The Strikes (Minimum Service Levels) Bill

Last autumn the Government introduced the Transport Strikes (Minimum Service Levels) Bill. That Bill never even made it as far as its first debate in the Commons because yesterday it was replaced by the Strikes (Minimum Service Levels) Bill. Can you spot the difference?

The first Bill applied to ‘specified transport services’ (without actually specifying them), but the new Bill is much wider. As well as transport, it also applies to health services, fire and rescue, education, the decommissioning of nuclear installations (and management of radioactive waste and spent fuel) and border security.

What does the Bill do? It gives the Secretary of State at BEIS the power to issue regulations specifying minimum service levels that will apply in the event of a strike taking place in any one of those sectors. An employer facing a strike covered by those regulations can then give a ‘work notice’ to the union identifying the employees that it needs in order to meet the service levels required. When a work notice is given the union must then take all reasonable steps to ‘ensure that all members of the union who are identified in the work notice comply with the notice’. If it fails to do so, then the strike is unlawful.

This Bill is less complex than the Transport Strikes Bill it is replacing. The Transport Strikes Bill had provisions allowing employers and unions to agree minimum service levels – with the Central Arbitration Committee required to step in and make a determination if no agreement was reached. The Secretary of State could issue regulations, but these would not apply if there was an agreement or a CAC determination.

In the new Bill, all that has gone. The Secretary of State has to consult before issuing Regulations and the implication is that he may not feel the need to do so in relation to services where an agreement is in place – but the power to make the Regulations is not limited.

The Secretary of State can issue Regulations relating to minimum levels of service but there are no criteria or guiding principles setting out how that minimum level of service is to be determined.  The Bill refers to minimum – as opposed to minimal – service levels. There is nothing whatsoever in the Bill that indicates what a minimum service level will be.

While the Government has been emphasising the need for minimum safety levels to be in place when there are strikes affecting key public services, there is no mention of safety anywhere in the Bill. I suspect that there would be some public sympathy for a rule that some level of emergency service should still be maintained when ambulance workers or firefighters go on strike. I’m not sure how volatile industrial relations in the world of decommissioning nuclear power plants is, but I can get behind the idea that a strike that led to an actual meltdown would be undesirable. Nothing in the Bill itself, however, limits the restriction on the right to strike to these emergency situations. The fact that the Bill also covers education makes it clear that the Government is thinking about more than public safety when it comes to limiting industrial action.

So regulations could be made in relation to teachers’ strikes aimed at making sure that schools retain a skeleton staff so that vulnerable children are taken care of. But they could also go much further than that – for example, preventing any interference with GCSE assessments or even the cancellation of classes. Similarly there is nothing to stop the Secretary of State from preventing any transport strikes that interfere with rush hour or result in any hospital appointments being cancelled.

This is bad lawmaking. The Government is granting itself sweeping powers while claiming that it only intends to use them for a limited purpose. This allows it to sidestep any debate about how the tension between the right to strike and impact that strikes have on public services should be navigated. The Bill has yet to be debated and there are many opportunities to amend it as it progresses through its Parliamentary stages. Surely a key issue that needs to be addressed is the criteria that will be used when setting out minimum service levels. The Bill currently gives a blank cheque to the Secretary of State and I don’t see how that can be sustainable.

Posted in Industrial action, trade unions | Tagged , , , | 1 Comment

The problem with P&O – when ignoring employment law is ‘worth it’

I think most employment lawyers would have had the same reaction as me when they saw the news about P&O sacking 800 ferry workers without notice or consultation. First you see it as an outrageous breach of even the basic requirements of employment law. Then you think ‘Oh hang on, isn’t there something in the legislation excluding people who work on ships? Is it next to that bit about share fishermen?”

As it turns out I think that the ferry workers are going to be covered by UK employment law. The exclusion of mariners applies only to British registered ships where the employees do not have a close connection with the UK. If crew members essentially work out of Dover or Hull I think it is pretty clear that UK employment rights apply to them. There might be more room for them to argue that the duty to inform the Secretary of State of the redundancies does not apply if the employees’ work on ships registered to other countries, but that is a matter between P&O and the Government – it doesn’t affect the position of the employees who have lost their jobs.

The truth is that P&O has chosen not to even try to comply with UK employment law. Mass dismissals for redundancy without notice or consultation will mean that individuals with more than two years’ service will have been unfairly dismissed. There will also have been a breach of the obligation in S.188 of the Trade Union and Labour Relations (Consolidation) Act 1992 to consult with employee representatives at least 45 days in advance of any dismissals taking effect. Of course in some cases an employer can argue that the urgency of its position means that such consultation cannot take place and that the dismissals are fair. But there is no serious suggestion of that being the case here. The fact that P&O had begun lining up replacement crew before announcing the redundancies is basically enough on its own to scotch that defence.

