EmpLaw Newsletter Jan 2018
January 2018
Here is our latest on-line Employment Law newsletter which will assist in keeping you informed of various current employment issues. The content of this newsletter is provided for general information purposes only and it is not intended to be legal or other professional advice. It should not be considered a substitute for taking professional advice in relation to specific circumstances. No responsibility can be accepted by Assicurazioni Generali S.p.A. for any action taken as a result of the information provided.
Worker status and rights are rarely out of the press at the moment. The recent EU holiday pay case of King v Sash Window Workshop adds another dimension and could have massive implications if you hire individuals on a self-employed basis as consultants or contractors.
If the contractor later brings and wins an employment tribunal case which says that they are a ‘worker’, rather than being genuinely self-employed, they will get all of the rights that go along with being a worker. While these rights are not as extensive as employment rights, they do include the right to 5.6 weeks’ paid holiday a year.
Mr King was a self-employed salesman who brought a claim for worker status and was successful. He had never asked to take holidays or been paid for them. However, the Court of Justice of the European Union has held that holiday pay accrued during the whole period that he worked for Sash Window Workshop. He was entitled to be paid for 13 years of holiday back-pay.
There are some questions which still need to be answered by the Court of Appeal, but this case may open up some businesses to the risk of large holiday pay claims from people they thought were self-employed - and going back much further than the two years we previously thought. This case also increases the stakes in the gig economy worker cases going through the courts at the moment.
- Criminal conviction for failure to Auto-Enrol into pension
- White lies – a false reason for dismissal
- Vicarious liability for data breaches
- Free movement rights
- Investigations
- Weekly rest periods
- And Finally…
Criminal conviction for failure to Auto-Enrol into pension
All UK employers have to put workers meeting certain criteria into a workplace pension scheme and pay minimum employer pension contributions. This is called ‘automatic enrolment’ because the employer has to do it without any input from the worker.
If an employer willfully fails to comply with its duty to auto-enrol workers into a pension then it commits a criminal offence under the Pensions Act 2008. Where a director of a company consented or ‘connived’ to commit the offence, or it was because of the director’s neglect, then that director is also personally guilty of the criminal offence.
The Pensions Regulator regulates workplace pension schemes in the UK. The Regulator investigated and found that 36 staff from a bus company, Stotts Tours (Oldham) should have been auto-enrolled into a pension. It found that the company should have been paying contributions since June 2015 into that scheme for them. The Regulator thought that the company deliberately failed to provide the pension and so it deserved to be criminally prosecuted. This has been the first prosecution of its kind since the auto-enrolment legislation was introduced.
The company and its managing director both pled guilty to 16 offences of willfully failing to offer a workplace pension at Brighton Magistrates’ Court. The offence can result in an unlimited fine (and up to two years’ imprisonment when the prosecution is brought in the Crown Court). Sentencing was deferred. The Regulator is also still chasing the company for civil fines of £14,400 for non-compliance.
The Regulator said “Automatic enrolment is not an option, it is the law. Employers should be in no doubt that if they willfully refuse to become compliant they could end up with a criminal record – and will still have to give their staff the pensions they are due.” Employers have been warned! [back to top]
White lies – a false reason for dismissal
Many of us have told a white lie or two at some stage – a fib designed to spare someone’s feelings. However, in the case of Rawlinson v Brightside Group Ltd the lie tied the employer in knots and eventually led to a successful constructive dismissal claim.
Mr Rawlinson was employed as Group Legal Counsel in an insurance broker business, Brightside. His employer decided to dismiss him because of concerns over poor performance, which it hadn’t raised with him. Brightside decided to tell a white lie over the reason for his dismissal. This was partly to soften the blow and partly to encourage Mr Rawlinson to work his notice period so it had time to recruit a replacement and do an orderly handover. Brightside told Mr Rawlinson that a decision had been made to review its approach to its legal service and that it would use external lawyers more in future instead. He was given notice of his dismissal.
Mr Rawlinson thought that if there was going to be an outsourcing of legal work there would be a TUPE transfer - meaning that his employment would transfer to the new law firm. He asked his employer for the name of the new firm. This left Brightside in a tricky position as there was no new firm! Mr Rawlinson resigned because of the failure to inform and consult, as he saw it as a breach of contract. He did not work his notice period.
The EAT held that he had been constructively dismissed. An employer is under a duty to act in good faith and not to mislead its employees. It didn’t matter that Mr Rawlinson had resigned in relation to something else. Brightside had wanted the relationship to continue during the notice period and so the intention behind the lie was not entirely selfless. While there was no obligation for Brightside to give the reason for dismissal, once it had chosen to do so, it needed to be truthful. The EAT did recognise that there might be less serious white lies which might not amount to a breach of trust and confidence, but this was not one of them. If you find yourself in a similar position, you may have to make a finely balanced judgment. If a handover is crucial then it could be tempting to tell a white lie. Ultimately the real reason for dismissal may come out in a future subject access request or tribunal proceedings anyway. But remember that the lie itself can have consequences that you didn’t mean or foresee and like in this case it can make things worse. [back to top]
Vicarious liability for data breaches
In the first ever class action for a data breach in the UK, the High Court has found that WM Morrisons Supermarkets PLC was vicariously liable for a deliberate disclosure of personal data by a rogue employee who had a grudge against his employer. The employee committed a criminal offence by his actions and was sentenced to eight years in prison. He deliberately disclosed the personal information of about 100,000 of his co-workers onto a file sharing website.
