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Employee who changed his status to subcontractor for £200 was a worker and was entitled to holiday pay Bale-outs?

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The Employment Appeal Tribunal has found that a claimant who changed his status from general labourer to a labour-only subcontractor in exchange for £200 was still a “worker” under the Employment Rights Act and the Working Time Regulations and was therefore entitled to holiday pay.

Mr Holden was employed by Plastering Contractors Stanmore Ltd as a general labourer between April 1997 and February 2001. From February 2001, Mr Holden agreed to become a labour-only subcontractor for a one-off payment of £200. After this, Mr Holden was put on Stanmore’s database of labour-only subcontractors. When work was needed at a particular site, Mr Holden was asked to perform it. He worked on many sites and whilst he was there, he would be under the instruction of the site supervisor. He could be paid by price or time spent completing work (the rates for which were set by Stanmore) and he was paid under Stanmore’s scheme rather than by submitting invoices. Save for his own safety boots, the remaining equipment was provided by Stanmore. Although there was no obligation for Stanmore to offer Mr Holden work or for Mr Holden to accept it, Mr Holden worked almost exclusively for Stanmore until he decided to take up similar work with another company.

Mr Holden brought a claim against Stanmore arguing that he was a worker and Stanmore’s failure to pay him holiday pay was an unlawful deduction from his wages under the Employment Rights Act.

The EAT held that Mr Holden was a worker for the purposes of the Employment Rights Act and the Working Time Regulations. Stanmore argued that because it and Mr Holden were not obliged to offer or accept work respectively there was insufficient mutual obligation for Mr Holden to be a “worker”. The EAT held that mutuality of obligation existed during each short assignment rather than during the entire arrangement. Stanmore also argued that any individual who was allowed to appoint a substitute pointed to there being no obligation on him to render personal service and therefore Mr Holden was not a worker. The EAT held that this did not reflect the reality of the arrangement. Finally, Stanmore argued that it had no right of control over Mr Holden. The EAT found that this argument was “fanciful”. Whilst Mr Holden’s experience meant that he required very little supervision, he still had to do what he was told.

Plastering Contractors Stanmore Ltd v Holden UKEAT/0074/14

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Employer should have set out deduction to employee’s wages in payslip

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An employee whose employer had clawed back overpaid wages claimed that his employers had not complied with the Employment Rights Act, which requires employers to give written and itemised pay statements. The Employment Appeal Tribunal has held that deductions of an employee’s wages should have been properly itemised and explained on the employee’s payslip.

The claimant, Mr Ridge, worked as a Software Engineer at HM Land Registry. The Land Registry paid its employees on the last day of each month and gave its employees a payslip which set out their gross pay and any deductions. Mr Ridge began to have health problems and had long periods of sickness absence. He had exhausted his sick pay entitlements and was absent after this period, which meant that there were months when he was not entitled to his full monthly salary. Where his absences were reported and processed before the end of the month, his gross pay would be reflected correctly on his payslips, but when they were not, he would be overpaid and the amount would be recovered from the next month’s gross pay. These reductions would appear as a negative amount on his payslip but there would be no other details explaining why the adjustments were made. Mr Ridge asked the Land Registry to include an explanation on his payslips but it did not do so.

Mr Ridge brought a claim against the Land Registry arguing that it had failed to meet its obligations under the Employment Rights Act which requires employers to give written and itemised pay statements to their employees (including itemised deductions and the purposes for which they are made). The Land Registry argued that the variations made to Mr Ridge’s pay were adjustments rather than deductions and therefore the provisions of the Employment Rights Act would not apply.

The EAT held that a reduction of the following month’s pay was a deduction for the purpose of the Employment Rights Act and that Mr Ridge was entitled to have a declaration to identify the amount and purpose of the deductions made from his salary. The EAT distinguished recoveries of overpayments (which it considered were deductions under the Employment Rights Act) from adjustments to pay due to Mr Ridge’s exhausted sick pay (which were not deductions under the Employment Rights Act). However, although Mr Ridge won his case in principle and was entitled to a declaration of the deductions made, he was not entitled to damages. Mr Ridge had claimed that he was entitled to a payment up to the aggregate of the unnotified deductions which he argued could be made even where the deduction made was correct. The EAT found that in this case this award would be disproportionate, given that: (i) the deductions were apparent; (ii) Mr Ridge was alerted to them; (iii) he understood the purpose for which they had been made, and (iv) a declaration would be a sufficient remedy.