P&O know this. They knew when they took the decision to behave in this way that they would have to pay out compensation to employees. Clearly they have decided that the amount they save as a result of this exercise will outweigh by some margin the amount of compensation they will have to pay. I am sure that settlement agreements will already be in the pipeline.

A lot of the commentary I have seen is that this case emphasises the need to ‘ban’ the practice of fire and rehire – a much more catchy phrase than “dismissal and reengagement” which is what I was brought up calling it. In particular many have referred to the private members Bill proposed by MP Barry Gardiner – the Employment and Trade union Rights (Dismissal and Reengagement) Bill. This shared the fate of almost all private members bills in that it was “talked out” in Parliament and failed to get a second reading in the Commons.

But that Bill would not really have changed the calculus for P&O in this case. Remember that what P&O did was already illegal under out current law – and they did it anyway. Barry Gardiner’s Bill was focussed on employers seeking a variation of contract backed up by the threat of dismissal. P&O missed that stage out and went straight to the dismissal itself. They aren’t even, as I understand it, offering reengagement.

The P&O situation highlights a feature of UK employment law that is often under appreciated, but is striking for many who come to the UK from some other jurisdictions. UK employment law seeks to punish employers who act in breach of it – but does not stop them from doing so. If an employer makes the calculation that the financial consequences of ignoring the law are outweighed by the business benefits of doing so then it is free to go ahead.

Sometimes of course an employee can get an injunction preventing the employer from acting in breach of a contract of employment. We sometimes see cases from NHS consultants who are enforcing particularly tightly drafted disciplinary or conduct procedures, but this is not really an option available to ‘normal’ employees. More recently we have seen an injunction obtained by the Trade Union USDAW preventing Tesco from dismissing a number of employees and offering them new contracts on less favourable terms. I can’t stress enough however how unusual the facts of that case were. In a previous deal Tesco had awarded those workers an additional payment as an incentive to agree to a restructuring programme and had given them assurances that this would be a permanent entitlement – a benefit ‘for life’. When Tesco sought to terminate the contracts of those workers and offer them new contracts without that payment, the High Court granted an injunction preventing the dismissals. Tesco’s guarantee that the payments would be ‘for life’ created an implied term that the contracts would not be terminated in order to get around that obligation. I don’t think we can really use the USDAW case as a spring board for injunctions preventing employees from being dismissed in breach of their statutory rights.

The problem of employers calculating that they can afford to disregard employment protections is not a new one and is not confined to the UK. In 1997 the closure of a Renault factory in Belgium caused major controversy. It was announced by the French Chief Executive in a press conference at the same time as the Works Council were informed – making it clear that there was no room for negotiation. The fact that there was no mechanism for preventing the closure led to a proposed EU directive on informing and consulting employees which had at its heart a provision which rendered business decisions null and void if they were implemented in breach of the obligation to consult. This met fierce resistance from the employer’s lobby (I’m speaking from memory here, as I was part of that lobby at the time). A blocking minority was marshalled against the directive – led by the UK under a labour government. Deadlock was only broken when the provisions on remedy were dropped. As a result we now have the Information and Consultation of Employees Directive 2002 which only requires ‘adequate sanctions’. That is implemented in the UK by the Information and Consultation of Employees Regulations 2004 which are so weak that they are largely ignored. They don’t even attempt to implement the basic requirements of the Directive and it was always a puzzle to me that they were never legally challenged. I’m sure the trade union movement had its reasons.

Anyway, the result is that UK employment law concentrates on providing some compensation to employees whose rights have been ignored, rather than ensuring that employers comply with the law in the first place. The only real way of preventing employers from occasionally choosing to ‘do a P&O’ is either to provide punitive remedies that are linked to the amount the employer hopes to save by the exercise, or to require major job losses to be cleared in advance by, for example, the Central Arbitration Committee – with any dismissals being deemed to be ineffective until that clearance is given. The current Government is obviously going to do nothing in that direction.

In the meantime, the best we can do is bear in mind, when making our travel arrangements, that other ferry services are available. Maybe we can show that P&O’s calculations were flawed after all.

Posted in Compensation and Remedies, Redundancy Consultation, trade unions, Uncategorized | Tagged , , , | 3 Comments

End of the Road for Uber?

