How Uber could win in the Employment Appeal Tribunal

I spent yesterday sitting in the public gallery of the Employment Appeal Tribunal (if you can call five rows of seats the back of a big room a ‘gallery’) listening to Dinah Rose QC argue that the Employment Tribunal was wrong to find that Uber drivers were ‘workers’ for the purposes of the Working Time Regulations and the National Minimum Wage. It was a great day out!

Back in October I wrote a post headed ‘Why Uber lost’. After listening to Dinah Rose I need to talk about why Uber might win. I should be careful here. I only attended day one of the hearing. The need to earn a living means I can’t watch day two when Jason Galbraith-Marten QC will argue in favour of the drivers. It also has to be said that Dinah Rose has that quality you always want in your barrister – she just sounds like she is obviously right. She picked apart the Employment Tribunal decision in a way that made me very glad that she has never edited an article I have written. Having heard only her (very impressive) arguments, I may well have come away with a skewed idea of how strong Uber’s case is.

The argument was long and detailed, but I think it boils down to this. Minicab drivers have always been accepted as being neither employees nor workers because they do not perform work ‘for’ the minicab firm that ’employs’ them. Instead the firm is the ‘agent’ of the driver, booking work on the driver’s behalf and charging the driver a fee or commission. There was a lot of detail about the law of agent and principal which also drew on the VAT treatment of minicab firms – I don’t envy the EAT Judge (HH Judge Eady QC) the task of picking through that issue when she comes to writing her judgment. The central point, however, was that the disruptive technology used by Uber that allowed this process to be operated on a massive scale did not alter the basic facts of the relationship between the driver and Uber, which is just a glorified minicab firm.

This is a smart argument because instead of presenting Uber as a new form of business that needs a fresh approach when analysing the rights of the drivers who engage with it, it essentially says ‘look, there is nothing new here; this is a minicab firm and the status of minicab drivers is well established’. Time and time again Dinah Rose emphasised that Uber was simply operating the same tried and tested business model adopted by any old minicab company. I’m not entirely sure that Uber would want to see themselves that way, but that’s another issue.

The other main plank of the appeal was the extent to which the Employment Tribunal Judge was prepared to look behind the detailed contractual documents setting out the relationship and consider the ‘commercial reality of the situation’. In Dinah Rose’s argument this was a sloppy approach where pejorative language about clever lawyers and business jargon hid an ignorance of the law of agents and a lack of rigour in analysing the contractual obligations of the parties. This did rather strike home with me. We all enjoyed reading the Employment Tribunal decision which had some colourful language about Uber and some good literary references (I always appreciate a judge who quotes Hamlet) – but on reflection there was perhaps too much colour and not enough precision about exactly what the contractual obligations were.

There is an ongoing debate about the relevance of ‘mutuality of obligation’ when it comes to defining workers. How important is it that a worker is not obliged to accept work from the ’employer’? Under the statutory definition there must be a contract under which the worker agrees to perform work personally for the employer. However someone can be recruited as an Uber driver and choose never to turn their app on and never accept a customer – have they agreed to perform work? The Tribunal held that drivers became workers when they made themselves available for work, but Dinah Rose emphasised that even then they were not obliged to accept a booking and could turn the app off at any time. Where, then, was the contractual obligation to work?

Was the employment judge too ready to ‘step back’ from the specific contractual obligations and look at the ‘reality of the situation’? Perhaps. Even if we get past the agent and principal point (and I hope we do, it’s an area I don’t know much about)  this could become an important authority on the scope of the mutual obligations that are needed to form a worker’s contract.

We can probably expect a decision from the EAT by Christmas (I’m completely guessing here) but I’d be astonished if the case finished there. The losing side will surely take it to the Court of Appeal and I wouldn’t be surprised if a point emerged worth taking to the Supreme Court. We are far from coming to the end of this particular journey.

Posted in Employment status, Uncategorized | Tagged , , | 6 Comments

How much does it cost to defend an ET claim?

