Employment Law E-Bulletin Issue 53

  • Fulton and anor v. Bear Scotland Ltd (No 2) UKEATS/0010/16 – EAT confirms three month gap breaks series of holiday pay deductions
  • Day v. Health Education England and others [2017] EWCA Civ 329 – Extended definition of ‘worker’ misapplied in whistleblowing claim
  • Taylor review set to order overhaul of zero hours contracts
  • Work and Pensions Committee publishes report on Gig economy

Fulton and anor v Bear Scotland Ltd (No 2) UKEATS/0010/16 – EAT confirms three month gap breaks series of holiday pay deductions

After the much-publicised decision back in November 2014 that ‘non-guaranteed’ overtime should be included in the calculation of workers’ statutory holiday pay, the Fulton and anor v Bear Scotland Ltd case has come before the Employment Appeal Tribunal (“EAT”) again. The EAT has confirmed that a gap of three months breaks a series of deductions for the purpose of bringing an unlawful deduction from wages claim.

In the original case, David Fulton and Douglas Baxter (the “Claimants”) claimed that Bear Scotland Ltd had made unauthorised deductions from their wages by failing to include overtime and other payments associated with their work in calculating their holiday pay. As well as holding that ‘non-guaranteed’ overtime must be included in holiday pay, Mr Justice Langstaff had also said that, for the purpose of bringing an unlawful deduction from wages claim under s.13 of the Employment Rights Act 1996 (“ERA”), a gap of more than three months between any two deductions in the chain breaks the ‘series’ of deductions.

Following the appeal, the case was heard again in the Employment Tribunal (“ET”) which found that most of the Claimants’ claims failed as they did not form an unbroken series of deductions and were therefore out of time. The ET confirmed that it was bound by the original EAT decision.

The Claimants appealed to the EAT. They argued that Langstaff’s decision concerning the three month gap was obiter and non-binding. They argued that the ruling only created a strong presumption that a three month gap breaks a series rather than a ‘hard and fast rule’. The EAT disagreed, ruling that Langstaff’s decision was a binding precedent.

The EAT also found that there was no conflict with the Court of Appeal’s decision in Arthur v London Eastern Railway Ltd which dealt with time limits for bringing claims for unlawful detriment under section 48(3) of the ERA in instances where there had been a ‘series of similar acts or failures’, some within a three month period and some outside. The clear difference between the two tests was acknowledged in that payments or deductions of wages will be made at very specific times whereas acts of discrimination may be part of an ongoing course of conduct which might be consistent or erratic.

Points to note:

This is good news for employers as it brings welcomed clarity on this point. The government had already applied a two-year stop gap in relation to retrospective unlawful deduction from wages claims, but this will also likely significantly reduce the amount workers can claim if they have not taken holiday for periods of three months or more. Claimants are required to issue a fresh claim every three months where there are ongoing deductions, in order to avoid being out of time.

Day v. Health Education England and others [2017] EWCA Civ 329 – Extended definition of ‘worker’ in whistleblowing claim

The Court of Appeal has overturned a decision by the EAT that an NHS employee and trainee doctor was not permitted to bring a whistleblowing claim against his training body Health Education England (“HEE”).

Dr Chris Day (the “Claimant”) was employed as a senior registrar with an NHS Trust after applying to HEE to train in emergency medicine. During his employment the Claimant made a number of allegations about threats to patient safety on account of staffing issues. He then proceeded to bring a claim against both the NHS Trust and HEE on the basis that he had suffered a detriment as a result of his complaints which he claimed were ‘protected disclosures’ under whistleblowing legislation.

The whistleblowing provisions in section 43A to 43L of the ERA protect workers from being subjected to any detriment on the ground that they have made a protected disclosure. A ‘worker’ is defined under s.230(3) ERA as an individual who has entered into or works under a contract of employment or any other contract whereby the individual undertakes to do or perform personally any work or services for the other party in the contract.

The usual definition of worker is extended in relation to the whistleblowing provisions to include a number of individuals who would not otherwise be covered. The definition, under s.43K(1)(a) covers a person ‘who works or worked for a person in circumstances in which -(i) he is or was introduced or supplied to do that work by a third person, and (ii) the terms on which he is or was engaged to do the work are or were in practice substantially determined not by him but by the person for whom he works or worked, by the third person or by both of them’. The purpose of this extended definition is to extend protection to certain agency workers.

The Claimant had argued that he fell within this definition. Conversely, the ET found that whilst the conditions of the first limb were met in that HEE did provide the Claimant’s services to the NHS Trust by way of introduction, the second element was not satisfied since HEE did not substantially determine his terms of engagement. It found that the relationship between the Claimant and HEE was one of training which operated alongside his appointment with the NHS Trust.

The Claimant’s appeal to the EAT was dismissed. The ET had not made a perverse decision in concluding that the NHS Trust, not HEE substantially set the Claimant’s terms. The EAT went further to suggest that, even if the test had been determined wrongly, the opening words of section 43K state that the provision only applies to individuals who do not constitute a worker under section 230(3). He explained that the Claimant constituted a worker for the NHS Trust therefore could not fall within this provision.

The Court of Appeal allowed the Claimant’s appeal and Lord Justice Elias held that an individual can be in a section 230(3) relationship with either the end-user or the person who introduced him to that end-user without preventing him from being a section 43K worker in relation to the other. In this case, although the Claimant was an employee of the NHS Trust this did not prevent him from being a worker for the HEE.

The case was remitted to a fresh ET to decide the preliminary issue as to whether HEE substantially determined the Claimant’s terms of engagements.

Points to note:

This decision is an important reminder of the importance of whistleblower protection. The Court of Appeal took the purpose behind the legislation into account and interpreted the legislation to give effect to this.

Taylor review set to overhaul zero hours contracts

The Matthew Taylor review into modern employment practices, which we last touched upon in issue 51 of the e-bulletin, is set to recommend that workers engaged on zero hours contracts be given the right to move to fixed hours. This follows a move by McDonalds restaurants to offer its 115,000 workers on zero hours contracts the option of moving to fixed contracts with a minimum number of guaranteed hours.

It is reported that, if this right is implemented, employers will be required to respond “seriously” to the request and provide reasons for the final decision.

The review is due to be published later this year so it will be a question of watching this space.

Work and Pensions Committee publishes report on Gig economy

The Work and Pensions Committee has published a report making a number of recommendations to rectify the imbalances that have arisen as a result of the growth of self-employed workers in the ‘gig economy’. As part of this enquiry the Committee heard from the likes of Uber, Amazon and Deliveroo and the individuals they engage.

One of the Committee’s findings was that companies are classifying the individuals they engage as ‘self-employed’ in order to avoid the rights that come with ‘employee’ or ‘worker’ status and the extra costs of National Insurance contributions, pension auto-enrolment and the apprenticeship levy.

The main recommendations of the report are:

  • the equalisation of national insurance contributions made by employers and the self-employed;
  • the encouragement of self-employed to save for retirement; and
  • having worker status as the default position.

The full report can be found on the www.parliament.uk website.

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