One of the things I like about the Supreme Court is its lack of grandeur. People often associate the English legal system with all manner of flummery – wigs, gowns, archaic language, soaring rhetoric  and elaborate ceremony. You get none of that in the Supreme Court. Even when it is sitting in its building on Parliament Square it takes a refreshingly down-to-earth approach. In lockdown, with  arguments being conducted from the various homes and offices of the participants, it is even more low key. You get clever people debating the law in a respectful and civilised manner – followed by a carefully reasoned decision. It’s lovely.

Take the announcement of the Uber decision on Friday. No fanfare, just Lord Leggatt sitting in front of what appear to be his dining room curtains saying ‘welcome to the Supreme Court’ – it makes you proud.

Despite the low production values, Friday’s decision in the Uber case was a real blockbuster. There is often a risk with much anticipated Supreme Court decisions that they will shy away from the big questions we are all interested in and focus on something that is specific to the case in front of them. My worry in this case was that it would end up turning on some aspect of agency law. But no. this is the new leading case on how you determine worker status. It gives the new starting point for that assessment and will now be quoted every time a Tribunal has to look at the issue.

The headline point is that when you are deciding whether a particular individual is a worker or not, you do not start with the contract and see whether that is the sort of contract a worker would have. Instead you start with the statutory provision – for example the right to the minimum wage – and see whether they fall into the statutory definition of a worker ‘irrespective of what had been contractually agreed’. Whether or not an individual is a worker is primarily a question of statutory interpretation not contractual interpretation.

Lord Leggatt points out that the modern approach to statutory interpretation is to look at the purpose of a particular provision and to interpret it, so far as possible, in the way which best gives effect to that purpose. In this case the purpose of the legislation being considered was to

‘protect vulnerable workers from being paid too little for the work they do, required to work excessive hours or subjected to other forms of unfair treatment (such as being victimised for whistleblowing).’

It is the vulnerability that is key. Some contractors are in a position to negotiate their own terms with their clients. Others are in a more subordinate position – dependent on the client for whatever work is offered to them. Given the statutory need to protect these individuals, it is clear that you cannot take the written contract as the starting point in determining whether they fall within the definition of “worker”. It is the very fact that the employer is in a position to dictate the terms of the contract that means that a statutory right to a minimum wage, a limit on working time or a right to paid annual leave is needed. Here’s a good bit from Lord Leggatt’s decision:

‘The efficacy of such protection would be seriously undermined if the putative employer could by the way in which the relationship is characterised in the written contract determine, even prima facie, whether or not the other party is to be classified as a worker. Laws such as the National Minimum Wage Act were manifestly enacted to protect those whom Parliament considers to be in need of protection and not just those who are designated by their employer as qualifying for it.’

I don’t know how you work, but If I’d written that paragraph I’d have taken a break and had a biscuit afterwards to reward myself.

The key overarching issue in determining whether or not the drivers were workers was whether they were in a position of subordination and dependence in relation to Uber. Lord Leggatt emphasised that the ‘touchstone’ of that subordination and dependence was the degree of control exercised by Uber over the work and service of the drivers – the greater the control, the stronger the case for classifying the drivers as workers.

Lord Leggatt then set out the factors that indicated that the extent of the control exercised by Uber did indeed create the subordination and dependence that justified that the Tribunal’s conclusion that the drivers were workers. I won’t go through them. But it strikes me that what was going on here was that Uber was trying to have its cake and eat it too. On the one hand it needed to ensure that those who took a ride with them enjoyed a good experience, that the price was appropriate, the driver behaved well, the car was of a certain standard and the route taken was efficient. On the other hand it wanted to pretend that it wasn’t providing this service at all – it was just acting as an intermediary giving individuals running a driving business the opportunity to find customers. Trying to hold these two contradictory approaches together led to some extraordinary contortions in the documentation it produced. And of course occasionally – particularly when it wanted to boast to regulators about how many ‘jobs’ it was creating – the mask slipped and the true nature of the relationship between Uber and its drivers became clear.

Throughout this case we have seen that the various contractual documents drafted by Uber have done them no favours at all. They were just too clever by half. Intricate and impenetrable, they set out a relationship between the parties that bore no relationship to reality. Asking the Supreme Court to give primacy to such documents was always a losing strategy (easy to say that now of course, but still, it’s true).

The result was that Uber drivers were workers. They were entitled to paid annual leave and – most importantly – to be paid the national minimum wage. Lord Leggatt’s judgment is now the first place to go when considering worker status. Could the same approach also apply when considering whether someone is an employee rather than just a worker? Maybe – though a contract of employment was a recognised ‘thing’ before statutory employment rights were created. Rights given to employees might still need to start with an analysis of whether the individuals relying on them were employed under that sort of contract – but that is an issue for a future case.