Mark Littlewood is the Director General of the Institute of Economic Affairs and yesterday he wrote an article in the Times attacking the HR profession for creating a ‘risk-averse, unimaginative and insipid working environment’. I’ll leave it to others to defend the profession as a whole – but one paragraph in particular caught my attention. When it comes to the cost of dealing with ET complaints, Mark says this:

Individual cases may not be conclusive,  but they can be illustrative. In one recent instance, a worker was seeking to secure £15,000 in compensation. Their claim failed, but the successful employer incurred unrecoverable legal fees of £50,000.

Mark uses this not as an example of ridiculous over-billing by a law firm, but as an illustration of how broken our employment law system is. His point, I think, is that even unjustified complaints can force an employer to spend tens of thousands of pounds defending itself. This creates an incentive for employees to bring spurious claims in the expectation that the employer will throw money at them to persuade them to go away.

This is an old debate and we could go round in circles on it. For what it’s worth I think Mark oversimplifies what leads someone to bring a tribunal claim. My experience, such as it is, is that relatively few people bring a claim as a purely cynical exercise in obtaining a settlement. Most feel genuinely aggrieved at how they have been treated.

What I want to focus on, however, is the specifics of the case. A claiming brought a claim seeking £15,000 in damages and the employer spent £50,000 successfully defending the claim. Frankly, that does seem like a lot of money to spend and I was keen to know more. On Twitter, Mark was kind enough to explain that he had received the details of this case directly from the lawyers concerned and could not therefore give any details – although they are likely to be ‘public soon’.

Fair enough. So let’s think about why a claim that was only worth £15,000 could cost £50,000 to defend.

The first, rather obvious point, is that it doesn’t need to. Legal costs are not compulsory in the Tribunal system; an employer is perfectly free to defend the case without hiring lawyers. However, although I think there are cases when an employer should be able to defend the case on its own, I certainly accept that most employers in most cases will need to take professional advice and will be at a serious disadvantage if they don’t.

But £50,000? That seems rather a lot.

Asking how much a lawyer costs is a bit like asking how much a car costs. If I need a car to do the shopping I can easily spend £50,000 on one, but you might think that was a bit extravagant. Some law firms charge more than others and while, to an extent, you get what you pay for, the expensive city firm you use for your corporate work is not always the best firm to use to defend a run of the mill tribunal claim. Hiring a barrister can be extremely expensive, but can also be an absolute bargain. There is no point in hiring a top QC in a straightforward case and there are many talented advocates who can do a great job for a modest fee.

I’m going to assume in this case that the employer took a deliberate decision to spend £50,000 defending the claim. Surely no reputable firm would simply spring a bill like that on a client without discussing how the preparation was going and what the likely costs were going to be? Because in any tribunal claim there is a decision to be made about how much preparation is appropriate – how many witnesses are needed, what documents should be included in the bundle etc. It may also be important to decide who in the firm will be dealing with the case – how much of the work will be done by a partner and how much by an assistant solicitor? Another decision is whether to challenge the claimant’s right to bring a claim. Should you seek a preliminary hearing to determine whether the individual was an employee or a worker? If the Tribunal rules against you, should you appeal, or concentrate on dealing with the merits of the case?

There is a balance to be struck (depending on the importance of the case as well as the risk and likely cost of losing) between ensuring success and spending so much that a victory feels like a defeat. I would generally argue that if a case is only worth £15,000 if it succeeds, then the resources allocated to defending it should be proportionate to that. If the Bill comes to £50,000 then something has gone wrong. Either the employer has not been paying attention to the costs as they build up, or the lawyers have been taking the employer for a ride.

There may be reasons, of course, why an employer would deliberately decide to spend so much. The case might have implications for the business as a whole. Deliveroo and Uber are in the process of spending (i would imagine) quite a lot of money defending a number of modest claims for holiday pay and the minimum wage. Pimlico Plumbers is taking a disability discrimination claim brought by a plumber to the Supreme Court on the issue of whether or not he is ‘in employment’ rather than simply arguing in the Tribunal that they haven’t discriminated against him.  These cases are not about the value of the individual claims but about the legitimacy of the employer’s whole business model. Of course it makes sense to make a serious investment in fighting those claims.