This case emphasises the importance of itemising payslips. Indeed, it is regrettable that this case was brought as the EAT itself noted the Land Registry could have easily explained the deductions by including a few abbreviated words on Mr Ridge’s payslip. Although Mr Ridge was unsuccessful in his claim for damages, employers reducing an employee’s wages to claw-back a previous overpayment could be at risk of punitive damages up to this amount if they have failed properly to identify the deduction properly, even if the employee understands the reason for the deduction and the employer is entitled to make it.

Ridge v HM Land Registry UKEAT/0098/10

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A dismissal for taking time off for a dependant was not automatically unfair

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The Employment Appeal Tribunal has held that the dismissal of a man who took time off for his dependant, in this case his pregnant partner, was not automatically unfair because he failed to inform his employer of the reason for his absence as soon as reasonably practicable.

Mr Ellis worked at Ratcliff Palfinger Ltd. He was contractually obliged to inform his line manager by no later than 30 minutes after he should have started work if he would be unable to attend and to keep in regular contact as appropriate, given the nature of the illness or condition that prevented him from working. On 25 November 2011, Mr Ellis was given a final written warning as a result of attendance issues, which stated that any further failure to work his required hours could result in his dismissal.

Mr Ellis had a pregnant partner and there had been some concerns about her health. As a result, on 6 February 2012, Mr Ellis took her to hospital several times but he did not explain the situation to Ratcliff (although his father called them later in the day to account for Mr Ellis’ absence). On 7 February 2012, Mr Ellis received a text from Ratcliff asking him to contact the office urgently. Mr Ellis contacted Ratcliff and was criticised for not making contact or coming into work. He called Ratcliff later that day to explain that he would not be in work the following day. Mr Ellis did not attend work that week during which his partner gave birth and the Tribunal rejected his evidence that he had mentioned this to Ratcliff on 7 February 2012.

On 15 February 2012, Ratcliff asked Mr Ellis to attend a disciplinary hearing. Mr Ellis did not attend. He said that the battery on his mobile phone had run out and he had called his father to ask him to call Ratcliff instead (as he could not remember their phone number). Bearing in mind the written warning on Mr Ellis’ file, Ratcliff dismissed Mr Ellis and gave him pay in lieu of notice on 16 February 2012, arguing that he had failed to make reasonable efforts to inform Ratcliff of his absence for the week beginning 6 February 2012.

The Employment Rights Act allows employees to take a reasonable amount of unpaid time off work to deal with certain situations affecting their dependants, including a dependant giving birth. Accordingly, any dismissal of an employee claiming this right will be automatically unfair. After unsuccessfully appealing Ratcliff’s decision, Mr Ellis then brought a claim that he had been automatically unfairly dismissed for taking urgent time off to care for his wife.

The EAT dismissed Mr Ellis’ claim and held that his dismissal was not automatically unfair because he had not told Ratcliff of his absence as soon as was reasonably practicable. The EAT held that when considering what was reasonably practicable, the courts should have regard to the particular facts, including the employee’s mental state. It held that what is reasonably practicable is not limited to what is “reasonably capable physically of being done”. However, it also found that the business needs of Ratcliff were not a relevant factor for it to consider. This case makes it clear that the onus will be on employees to take appropriate steps to inform their employers of time off taken for dependants.

As of 1 October 2014, qualifying employees and agency workers have also had the right to take unpaid time off work to attend two ante-natal appointments with their pregnant partner (capped at 6.5 hours per appointment).

Ellis v Ratcliff Palfinger Ltd UKEAT/0438/13

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Failure to pay male employee enhanced additional paternity pay was not discriminatory

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A male employee who argued that his employer’s failure to pay him enhanced additional paternity pay was directly and indirectly discriminatory was unsuccessful in his claim. The Tribunal held that the appropriate comparator for direct discrimination is a female applicant for additional paternity leave who is the female spouse or civil partner of someone on maternity leave and, therefore, the claimant could not establish that he had been treated less favourably because he was a man. In any event, it held that the disparity in treatment was a proportionate means of keeping more women at Ford.