Working Time and the sheer scale of Uber’s arrears

Back to Uber. Crucially the Supreme Court, as well as finding that the drivers were workers, also upheld the Tribunal’s finding that a driver who logged on to the app was working even before a job was allocated. Uber had claimed that having the app switched on implied absolutely no obligation on the driver’s part to accept work – but were not helped by the fact that their Welcome Pack for drivers referred to logging on as ‘going on duty’. It was clear that Uber regarded drivers who had the app switched on as under some sort of obligation to accept trips – even if they could decline individual requests.

The finding on working time is, surely a killer blow. It means that every time one of Uber’s 40,000 or so drivers has had the app switched on, they have been entitled to be paid the minimum wage for however long they remained logged on. The potential for back-pay claims must be enormous.

Uber’s reaction so far has been almost nonchalant. The Guardian quotes Janie Heywood of Uber as saying:

“We respect the court’s decision which focused on a small number of drivers who used the Uber app in 2016. Since then we have made some significant changes to our business, guided by drivers every step of the way. These include giving even more control over how they earn and providing new protections like free insurance in case of sickness or injury.”

The idea that this case was all about a small number of drivers on an old set of terms and conditions just won’t wash. Uber did not lose this case on some technicality about their 2016 documentation. The Courts have found that Uber’s business model means that its drivers are workers. That position isn’t going to change by tweaking the wording of their policies. And quite what difference a free insurance policy is supposed to make is beyond me. Are they really going to brazen this out? Pretend that they can carry on as normal and see how many drivers actually have the nerve – and the resources – to take them on?

Surely HMRC must step in. Now that we know for sure that Uber drivers are workers, compliance officers can set about the task of assessing whether or not Uber has complied with their obligations (shouldn’t be tricky – they clearly haven’t) in respect of the minimum wage and set about calculating the amount of arrears that are due. They should then issue what might be their biggest ever Notice of Underpayment – plus a penalty of up to £20,000 per worker. There should be no excuses. This is a massive breach of the minimum wage law. If HMRC doesn’t act, then how will it explain its decision to pursue smaller employers making genuine mistakes about how the minimum wage is calculated?

One argument that must not be allowed to gain traction is that Uber’s liability has arisen as a result of some unexpected legal quirk – that they are victims of a complex or unclear law. Uber lost this case in 2016 and it is only their repeated appeals that have kept the process going this long. The complexity of the case arises from their own practice of shrouding a straightforward worker relationship in a mesh of overcomplicated legal verbiage bearing no relation to the facts on the ground – and clearly intended to dodge the obligations that other employers have to bear.  Their legal arguments have reached the end of the road.

Time to pay up.

Posted in Uncategorized | Tagged | 2 Comments

Is the Government about to rip up workers’ rights?

Last night the Financial Times reported that the Government is planning a post-Brexit overhaul of the labour market that would involve ‘ripping up’ workers’ rights ‘enshrined in EU law’. Specifically:

The main areas of focus are on ending the 48-hour working week, tweaking the rules around rest breaks at work and not including overtime pay when calculating some holiday pay entitlements, said people familiar with the plans.

Before we get carried away, we should remember what stage these proposals are at. We are overdue an Employment Bill and officials in BEIS are clearly working out some proposals to put to Ministers. It seems that they have been trying to gauge reaction in the business community to some of the possible changes – presumably that is where the FT is getting its information. There is no formal government proposal as yet.

However I have written before about the particular significance that some Tory MPs attach to the Working Time Regulations. Essentially they feel that the EU duped them by pretending that the Working Time Directive was a health and safety measure when in reality it was about (the horror!) improving employment rights. We don’t need to revisit that debate, except to acknowledge that if the next Employment Bill did include a measure ‘ending the 48 hour week’ there would be lots of Conservative MPs who would be enthusiastic about that.

But is such a change even possible? Didn’t the Government, in its deal with the EU, sign up to ‘level playing field provisions’ preventing them from reducing employment rights in this way?

Well, up to a point.

In fact, when it comes to employment law the EU-UK Trade Agreement is not very prescriptive. It specifically acknowledges that both parties are free to set their own policies and priorities when it comes to employment law. Then, at Article 6.2, it says this:

3. A Party shall not weaken or reduce, in a manner affecting trade or investment between the parties, its labour and social levels of protection below the levels in place at the end of the transition period, including by failing to effectively enforce its law and standards.