A number of people on Twitter suggested to me that an employer might choose to spend much more than the value of a claim in order to defend its reputation. That’s a fair point, but I think it is sometimes overblown. Most tribunal claims don’t really have as much of an impact on an employer’s reputation as the employer often thinks. Where the case really does carry that risk, then a good media strategy might be a more cost effective way of dealing with it than throwing money at the case itself.

I’d also accept that an employer sometimes needs to show that it is prepared to fight a case, rather than just agree a settlement, to send a clear message that it is not an easy touch. But again, there is no need to spend an exorbitant amount to do that. I’m not arguing that in Mark’s example the employer should have settled the case rather than spend £50,000 defending it, I’m querying whether defending the claim really needed to be so expensive.

I know that lots of practicing lawyers read this blog, so I would love to hear their views on managing Tribunal costs. Perhaps I am wrong and £50,000 is simply the going rate for defending an unfair dismissal claim these days. If you are an employer with experience of balancing legal costs against the value of claim then please share your experience in the comments section. If you are in private practice, please leave a comment and tell me how much it costs to defend an ET claim and what employers can do to keep the costs at a reasonable level. Feel free to plug your firm!

Perhaps we can get a sense of how useful an illustration Mark Littlewood’s story of a £50,000 legal bill is.

 

 

Posted in Employment Tribunals, Uncategorized | Tagged , , , , | 8 Comments

Employment Tribunal fees have been abolished

Blimey.

I now wish that, when I wrote yesterday’s post on the imminent  Supreme Court ET fees decision, I had sounded rather more confident. Frankly, though, I found it difficult to believe that the Court would really be so bold as to strike down a flagship Government policy – but it has. Employment Tribunal Fees have been abolished.

Whatever side of the employment law fence you sit on, we should first of all acknowledge that this is an astounding victory for the legal team at UNISON.

They began their legal challenge in June 2013 and have lost twice in the High Court and once in the Court of Appeal. I , like many other employment lawyers, thought that they stood only a theoretical chance of winning. It was only when I saw the arguments in the Supreme Court that I thought ‘oh hang on, they might just do this’. Taking the case all the way took dogged determination, and amazing confidence in the face of some pretty negative judicial comment  – but in the end they won through. Moments of utter triumph are rare in professional life and everyone involved deserves to revel in this one.

I won’t try to analyse the reasoning of the case. Look at the timeline of Jermias Prassl –  for a proper legal assessment.  But I do want to make a few points and pose some questions.

First point. Although the Supreme Court mentions EU law and human rights in its judgment, it is important to stress that the outcome is based firmly on British constitutional law. Lord Reed – and its almost as though he wanted to really emphasise this point – referred to MagnaCarta, Sir Edward Coke’s Institutes of the Lawes of England and Blackstone’s Commentaries on the Laws of England as well as case law dating back to the early 20th century.

This is not a case where the policy of the UK Government has been overruled by the EU or the European Court of Human Rights. The Government has simply acted in a way which went beyond the powers granted to it by Parliament. Let’s have no Brexiteer whinging about this.

Second point. The Government might have expected that if it did lose then it would do so on the basis that the system should be reformed because it was now clear that ET fees are having a bigger impact on claims than was intended.  Perhaps they expected that the Supreme Court would suggest a lowering of the fees payable and give the Government a chance to come up with a new system.

Well – no. The Supreme Court’s decision is that the Fees Order was unlawful when it was made and they have quashed it. That means that the Government is not being ordered to abolish the fees – the fees have been abolished! There is no longer any need for claimants to pay a fee to the Tribunal and the Employment Tribunal Service will need to get its act together pretty quickly and change its internal systems to reflect that fact. To its credit is seems that the wheels are already in motion with reports of claimants being told that they are no longer required to stump up a hearing fee

Third Point. In theory, the Government could come up with another system. They could introduce primary legislation spelling out precisely what level of fees could be charged or another Fees Order that complied with the Supreme Court’s requirements on access to justice.