The claimant, Mr Shuter, worked for Ford. His wife gave birth on 25 December 2012 and returned to work from maternity leave on 15 July 2013. Mr Shuter took additional paternity leave in respect of his wife’s unclaimed maternity leave. While Ford paid female employees taking maternity leave up to 52 weeks full basic pay, it paid those taking additional paternity leave the statutory minimum pay.

Mr Shuter claimed that the failure of his employers to pay APL at the same rate that it did for maternity pay was both directly and indirectly discriminatory. Mr Shuter claimed that Ford’s policy was directly discriminatory because he was put at a disadvantage because of his gender and that he should be compared with a woman taking maternity leave after 20 weeks of giving birth for the purposes of his claim. He also argued that Ford’s policy was indirectly discriminatory because men were more likely to claim additional parental leave and, therefore, as a group were likely to be disadvantaged by the difference in treatment.

The Tribunal dismissed both of Mr Shuter’s claims. When considering Mr Shuter’s direct discrimination claim, it rejected his proposed comparator and held that the correct comparator for Mr Shuter would be a women applying for additional paternity leave i.e. the female spouse or civil partner of a women claiming maternity leave. Therefore, he was not being directly discriminated against because of his gender.

The Tribunal also considered Mr Shuter’s indirect discrimination claim. While Ford accepted that men were likely to be disadvantaged as a group in comparison to women because applicants for additional paternity leave were more likely to be men then women, it argued that it was a proportionate means of achieving a legitimate aim. The Tribunal held that Ford could justify its practice of paying women basic pay when on leave beyond 20 weeks because it was aiming to recruit and retain women in its workforce.

This decision is just a first instance decision and is therefore not binding but it does demonstrate the issues in balance with parental leave policies.

Shuter v Ford Motor Company Ltd ET/3203504/13

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Employment Appeal Tribunal holds that project manager should not have been assigned to a new contractor on a TUPE transfer

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The EAT has held that an employee, who was a project manager, did not transfer under TUPE. The EAT cautioned against placing too much emphasis on how much time an employee spends on each project and said that careful consideration should be given to the group transferring and whether the employee belongs to it.

Mr Armitage was a project engineer at ERH Communications Limited. ERH provided communications services to the Welsh Assembly under a regional maintenance contract, a framework agreement and an ancillary contract (under which it could bid for additional work).

In October 2012, Mr Armitage was promoted to the role of Project Manager and had to manage several matters including the regional maintenance contract. ERH subsequently lost this contract (but retained the other two contracts) to its competitor, Costain Limited, who took over the provision of services on 1 February 2013.

ERH conducted a consultation process to determine which of its employees should be transferred to Costain under TUPE and it informed Mr Armitage that he would transfer because he spent 80% of his time on the regional maintenance contract. Mr Armitage objected to this assessment which did not take account of the fact that his responsibilities had changed since his promotion. Costain also did not agree that TUPE should apply to Mr Armitage. They argued that he had spent most of his time working under ancillary projects rather than the regional maintenance contract and therefore he had not transferred.

The EAT held that when making a decision on whether or not an employee had transferred under TUPE, the courts should first consider the group of employees who would transfer and then consider whether the employee belonged to that group. It noted that: i) the group must be deliberately put together for the purpose of the relevant work; ii) it should not assume that every employee carrying out work for the relevant client is assigned; and iii) the decision on assignment should be made by a proper examination of the facts and was not a formality.

The EAT was critical of the reliance placed on the percentages of time Mr Armitage had spent on each contract, particularly given that he may have been more involved ahead of the transfer because it was likely to be a time that his skills were needed and that this in itself would not mean that he should be deemed assigned.

Although the case was remitted back to the Tribunal for a final decision, the EAT exercised its discretion and ordered ERH (not Mr Armitage) to pay Costain’s EAT fees. Indeed, when making the cost award the EAT commented that Mr Armitage was prevented from knowing who was liable for the termination of his employment until the current arguments between the two companies were resolved. This approach indicates that where two employers are the real protagonists in the litigation, the tribunals will follow a “loser pays” approach towards costs more readily.

Costain Limited v Armitage and another UKEAT/0048/14

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