Employment Law E-Bulletin Issue 47

  • Aslam and others v Uber BV and others ET/2202550/15 – Uber drivers held to be workers
  • British Gas Trading Ltd v Lock and another [2016] EWCA Civ 983 – holiday pay under WTR includes results-based commission
  • Snell v Network Rail Infrastructure Limited S/4100178/2016 – discriminatory levels of shared parental pay
  • Autumn statement: employment implications

Aslam and others v Uber BV and others ET/2202550/15 – Uber drivers held to be workers

An employment tribunal has held that Uber drivers are ‘workers’ for the purposes of the Employment Rights Act 1996 (“ERA”), the National Minimum Wage Act 1998 (“NMWA”) and the Working Time Regulations 1998 (“WTR”), meaning that they are entitled to the national minimum wage, paid annual leave and whistleblowing protection.

This decision followed a number of Uber drivers bringing claims for unlawful deductions from wages (alleging a failure to pay the national minimum wage and also to provide paid annual leave), two of which were ultimately put forward as test claimants.

One of the issues the employment tribunal needed to consider at a preliminary stage in these proceedings was whether the drivers were ‘workers’ for the purposes of the legislation mentioned above and therefore entitled to what they were claiming.

Uber argued that it was a technology platform that facilitated the provision of taxi services rather than being a transport business itself. Its position was that its drivers were self-employed contractors offering their services to passengers via its smartphone app and it had documentation in place which purported to confirm such a relationship. The tribunal held that the documentation did not correspond with the practical reality and therefore disregarded it.

The tribunal held that Uber was in the business of providing taxi services and engaged drivers as workers to deliver its business. It held that any driver who had their app switched on, was within the territory in which they were authorised to work and was willing and able to accept assignments, was deemed to be working for Uber. In addition it held that these periods counted as working time for the purposes of the WTR.

Although a first instance decision and therefore not binding on future cases, this judgement is of interest in relation to the new “gig economy” model of working which looks to describe a self-employment, or freelancing, model of working, where individuals sell their skills and services on an ad hoc basis. Riders engaged by the delivery company, Deliveroo, have already demanded union recognition and workers’ rights and are set to take legal action too if the company rejects their request.

Dealing with the question of an individual’s employment status is not always straightforward and this case is a reminder of the need for businesses to consider the factual make-up of the working relationship they have with the individuals they engage, as well as the degree of control they hold over them. The issue of control is something the tribunal appeared to focus on throughout its judgment in this case.

Uber is planning to appeal and we will therefore keep an eye on how this progresses, but we don’t expect it be the last case of its kind.

British Gas Trading Ltd v Lock and another [2016] EWCA Civ 983 – holiday pay under WTR includes results-based commission

The Court of Appeal has upheld the EAT's decision that the Working Time Regulations 1998 (“WTR”) can be interpreted compatibly with the EU Working Time Directive (“WTD”), requiring results-based commission payments to be included in the calculation of holiday pay.

Most will be familiar with the facts of this case by now, but to recap, Mr Lock’s remuneration package included commission earned on sales. As he could not secure any sales whilst on annual leave, he lost the potential to generate commission during any such leave period. Mr Lock argued that holiday pay should reflect “normal remuneration” and that his pay should therefore be enhanced to reflect the commission that he would otherwise have earned had he not been on holiday.

The Tribunal referred questions to the European Court of Justice (“ECJ”) for a preliminary ruling, including whether the WTD required commission payments to be included in holiday pay. The ECJ held that “normal remuneration” must be paid during periods of annual leave and contractual commission payments must therefore be taken into account when calculating holiday pay under Article 7 of the WTD.

The Tribunal held that there was no obstacle to interpreting the WTR so as to ensure compatibility with the WTD, specifically, including commission payments in the calculation of holiday pay and this decision was subsequently upheld by the EAT. British Gas Trading Ltd (“British Gas”) appealed, arguing that it had not been open to the Tribunal to amend the WTR under the guise of interpretation. The Court of Appeal has now rejected this appeal and confirmed what we knew in 2014; when calculating holiday pay, workers are entitled to be paid an amount which reflects the commission they would have earned if not on holiday. However, the court did not find the question easy and noted this, confirming that its view on the answer had waivered. We understand that British Gas intends to seek leave to appeal to the Supreme Court.

We will of course update you as and when this case inevitably proceeds to the Supreme Court for ultimate determination, however, in the meantime some important points for employers to note are:

  • the court made it clear that the wording to be read into the WTR should be restricted to the circumstances of Mr Lock’s case, where he was in receipt of contractual results-based commission;
  • this decision only relates to the 4 weeks’ holiday entitlement under Regulation 13 of the WTR, not the additional 1.6 weeks under Regulation 13A or any additional contractual holiday entitlement; and
  • claims in relation to holiday pay are limited to deductions going back 2 years from the date of an unlawful deduction of wages claim (where there are a series of deductions).

Snell v Network Rail Infrastructure Limited S/4100178/2016 – discriminatory levels of shared parental pay

Employers who offer enhanced maternity packages are not obliged to provide comparable enhancement for anyone taking shared parental leave (“SPL”). However, difficulties are likely to arise if male and female employees are paid differently in relation to the same shared parental leave policy. A Scottish employment tribunal has recently determined the compensation arising out of a discriminatory shared parental pay policy.

Mr and Mrs Snell both work for Network Rail and before the birth of their first child anticipated taking advantage of the new right to take shared parental leave. But when Mr Snell applied for the leave, he was told he was only entitled to statutory pay while his wife would receive full pay in respect of the first 26 weeks’ shared parental leave she took (followed by 13 weeks’ statutory parental pay thereafter). Mr Snell raised a grievance, complaining that payments to mothers taking shared parental leave were at a significantly preferential rate to those made to fathers and that he believed he was being discriminated against because of his sex. Network Rail rejected the grievance and Mr Snell took his case to an employment tribunal.

Network Rail had originally tried to justify its policy on the basis that the correct comparator for Mr Snell was a female partner, as opposed to a mother or primary carer, and that even if the policy put him at a disadvantage it could be objectively justified. This was because it considered the policy to be a proportionate means of achieving its aim of recruiting and retaining women in a male dominated workforce, which is an argument that has been successfully used by employers wanting to offer employees enhanced maternity pay while only providing statutory shared parental pay. Ultimately however, Network Rail decided not to contest the claim for indirect discrimination and Mr Snell withdrew his claim of direct discrimination. There was therefore a finding of indirect discrimination and the focus of the hearing was therefore remedy only in respect of the indirect discrimination claim. Mr Snell was awarded £28,321.03.

This case underlines the importance of employers ensuring that they treat male and female employees the same when implementing enhanced shared parental leave policies. We understand that Network Rail has since reduced its female employees’ shared parental pay entitlement to statutory pay only in line with its male employees, “to ensure fairness”.

Autumn statement: employment implications

The Chancellor’s recent autumn statement contained a few employment related announcements, namely:

  • an increase in the National Living Wage (“NMW”) for those aged 25 and over to £7.50 in April 2017 (the equivalent of £1,400 per annum for a full time worker earning the NMW);
  • plans to spend £4.3m on helping small businesses understand the NMW rules and cracking down on employers who are not paying the NMW; and
  • the removal of salary sacrifice advantages. From April 2017 most salary sacrifice schemes will be subject to the same tax as cash income. However, this will exclude pension and pension advice schemes, childcare, ultra-low emission cars and cycle to work schemes, and there will be certain protections in place for existing arrangements.

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