But that’s not going to happen is it? Primary legislation is out of the question. The Government hasn’t got the time – or the majority – to get it done. A new Fees Order would just threaten a new Judicial Review unless there was very careful consideration of a whole range of different potential claims, a very low fee for small claims and a much more generous remission system. Even then the Government couldn’t be certain the new system would withstand scrutiny. They can’t possibly think that it is worth the effort and  – with everything else on their plate – will surely just decide to just move on. Perhaps this is an issue they can revisit after the Brexit dust has settled, but I can’t see fees rearing their ugly head again for a year or two.

 

So now some questions:

  • Since  every single ET fee levied since 2013 has been collected illegally. The Government will need to give the money back. How will that be done? Will people need to apply or will the Government process refunds automatically?
  • What about the employers ordered to pay costs to winning claimants to reimburse them for the fees they were unlawfully required to pay? Will the employer be refunded by the Government? Or will employers have to ask for refunds from claimants once those claimants have been given their refunds?
  • What about claimants who paid the fee but then settled their claims? If they get a refund will the employers who settled be able to recover for that part of the settlement representing the fee? Will they recover it from the claimant or the Government?
  • Will potential claimants who were unlawfully denied access to justice be able to sue the government for the losses caused by their inability to bering a claim? Will they perhaps be allowed to submit late applications to the Tribunal?  How will Tribunals treat those late applications?

Answers to these questions will emerge in the coming weeks and months. In the meantime, the biggest question of all is what will happen to the number of Tribunal claims now that ET fees have been abolished? Will they just bounce back to their 2013 levels? If they do, will the Tribunal system be able to cope? Does Acas have enough conciliators available? Will Richard Dunstan do a graph?*

There are all sorts of issues that will need to be addressed over the coming months. For now, though, UNISON are entitled to sit back and enjoy the biggest single victory in the history of employment law.

 

 

*Rhetorical question. Of course he’ll do a graph.

Posted in Employment Tribunals | Tagged , , | 5 Comments

Supreme Court ready to rule on Tribunal fees

This is a post with a very short shelf life. By Wednesday afternoon it will be irrelevant.

On Wednesday morning the Supreme Court will give its decision in the Judicial Review proceedings challenging the ledreamstime_l_20488717gality of the Employment Tribunal fee system. If Unison’s challenge to the regime succeeds, it will quite simply be the most dramatic judicial intervention in government policy in the whole history of employment law.

Partly for that reason I have always felt sceptical about this challenge. There is a tendency nowadays to conflate something being unfair or wrong with it being illegal. I think you can readily persuade the courts that the employment tribunal fee is bad policy – ill-thought out, unfair and with serious unintended consequences. If you doubt that the fee system has resulted in a dramatic collapse in the number of tribunal claims being brought then you need to read this post by Richard Dunstan (who has documented the impact of fees more thoroughly than anyone I know).

But the issue for the Supreme Court is not whether ET fees are bad policy; the issue is whether they are unlawful. Will the Court really be prepared to go that far?

Well maybe.

Unison’s challenge is possible because Parliament never passed an Act requiring Employment Tribunals to charge a fee. This major change in the way in which employment law works was introduced through secondary legislation. The Fees Order of 2013 was introduced under the Tribunals Courts and Enforcement Act 2007. When a Minister introduces secondary legislation he or she must act within the scope not only of the Act under which the orders or regulations are made, but also in accordance with the legal principles laid down by the courts. Unison argues that Employment Tribunal fees restrict access to justice –  and that a Minister can only introduce an order which does that if the restriction goes no further than is proportionate, given the legitimate aims lying behind the decision.

That argument is based in part on The European Convention on Human Rights, Article 6 of which guarantees the right to a fair trial – and which also encompasses access to justice. it is also based on European Law in so far as the fees apply to rights (such as holiday pay) which derive from EU law. However it struck me that Unison’s key argument before the Supreme Court was that there is a general common law principle that the Minister will not disproportionately restrict access to justice without the explicit authority of an Act of Parliament.

