-neutral policy and consider whether it is necessary for the employee to deal with clients.
The European Forum of Muslim Women said they “strongly condemn and deplore the decision”, saying “The backing of this headscarf ban by the highest court of justice in Europe is a serious threat to the principles of equality, justice, and freedoms that EU must uphold.”
Their religious discrimination cases now go back to the national courts to rule on the cases having taken further evidence on questions identified by the ECJ, such as whether the employees could have been made non-client-facing.
The rulings of the ECJ are currently binding on the UK. They won’t be from 2009 because of Brexit. We think it likely that the UK courts and tribunals will continue to apply the ECJ’s rulings, albeit maybe on a haphazard basis, so that the future of employment law will become even harder to predict.
Case report: Bougnaoui and ADDHRead More