So a change in employment law is only prohibited if affects ‘trade or investment’. A change that doesn’t clear that bar is perfectly fine – even if it would not have been possible while we were actually bound by EU law.

Even if you take the view that a particular reform would affect trade, this doesn’t affect the legality of the measure in the way that we were used to when the UK was subject to EU law. To cause an issue, the change would have to be serious enough that the EU Member States thought it was worthwhile to invoke the dispute resolution mechanisms set out in the Treaty. What is more, when it comes to labour rights, that mechanism is limited to consultations involving an independent panel of experts (see Article 6.4) There is no recourse to the arbitration tribunal.

As it happens, I think the wholesale repeal of the Working Time Regulations probably would be a big enough step to cause difficulties with the EU. I don’t think that is a realistic option. But excluding overtime from the calculation of holiday pay strikes me as just the sort of change we can expect. And I really don’t see the EU kicking up a fuss if the record-keeping requirements in the Working Time Regulations are dispensed with. As far as I can tell, they are largely ignored anyway.

The Government has been swift to deny that it is planning to undermine workers’ rights. Business Minister Kwasi Kwartang Tweeted in response to the FT article denying any intention of rowing back on workers’ rights.

Well, of course, he would say that. When Labour was in power it always insisted that any improvements to workers’ rights were not a burden on businesses but were designed to help them be more competitive. I’m sure any change introduced by the Conservatives will employ the same sort of sleight of hand. Overall, the reforms will be pitched as improving the freedom for both sides to organise work in the way that suits them best. And it might well be that any rowing back of EU employment rights will be set off against improvements elsewhere. The Conservative manifesto promised more leave for carers and redundancy protection for new parents. It’s perfectly possible that the Employment Bill, when it comes, will be seen as a net improvement in workers’ rights.

But we have to acknowledge that we are in a different system now. Changes to employment law can no longer be legally challenged on the basis that they are not consistent with a Directive. This gives the Government quite a lot of scope to make important changes to employment law that will be significant for us here in the UK, but not dramatic enough to trigger a dispute with the EU. What we will see when the Employment Bill is eventually published is how far the Government is willing to test the boundaries of the trade deal.

Buckle up.

(Oh and as it happens, I am holding a webinar on 21 January looking at the prospects for employment law in 2021. I’ll be looking at the impact of Brexit, the Government’s outstanding employment law commitments and some of the key cases coming before the Supreme Court – you can buy tickets here)

Posted in Uncategorized | 4 Comments

Early Retirement and the Exit Pay Cap

Well this might seem a bit niche. But if you’re in the public sector – especially local government – there is one major issue that you will be concerned with. That is the introduction of a £95,000 cap on public sector exit payments.

It isn’t something that strikes most people as controversial – who cares after all if senior executives are no longer given overly generous redundancy payments?  The maximum statutory redundancy payment is around £16K so anyone getting just under six figures is still doing pretty well.

The crucial point however is that included in the cap is what is known as a ‘pension strain’ payment. This is a payment made by an employer to a pension fund to cover the additional costs of an employee who qualifies for enhanced benefits when taking early retirement.

For example, in the Local Government Pension Scheme (LGPS), an employee who is made redundant over the age of 55 is entitled to an unreduced pension – they essentially get the pension they would have been due if they were at retirement age. The cost of that benefit is not covered by normal pension contributions. Instead the pension fund charges the employer an extra sum to cover the cost. This is the ‘pension strain’ payment and it is this payment that is caught up in the £95,000 cap.

And that is a problem because pension strain payments are very expensive. It is not unusual for them to be well in excess of £100,000 – even for middle ranking employees. If you put the payment alongside statutory and contractual redundancy payments, the cap presents a serious problem for any local authority looking to make redundancies affecting employees who are 55 or over.

So if the cap is to be brought in, it is obvious that the LGPS needs to be changed first. Essentially the pension entitlement of those being made redundant over the age of 55 needs to be reduced. You won’t find that fact highlighted in the news coverage of this issue, but for local government at least this is far and away the most important result of capping exit payments.

Quite rightly, therefore, the Ministry for Housing, Communities and Local Government is consulting on changes to the pension scheme. It proposes that the pension strain cost should be capped at a level that allows the employer to comply with the £95K limit. As a result the employee’s pension will be adjusted in line with the amount the employer is paying. The scheme will be made more flexible so that the employee can make their own payment into the fund to secure additional pension. I think the government may be overestimating how many tens of thousands of pounds employees will have available for this purpose, but that’s a separate issue.