The Government does not seem to dispute that general principle. It is not arguing that the Fees Order was entirely a matter for the discretion of the Minister. The argument is about what ‘restricting access to justice’ actually means. Unison says that if the fee deters claims that should properly be brought before the Tribunal then that is enough. The Government argues that as long as the fees are actually affordable, the fact that people may choose to save their money and not bring a claim does not mean that they are being denied access to justice.

Listening to the arguments, I think the issue that really caught the attention of the Court was the sheer irrationality of paying a hefty ET fee to pursue a very small claim. The Tribunal system was designed for small claims.  Unlawful deductions from wages, for example, may concern very small sums of money that are nevertheless vital to those who have not been paid what is owed them by their employer. But to take a Tribunal case to a full hearing on that issue, the claimant has to fork out £390.

Now the Government argues that if a claimant cannot afford to pay that fee, then there is a remission system which may allow the fee to be waived. But Unison’s point – and I think the Supreme Court was sympathetic to this – is that even if you could technically afford to pay the fee, why would you? It is irrational to spend £390 in the hope of recovering £100 in unpaid wages. All litigation is a risk  – and even if you win the case there is a further risk that the employer will simply not pay. The fee system, Unison say, has denied thousands of individuals access to justice by effectively rendering the pursuit of their claims pointless.

The other main plank of Unison’s case is discrimination. It seems to be accepted that women are disproportionately affected by the higher fees applicable in ‘Type B’ claims (which include sex discrimination) and the issue should therefore be whether the system is a ‘proportionate means of achieving a legitimate aim’ – essentially the same principle of justification being put forward on the access to justice point.

The Court of Appeal held that the fee system was justified despite its disproportionate impact. Will the Supreme Court agree? Listening to the arguments I thought that the Government side was given quite a rough ride by some members of the Court – who did not seem impressed with the lack of thought that had gone into setting the level of the fees, assessing their impact or in setting the criteria that would determine whether an individual qualified for remission. If I were David Barr QC, who appeared for the Government, I would have felt pretty bruised at the end of my submissions. But we can’t take that as an indication of which way the decision will go. I can certainly see the Supreme Court being highly critical of the way in which fees were introduced and the effect that they have had, and yet still deciding that the Government acted lawfully in introducing them.

But it is just possible that the Supreme Court is ready to do something dramatic and rule that a major government policy is illegal. The Court has already shown that it is prepared to put the cat among the pigeons when it comes to developing our constitutional law – think of Article 50 – and a positive result for Unison would open a new chapter in the Court’s willingness to limit the powers of the executive. It would assert the sovereignty of Parliament as expressed in Acts of Parliament as against the power of ministers to shape the law through orders and regulations slipped through with minimal scrutiny and no opportunity for amendment. It would be a very big deal and – bearing in mind the extent to which the Brexit process is likely to rely on ministers introducing secondary legislation – it would have ramifications well beyond employment law.

You can watch the judgment being given on Supreme Court Live at 9.45 on Wednesday 26 July.

Exciting isn’t it?

 

 

 

 

Posted in Employment Tribunals | Tagged , , , | 1 Comment

What about the dependent contractors?

There is much to mull over in the Taylor ‘Good Work’ Review. It proposes some significant changes to employment law that deserve serious consideration. I set out a whole list of them here. But a lot of attention is being paid to a change that, in itself, will have only a cosmetic effect – relabelling workers as ‘dependent contractors’

Here is way the Review puts it on page 35:

Government should retain the current three-tier approach to employment status as it remains relevant in the modern labour market, but rename as ‘dependent contractors’ the category of people who are eligible for worker rights but who are not employees.

There are also proposals for redefining the scope of employees and workers – but I’ll deal with those future posts. Here I just want to concentrate on their change of name and why I think its a bad idea.

First of all let’s be clear that this is not a ‘new’ status. We are not talking about a new category of person previously excluded from employment law who will now gain some new set of rights. This is just about what to call that group of people who are not employed under a contract of employment but who nevertheless qualify for rights such as the National Minimum Wage, or rest breaks and annual leave under the  Working Time Regulations.