Morrisons were found liable for the employee’s actions, even though this was exactly what that employee wanted to achieve – financial and reputational damage. Morrisons is going to appeal, but unless the case is overturned, it could be extremely expensive for Morrisons. It could also have worrying consequences for other employers who find that an employee has disclosed data without their knowledge or consent.
The court found that Morrisons had appropriate measures in place to keep information secure. Although Morrisons could have had a better process for deleting information, the court found that this did not lead to the disclosure. Morrisons were found to be liable for policy reasons, rather than because of their actions. The reason for the decision was to protect the data subjects - in this case the Morrisons’ workers who had their data shared on the internet. The court wasn’t moved by Morrisons’ arguments about the financial consequences of vicarious liability. It thought that many companies would take out insurance to cover these sorts of claims.
The new data protection laws implementing the GDPR which come in soon and increase liability for employers and data processors, will also raise the financial stakes even more. We may see more class actions for compensation too. This is definitely a case to watch closely on appeal. [back to top]
It remains unclear what immigration rules will look like after Brexit, but the recent European case of Toufik Lounes v Secretary or State for the Home Department is relevant right now to UK employers and EU citizens.
The case involved a woman of Spanish origin, Ms Ormazabal who then acquired dual Spanish and British nationality. She has an Algerian husband Mr Lounes, who had stayed in the UK illegally after his visitor’s visa had expired. The question was whether Ms Ormazabal was allowed to live with her husband in the UK, when his residency application (as a family member of an EEA national) had been refused. The Home Office took the view that Ms Ormazabal was no longer an EEA national when she became a British citizen and so Mr Lounes was not entitled to stay in the UK as a family member of an EEA national.
The Court of Justice of the European Union held that Ms Ormazabal had a right to lead a normal family life in the UK even after she became a British citizen of dual nationality. Mr Lounes benefitted from a right of residence in the UK as a result. The UK had been wrong to refuse to recognise the rights of freedom of movement of EU citizens who have acquired British citizenship and the similar rights of their family members.
The legal position will change again after Brexit unless a deal is reached. So, if you have any EU citizens in your workforce who have been denied free movement of worker rights in this way because they have become a British citizen, then they should consider re-applying now, before Brexit. [back to top]
Usually employers are worried about their investigations not being detailed enough. However, in the case of NHS 24 v Pillar the question was whether the investigation was too thorough!
Ms Pillar was a nurse practitioner who worked for the Scottish telephone and online helpline NHS 24. Her work involved taking telephone calls from members of the public and triaging them. She was dismissed following a failure to correctly triage a call – the patient then had a heart attack. Two previous similar incidents were included in the investigation report when they hadn’t led to disciplinary action before. The tribunal decided that this made the dismissal unfair as it was an unreasonable investigation - it was too thorough. However, the Employment Appeal Tribunal disagreed.
The EAT held that unless it could be said that the earlier incidents should never have been a factor in the decision to dismiss (which wasn’t being argued by Ms Pillar), there was no rational basis to exclude details of them from the investigation report. The dismissal was fair.
As a general rule, it may be best to try and treat conduct consistently to avoid an unfair dismissal. However, an investigation cannot be too thorough. It is for the dismissing officer to decide how to treat the investigation report and to decide whether it would be fair to rely on it at all. [back to top]
All employers have to allow workers to have a 24-hour rest period every seven days under European Law. But what does that actually mean? Slightly strangely, the European Court has held that it can actually be given at any point in a 14-day period.
Mr Maio Marques da Rosa was a casino worker in Portugal who was made redundant. He worked on a rotating schedule which meant that sometimes he worked for seven days in a row. After he was dismissed, he claimed that his employer had not given him his weekly rest period of 24 hours every seven days. He argued that it should have been given at the latest after six consecutive working days.
The CJEU decided that there was no requirement for weekly rest to be provided after six consecutive days of work. It can be provided within each 7-day period and allows employers some flexibility in how to organise shifts. This means that in the UK, an employer could give a 48-hour rest period at the start of a 14-day period and at the end of the next period. This could involve the employee working for 24 days in a row as long as daily rest breaks, the maximum working week rules and any contractual requirements are met. [back to top]
Two US navy pilots were disciplined because they drew an enormous picture in the sky over Washington State of male genitalia using their aircraft. Their actions were described as “a condensed air trail resembling an obscene image to observers on the ground.” It was reported in the Military Times that the US navy had said that their “sophomoric and immature antics of a sexual nature” had “no place in naval aviation today.” The pilots were not dismissed by the US navy. However, in the UK sexual harassment and other such misconduct is more likely to result in dismissal, particularly given the press attention it has received lately. [back to top]