Now it should be obvious – absolutely obvious! – that the cap on exit payments should not be brought into force before the necessary changes to the pension scheme have been made. It would be grossly irresponsible to do otherwise. The MHCLG consultation runs until November the 9th and – rather oddly – consultation on the already published draft Regulations amending the scheme in line with that consultation runs to December 18th. Even assuming a level of speed and efficiency rare in government circles, that suggests that any change to pension entitlement is unlikely to take effect before the end of the year.

Nevertheless, the Government has brought the Restriction on Public Sector Exit Payments Regulations 2020 into force with effect from 4th November. This is a baffling decision and I think the government will come to regret it.

There is no transition period. From 4th November it will be unlawful for a local authority to make an exit payment in excess of the cap. That will be so even if an employee was given notice of dismissal three months earlier.

So what happens to pensions in this limbo period between the cap coming into force and pension scheme being changed? My view is that this is not the employee’s problem. The entitlement of a redundant employee aged 55 or older is set out in Reg 30(7) of the Local Government Pension Scheme Regulations 2013. That provides that such an employee ‘is entitled to, and must take’ an immediate pension ‘without reduction’.

The pension strain payment is dealt with by Reg 68(2) of the LGPS Regs. That says that the ‘administering authority’ – the local authority operating one of the LGPS pension funds – may require the employer to make additional payments to the fund as a result of the employee’s retirement benefits becoming ‘immediately payable’.  

Here is the key point. The employee’s benefits are not dependent on the pension strain payment actually being made. That, after all, is why the government is having to consult over their proposed changes to the pension scheme. The fund is required to charge the employer for the additional costs caused by the employee’s enhanced entitlement, but that entitlement comes first.

So with the cap in place – and before the rules of the pension scheme are changed – the employer is in something of a quandry. It is faced with a request from the pension fund made under Reg 68(2) which is likely to be for a sum that it is legally prevented from paying under the Exit Payments Regulations. My reading, for what it is worth, is that the employer simply has to say to the fund ‘sorry, but we are only legally allowed to pay you this much’. The fund will then have to worry about the shortfall in the funding of the pension that this causes. Not a satisfactory position of course – but not the employee’s problem.

The trouble is, the Government does not seem to see it that way.  The Minister for Local Government has written an extraordinary letter to the chief executives of administering authorities telling them that they will have to limit the pensions paid to employees being made redundant. There is no getting around the need to quote the key paragraph in full:

“In the meantime, the recommended course of action for an administering authority to act consistently with its legal duties is that the provisions of Regulation 30(7) are subject to the cap and so the provisions of Regulation 8 of the 2020 Regulations and Regulation 30(5) of the LGPS 2013 Regulations should be engaged. The Government’s view is that LGPS members in that position should be able to elect to receive an immediate but fully reduced pension or, if they do not so elect, a deferred pension plus a lump sum equal to the capped strain cost.”

The fundamental error in this paragraph is the assertion that the provisions of Reg 30(7) (the entitlement of a redundant employee over the age of 55 to an unreduced pension) are ‘subject to the cap’.

They are not.

The cap is a cap on payments made by an employer to an employee in respect of their leaving employment. The payments included in the cap are listed in Regulation 5. That list does not include payment of pension – whether enhanced or otherwise – from the pension fund to one of its members. Indeed how could it? By no means every local authority operates its own pension fund. Typically the largest local authority in a particular region administers a fund and the surrounding local authorities are ‘participating employers’. So in most cases pension payments are not made by the employer at all. Even where the employer is the administering authority it is clear that the pension payment is not being made in its capacity as employer.

More fundamentally however, the actual pension payments to the employee are modest and spread over time. The employer’s pension strain payment may over £95,000 but it will usually be some years before the actual pension paid to the employee will add up to that amount.

So on what possible basis can the government claim that payments made under Regulation 30(7) are subject to the cap? It is nonsense!

The Minister then says that Regulation 8 (of the Exit Payment Regs) ‘should be engaged’. We need to look at what that says, but I suggest you have a cup of tea first.

I’ll wait….

Right. We need to set out Regulation 8 in full because I have no idea how to summarise it. Here it is:

8.—(1) Where these Regulations prevent a relevant authority from making an exit payment of the type described in regulation 5(2)(b) which exceeds the exit payment cap in respect of a person, the relevant authority must, as an alternative, make to that person or in respect of that person to another person, a payment of an amount not exceeding the amount of that exit payment.

(2) This regulation is subject to regulation 3(a).

Soak it up. Let the words flow over you.

If you are left thinking ‘what does that mean’? then join the club.