I don’t see anything wrong with the word ‘worker’. I certainly don’t see that ‘dependent contractor’ is any better. But my objection is more practical than that. If this change is made, what will that do to the drafting of employment law?

Here’s the problem. Look at the definition of a worker in the Working Time Regulations.

“worker” means an individual who has entered into or works under (or, where the employment has ceased, worked under)—

(a) a contract of employment; or

(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;

and any reference to a worker’s contract shall be construed accordingly

You can see that the term worker covers both employees and people employed under ‘any other contract’ under which they are personally obliged to perform work. The word ‘worker’ does not just apply to those other contracts, it applies to employees too. There is actually no name for the people in the ‘other’ category. They tend to be referred to in the case law as ‘limb (b) workers’.

So here is where the Taylor report goes wrong. it says that it wants to rename those ‘limb b workers’ as dependent contractors, but the legislation doesn’t give them a name at all. Whenever the word ‘worker’ is used, it refers to both employees and this wider (unnamed) category. I’ve picked the example of the Working Time Regulations but the same issue arises under the Employment Rights Act 1996, the National Minimum Wage Act 1998, the Trade Union and Labour Relations (Consolidation) Act 1992 and others.

To introduce the concept of ‘dependent contractor’ – which will not, the Report says, include employees – you would need to have two separate definitions: e.g.

’employee’ means an individual who has entered into or works under a contract of employment

‘dependent contractor’ means an individual who works under a contract…whereby the individual undertakes to do or perform work personally…

Then – whenever a right is set out, you would need to amend what the law says about who qualifies for it. Look at Regulation 11 of the Working Time Regulations:

Weekly rest period

11.—(1) Subject to paragraph (2), an adult worker is entitled to an uninterrupted rest period of not less than 24 hours in each seven-day period…

If we drop the term worker and replace it with ‘dependent contractor’ Regulation 11 would have to look like this

Weekly rest period

11.—(1) Subject to paragraph (2), an adult employee or dependent contractor is entitled to an uninterrupted rest period of not less than 24 hours in each seven-day period…

Basically, every time the current legislation refers to a worker, we would have to change the wording to say ‘an employee or a dependent contractor’. Some poor soul in the Department for Business will have to go through the whole statute book looking at each time the word worker is used and decide whether it needs to be replaced. Perhaps you could come up with some sort of ‘find and replace’ amendment – but why would you bother? What on earth would be the point?

Fundamentally,  why would the world be a better place if the definition of a trade union (section 1 of the 1992 Act) was an organisation:

(a) which consists wholly or mainly of employees and dependent contractors of one or more descriptions and whose principal purposes include the regulation of relations between employees and dependent contractors of that description or those descriptions and employers …

I think this is a rather silly idea that has already had far to much attention.

Let’s never speak of it again.

 

Posted in Employment status, Taylor Report, Uncategorized | 11 Comments

The Taylor Review – the good, the bad and and the cosmetic

It’s easy to pick holes in any substantial piece of work – which is great news for people like me. There is, therefore, plenty in the Taylor Review ‘Good Work’ Report (as it now seems to be called) that I intend to spend much of the summer picking holes in and whinging about (I mean – ‘dependent contractors’ – honestly!).

There is also much in the report that will be of more interest to other people than to me. There are graphs. There is discussion of National Insurance Contributions. There is plenty of stuff about promoting and sharing good practice that I frankly skimmed through. I don’t dismiss these things – but other people can write about them.

What I wanted to see from the review was substantive proposals for actual amendments in employment law – and in all fairness there are plenty of them. Some are a bad idea and some would make very little difference to anyone. But some of the proposals are really progressive and should be welcomed. We can argue about which is which later, but for now here are the proposals on employment law that I take from the report.

