Martin Stephen

Published by
Martin Stephen

27th February 2017

Welcome to this month's Employment Briefing. This month we look at: 

  • The status of European Union workers and Article 50
  • Another gig economy case involving Pimlico Plumbers
  • The Trade Union Act 2016
  • Gross misconduct and the need for clearly defined standards and practices
  • Increases in dismissal financial limits.

If you have any questions about any of the topics covered or would like to meet with our Employment team please call Martin Stephen on 0141 248 3434 or email mss@wjm.co.uk

Status of European Union Citizen Workers

The House of Commons voted last month to enable the Prime Minister to trigger Article 50 and begin the formal process of exiting the European Union. The Prime Minister has indicated that she will do so before the end of March.

This has once again opened up the question of what will happen to EU citizens who currently enjoy the right to live and work in the UK. Polling indicates that only 5% of voters in the UK believe that those EU citizens who are already legally resident here should be asked to leave after Brexit. However, the Government has been less forthcoming on the topic. It has refused to state its position without a reciprocal guarantee about the status of British born people living on the Continent.

Estimates suggest that there are around 3 million EU nationals in the UK and, according to figures released pre-referendum, they account for just under 7% of the workforce. They are especially important in areas such as manufacturing, health and social care and retail. It is believed that 75% of EU citizens working here would not meet the visa requirements applied to non-EU migrants and so failure to reach a deal on their status could leave a big hole in the workforce.

The effect of the current uncertainty is already evident. Figures released by the Office of National Statistics this month show that the number of EU nationals in the workforce fell by 19,000 in the last quarter of 2016.

WJM’s employment team believes that the Government should  provide clarity as quickly as possible for employers who are attempting to recruit and retain staff. The sheer number of EU nationals in our workforce makes them of vital importance to our economy and it is essential that their status is confirmed. Employers should stay aware of developments in this area and we will, of course, keep you updated.

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Pimlico Plumbers & Charlie Mullins v Gary Smith

Another month brings another gig economy case. This is an area of the law which is in sharp focus at the moment and the Court of Appeal has issued further guidance here as to the difference between self-employed status and worker status.

The claimant, Smith, worked for Pimlico Plumbers between 2005 and 2011 before he suffered a heart attack. Smith was dismissed by Pimlico shortly thereafter and brought a claim to the Employment Tribunal that he was unfairly or wrongly dismissed. 

Smith had signed two agreements during his time working with Pimlico, one in 2005 and a second in 2009. The 2005 agreement described him as a “sub-contracted employee” whereas the 2009 documents called him a “self-employed operative”. Internally, Pimlico Plumbers considered Smith to be self-employed throughout his time working with them.

These agreements set out the terms of Smith and Pimlico’s working relationship. Smith was required to wear a uniform and drive a Pimlico Plumbers branded van. He was expected to work 40 hours over 5 days per week and he was required to consult with Pimlico before taking holidays. Furthermore, the agreements required him to deliver services personally with no right to sub-contract or delegate.

Perhaps unsurprisingly, given these facts as well as the recent Uber and City Sprint decisions, Smith was held to have the status of worker by the Employment Tribunal. This has now been affirmed by both the Employment Appeals Tribunal and the Court of Appeal. Pimlico Plumbers have suggested that they are considering an appeal to the Supreme Court.

WJM’s employment team says that this is a very important case given it is a decision of  the Court of Appeal. It is likely that it will be cited and relied upon during the forthcoming Uber appeal. It again shows that the courts are willing to look behind the terms of a contract to assess the true nature of the relationship between the parties. The recurring theme in these cases seems to be the operational independence of the so called  “self-employed contractor”. It is increasingly clear that the courts will not accept arrangements where the “employer” holds a significant degree of influence and control  over the contractor’s work.

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The Trade Union Act

It has been confirmed that the Trade Union Act 2016 will enter into force on 1st March. This law was passed in parliament last year and introduces significant reform, particularly regarding the right to strike.

From 1st March, a turnout threshold will apply to all ballots for strike action. For a vote to succeed there must be 50% turnout. An absolute majority of that 50% must support the proposed strike action. In most cases, therefore, if 1,000 people are balloted, 500 must vote and 251 of those must vote in favour if a strike is to go ahead.

It will be slightly different in cases concerning “important public services” (health, transport, education, fire and border security). A 50% turnout will still be required but a vote will additionally have to command the support of 40% of ALL eligible voters. Again, for example, if 1,000 people are balloted, 500 must vote and 400 of those must vote in favour.

Additionally, the Act introduces some further reforms including a requirement that unions must give two weeks’ notice of a strike (shortened to seven days if the union and the employer agree); a requirement for unions to include a summary of the dispute on the strike ballot paper and a 6 month ballot mandate period (extended to 9 months if the union and the employer agree as such).

WJM’s employment team points out that this Act is a significant reform of the operation of Trade Unions and collective bargaining in the UK. The more onerous requirements make it probable that unions will seek different ways of putting pressure on employers in disputes for fear of failing to meet the strike thresholds (e.g. collective refusal to volunteer for overtime). Some Unions have suggested that they will seek to challenge the Act in the courts while the devolved administrations in Scotland and Wales are known not to be fans. Its entry into force may not be the end of the story with this Act and we will endeavour to keep you updated with any developments.

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Adesokan v Sainsbury’s Supermarkets

The Court of Appeal has given its decision in this case which concerned whether an employer could dismiss an employee for gross negligence without notice.

Adesokan had worked at Sainsbury’s for 26 years and held a managerial role with responsibility for 20 shops. Sainsbury’s operated an employee feedback survey which was used to inform company decisions about working environment, pay, bonuses, targets et cetera. Adesokan was made aware of an email sent by a member of the HR team to five of the store managers he was responsible for. The email asked the managers to ensure that their most enthusiastic staff filled it out. This appeared to be an attempt to manipulate the results of the survey to show a better image of Sainsbury’s. Adesokan did ask for the HR representative to clarify the email but he never followed up on this and failed to alert more senior management.

Sainsbury’s later found out about this and, following a disciplinary process, Adesokan was dismissed without notice. Sainsbury’s took the view that he had been grossly negligent and that this amounted to gross misconduct. Adesokan sued for wrongful dismissal.

The Court of Appeal, however, upheld the High Court’s first instance decision and held in favour of Sainsbury’s. They found that Adesokan had been grossly negligent in failing to pursue the matter more thoroughly. They cited sections of Sainsbury’s disciplinary code which stated that gross misconduct included “any other serious breach of procedure or policy that leads to a loss of trust and confidence” and “a breach of our standards and rules that is so serious that it can lead to summary dismissal“. Adesokan’s actions fell within these parameters and it was irrelevant that his actions had not been deliberate or dishonest.

WJM’s employment team believes that this cases shows that gross misconduct will not necessarily be limited to deliberate actions on the part of an employee. These cases will always turn on their own facts and so it is important for employers to have clearly defined standards and practices in place which they can rely upon when looking to dismiss for gross misconduct. It should be made plain to employees in these standards that they encompass omissions as well as acts.

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Increase in Financial Limits

For dismissals occurring on or after 6 April 2017 the statutory limit on a week’s pay rises from £479 to £489 and the maximum compensatory award rises from £78,962 to £80,541.

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The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at February 2017. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.