The reference to Reg 5(2)(b) is a reference to the pension strain payment that we have been discussing. The Regulation seems to say that if an employer is prevented from making a payment because it exceeds the cap then it must ‘as an alternative’ pay an equivalent sum either directly to the employee or to someone else – presumably the pension fund – ‘in respect of that person’.

But that equivalent payment is in itself subject to the cap (that’s what the reference to Regulation 3(a) means) so this doesn’t solve the problem. It merely seems to allow the same total amount of money to be shuffled around so that some is given directly to the employee rather than the pension fund. But I fail to see what that would achieve.

What the Government seems to think this means – judging from the Minister’s letter – is that the employee has a choice. They can either take a reduced pension provided for by Regulation 30(5) LGPS (which is aimed at former employees who happen to reach the age of 55 and want to take their pension early) or they can defer their pension and receive a lump sum from the employer equivalent to the capped strain cost that the employer would otherwise be required to pay into the pension fund.

This is nonsense. Regulation 8 does not amend the LGPS Regs and those Regulations give the employee no such choice. We have seen that Reg.30(7) says that the employee ‘is entitled to, and must take’ an unreduced pension. They cannot choose to defer it.

They may well have that choice once the LGPS Regs are amended, but to suggest that it is already the position fundamentally misunderstands how laws work. It seems strange to have to point out that just because you intend to introduce a law in the future does not mean that everyone has to behave as though that law is already in force.

I could scream.

My worry is that it is difficult for those administering a pension fund to just dismiss a letter from the relevant minister telling them that they can no longer pay the unreduced pension provided for in the rules of the pension scheme. But if they follow the course of action set out by the Minister in his letter then they seem certain to face legal action from employees who are not given the pension that they are clearly entitled to receive. If the employer has paid the employee a lump sum then they may well choose to put that towards their legal expenses.

I think the Minister needs to withdraw the letter and acknowledge that pension rights cannot be taken away by such indirect means as the Exit Payment Regulations. Treasury Ministers should then make it clear (as they have the power to do) that local authorities can waive the application of the cap when it comes to making pension strain payments until such time as the Local Government Pension Scheme is properly amended.

If this doesn’t happen then it seems inevitable that this will end up in the courts – and I don’t think that would end well for the Government.

To see more of what I do visit

For a more detailed explanation of how the exit pay cap works then you might like to watch this webinar that I recorded before the implementation date was known.

Posted in Uncategorized | Tagged , | 2 Comments

Should we ban ‘firing and re-hiring’?

Keir Starmer addresses the TUC today and – such is the nature of these events – we already know what he is ‘expected to say’. Starmer will condemn employers (recent examples include British Gas and British Airways) that have fired staff only to re-hire them on less favourable terms and conditions. According to the Guardian he will say that such practices are:

‘not just wrong but against British values’

and that:

‘These tactics punish good employers, hit working people hard and harm our economy. After a decade of pay restraint – that’s the last thing working people need, and in the middle of a deep recession – it’s the last thing our economy needs.’

Now we are some four years away from a Labour Party manifesto that might actually propose a change of the law in this area, so I don’t criticise Starmer for being vague about what is actually being proposed here. What we are getting is not so much a new policy as a ‘policy flavour’ (Copyright: ‘The Thick of It’). But it is worth looking at what the law actually is on this topic before deciding whether it needs changing and what a change might look like.

The practice of dismissing employees and then reengaging them on different terms and conditions is not one confined to bad employers. It is the nuclear option in the negotiation of contractual changes, but it is one that has been used by employers of all types in both the public and private sector. The reason it is a ‘thing’ is that contracts of employment cannot just be varied unilaterally. A contract is an agreement and so any changes to it also have to be agreed by both sides. Sometimes that agreement is given in advance – where the contract includes a variation clause – but the extent to which an employer can rely on those to make major changes is not entirely clear. Normally new terms have to be negotiated – either with a recognised trade union or individual employees. If negotiations break down for any reason, the original terms continue in place.

But while an employer cannot change the contract unilaterally, it can bring it to an end. By giving notice of termination the employer can end the contract that it doesn’t like and then propose a new one that the employee is free to accept or decline. Since declining the offer will leave employees out of a job we might query the extent to which they have a free choice in the matter, but that is at least the legal position.

It is easy to find examples of employers resorting to this tactic in a way that would strike most people as unfair. A successful company imposing a pay cut or reducing entitlements just because it can will not attract much sympathy. But you can equally easily give examples of employers who were just doing their best to protect as many jobs as possible. Perhaps the change is the only way that the employer can avoid widespread redundancies. Perhaps most of the workforce is willing to agree to the new arrangement and it is just being blocked by a few employees who are unwilling (or unable) to make the change.