  1. Keep the distinction between employees and workers, but rename workers who are not employees ‘dependent contractors’ (Page 35)
  2. Amend the legislation defining employees and workers so that case law principles are reflected in the legislation itself – possibly with supporting secondary legislation  (page 35)
  3. Remove the requirement for workers (I refuse to use the ‘dependent contractors’ term) to have a contract to perform work personally (page 36)
  4. Place more emphasis on control in the definition of worker status (page 36)
  5. Consider taking account of the subtly different definitions of ‘worker’ in the legislation
  6. Retain need for personal service in employment contract
  7. Amend the law on the National Minimum Wage to make it clear that gig-economy workers allocated for through an app are undertaking a form of output work and will not have to be paid NMW for each hour logged on when there is no work available (Page 38)
  8. Treat workers treated as ’employed’ for the purposes of tax status (page 38)
  9. Extend the right to a written statement of terms to workers as well as employees (page 39)
  10. Require written statements to be given on day one of employment (page 39)
  11. Extend written statement of terms to include description of statutory rights (page 39)
  12. Give a stand alone right to compensation if employer has not given written statement (page 39)
  13. Consider increasing the rate of the National Minimum Wage for hours that are not guaranteed by the employer (page 44)
  14. Preserve continuity of employment where any gap in employment is less than one month, rather than one week  (page 45)
  15. Improve the information to be given to agency workers (page 46)
  16. increase the reference period for calculating holiday pay (where pay is variable) from 12 weeks to 52 weeks. (page 47)
  17. Allow holiday pay to be paid on a ‘rolled up basis’ (page 47)
  18. Give agency workers the right to request a direct contract with the end user after 12 months on an assignment (page 48)
  19. Give those on zero-hours contracts the right to request guaranteed hours after 12 months (page 48)
  20. Require employers to set up Information and Consultation arrangements when requested by just 2% of the workforce rather than the current 10% (Page 53)
  21. Require larger employers to report on their overall workforce structure – including requests from zero-hours workers for regular hours (page 55)
  22. Abolish the ‘Swedish Derogation’ which allows agencies to avoid matching end user pay by employing agency workers in a way that allows for pay between assignments (Page 59)
  23. Give HMRC enforcement powers in respect of sick pay and holiday pay as well as minimum wage issues (page 59)
  24. Allow claimants to being a claim to ET (without fee) to determine employment status as a preliminary issue prior to substantive claim (page 62)
  25. Place burden on employer in ET claim to prove that claimant is not an employee / worker (page 62)
  26. Give BEIS the power to pursue the enforcement of Tribunal awards – i.e. pursuing the actual award, not just imposing a penalty  for non-compliance (page 63)
  27. Allow ET to impose aggravated penalties on employer who does not apply  ET ruling on employment status to similar groups of workers (page 63)
  28. Allow uplifts in compensation where employer commits subsequent breaches of employment law based on similar working arrangements to those already dealt with by ET (page 64)
  29. Consider allowing flexible working requests to cover temporary as well as permanent changes to contracts (page 95)
  30. Reform SSP to make it a proper employument right available to all workers – accrued in line with length of service (page 99)
  31. Give individuals a right to return to work following  long-term sickness absence (page 99)

Some of these proposals are ‘ready to go’ and others would obviously require a great deal of work to turn them into something specific. For example, it’s all very well saying we need a clearer definition of who is an employee and who is a worker – but what would those definitions actually look like?

I plan to look at a number of these proposals in more detail over the summer and will, as ever, be blogging and Tweeting my thoughts. But before I start whinging and carping (and I will be doing a lot of that), it is worth acknowledging that this Report is a more substantial piece of work than the various leaks over recent days suggested. There is a lot of substance here that will form the framework of the employment law debate for the foreseeable future.

Good work.

 

Posted in Employment status, Taylor Report, Uncategorized, Zero Hours COntracts | Tagged , , | 2 Comments

Employment Status – in praise of fuzziness

As we await the publication of the Taylor Review of Modern Working Practices, one issue that is being discussed is whether the definitions of employee and worker need to be simplified and/or clarified. There is a general feeling that that the current distinction between the two is rather vague and fuzzy – as is the distinction between those who are either workers or employees and the ‘genuinely’ self-employed. Most people instinctively feel that vagueness in legal definitions is a bad thing as it leads to uncertainty. I’m not convinced.

Sarah O’Connor, the employment correspondent for the Financial Times, wrote recently about the need for clarity – arguing that you can’t expect people to ‘plough through reams of case law to figure out if they have been misclassified’ and that ‘there is little point in having employment rights if no-one really knows to whom they apply’.

Its certainly a fair point and it chimes with the Law Society’s submission to the Taylor review in which it urged the clarification of employment status.To its credit the Law Society puts its money where its mouth is and actually proposes new definitions of worker and employee that it feels would lead to greater clarity and understanding. Here is their proposed definition of an employee:

A person in paid work is an employee if:

  1. (a)  they provide work under a contract of service or apprenticeship, whether express or implied; and
  2. (b)  the contract places an obligation on the employer to provide work, and the individual to accept and execute allocated work personally; and

(c) the employer retains control over how the work will be carried out, for example:

  1. where the work will be executed,
  2. how activities will be performed,
  3. the hours during which the work is to be performed; and

(d) the contract provides for regular remuneration by the employer regardless of the level of profit enjoyed by his business.

Be honest. Do you read that definition and think ‘Oh it all makes sense now!’? This attempt simply shows that clarifying employment status is easier said than done. Personally I don’t see how taking principles from leading cases and bunging them into the statute helps us very much. The Law Society’s proposed new definitions don’t really add anything. In fact, look at their proposed definition of a worker:

A person in paid work is a worker if they work (or worked):

  1. (a)  under a contract of employment (or other contract) whether express or implied; and
  2. (b)  the contract places an obligation on the worker to personally perform allocated work or service in a manner stipulated by the employer; and

(c) the contract does not provide that the worker will work exclusively for the employer; and

(d) the status of the employer is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the worker.

It seems to me that the line about performing work ‘in a manner stipulated by the employer’ is rather restrictive and  would actually have the effect of narrowing the scope of the law. Im sure that is not what is intended but it does show that coming up with a simple and clear definition is far from easy.

The essential problem with employment status is not that the definitions are vague, but that there is an incentive for employers (using the term in its broadest sense) to seek to limit an individual’s rights by drafting a ‘self-employed’ contract when in practice it is no such thing.

If we come up with new statutory definitions then that will simply give those employers a clearer target to aim at. If we specify that an employment contract is one which ‘provides for regular remuneration by the employer regardless of the level of profit enjoyed by his business’ – as the Law Society proposes – then some employers will draft clauses providing for pay to be reduced when the employer makes a loss. We would then see a whole new line of cases looking at how much variation in pay would take the contract outside the definition of employment and people would start arguing for the need to clarify the law all over again.

What we need is a system in which the Tribunal is able to cut through the terms drafted by lawyers and look at the reality of the situation. That’s what they try to do already – but they are not free to put aside the written terms of the contract without good reason.

I don’t think it should be a contractual analysis at all.

Where one person sells their labour to another then I think employment law should apply to that relationship unless the ’employee’ can be said to be in business on their own account. Whether they are genuinely running their own business should be a matter for the tribunal to decide, with a key factor being whether they seek to provide their services to the world at large or whether they depend on a particular ’employer’ to make their living.

I don’t see the need for a difference between employee and worker status – let’s just give full employment rights to everyone who works for someone else. Unfair dismissal is a pretty limited right anyway and redundancy payments are modest. I don’t see that this expansion of rights would create any great hardship for employers – and it would eliminate a lot of confusion. While we’re at it we could align tax law with the new definition and remove the incentive for many employees to play along with the rather artificial notion that they are self-employed.

Coming up with a new ‘clear’ definition of employment status is a hiding to nothing. Whatever definition is arrived at will simply create new and profitable areas of doubt and uncertainty. Removing the definitions would limit the scope for employers to draft their way out of employment law and free tribunals up to do justice between the parties. Clarity and certainty sound like good ideas, but in this context they are a mirage and there is no point in chasing them. Let’s go for fuzziness instead.

Fuzzy, but fair.

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