It is not that the practice of ‘firing and re-hiring’ is in itself unfair. Rather, it is the substance of the changes being made and the wider circumstances faced by the employer that make the difference between a reasonable reorganisation and an unreasonable abuse of the employer’s power.

And employment law is already involved. An employee who is dismissed and then reengaged has still been dismissed. A dismissal is the termination of a contract of employment by the employer – it does not go away if the employee accepts a new contract. Employees with two years’ service can claim unfair dismissal even if they accept the new contract and continue working for the employer. An employer who dismisses hundreds of staff just to impose new terms and conditions on them is risking hundreds of individual tribunal claims.

Where the process affects more than 20 employees there is also (it seems) an obligation to consult employee representatives exactly as though this were a mass redundancy exercise. This is because that is what it is. Redundancy for these purposes has a wider meaning than when we are considering the fairness of a redundancy dismissal or an employee’s entitlement to a redundancy payment. When it comes to collective consultation the test is whether the employer is proposing to dismiss employees for a reason ‘not related to the individual concerned’ (S.195 Trade Union and Labour Relations (Consolidation) Act 1992). It is widely accepted that an exercise that involves dismissing employees who don’t agree to new terms and conditions falls under this category. Personally I’ve always thought that the employer could argue that each dismissal was based on the individual employee’s refusal to accept the change, but that is a debate for another day. And of course, while the employer must consult ‘with a view to reaching an agreement’ with the representatives, the reality is that an employer is not obliged to change course as a result of the consultation. The duty to consult imposes a time constraint (30 or 45 days depending on the number of employees affected) and requires the employer to jump through some procedural hoops – but it doesn’t provide any mechanism for judging the fairness of what is being proposed.

In reality, nor does the law of unfair dismissal. The ‘range of reasonable responses test’ means that tribunals have limited scope for inquiring into the fairness of the change that the employer is making. They can ask whether the employer had a legitimate business reason for the change being proposed, but can’t delve too deeply into whether or not the employer could have solved its problems some other way. Instead they tend to concentrate on the way in which the change was made – whether the employer genuinely tried to reach an agreement with the employees first and what consultation took place when dismissals were planned as an alternative.

This is a problem that goes way beyond ‘firing and re-hiring’. The need for a tribunal to avoid ‘substituting its own view for that of a reasonable employer’ has turned unfair dismissal into a largely procedural right with the case law concentrating on how the employer has gone about dismissing employees and not looking too closely at the strength of its reasons for doing so. If I were in charge of employment law I would want to do something to fix that – and Britain would be a better place.

All the same, an employer who is ‘firing and re-hiring’ (I can’t believe I’ve always referred to ‘dismissal and re-engagement’ when there is an alternative version that actually rhymes!) is not doing so in a legal vacuum. It has to weigh its need to make the change with the risk it faces of unfair dismissal claims and its obligations to consult employee representatives. It is not something to be done casually or on a management whim. When manifestos come to be written, I doubt that a total ban on the practice will make the cut.

This is, by the way, exactly the sort of topic that I will be running webinars on this autumn. The first dates are about to be announced – sign up here to be the first to hear about them.

Posted in Uncategorized | Tagged , | 3 Comments

New Starters and the Coronavirus Job Retention Scheme

UPDATE: Wednesday 15 April 2020

In a major change to the Job Retention Scheme the Treasury has announced that the cut off date of 28 February has been moved to 19 March.

The guidance now says this:

Employees you can claim for
You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020.This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020. Employees that were employed as of 28 February 2020 and on payroll (i.e. notified to HMRC on an RTI submission on or before 28 February) and were made redundant or stopped working for the employer after that and prior to 19 March 2020, can also qualify for the scheme if the employer re-employs them and puts them on furlough.

If you want to read the full Treasury Direction setting up the scheme you can now read that here – but be warned, it’s a bit complicated!

As a result of this major U-turn, the remainder of this post is of historical interest only!


The Coronavirus Job Retention Scheme is the unprecedented – in the UK at any rate – government scheme that will award grants to employers who have ‘furloughed’ employees, potentially funding up to 80 per cent of their wage costs to a maximum of £2,500 per month.

The scheme is not yet up and running and we are reliant on Government guidance as to how it will work – which is being updated almost in real time, it seems, as the details are being thrashed out.

At first, it is fair to say, everybody was simply impressed – and taken aback – at the sheer scale of what the Chancellor was proposing. Since then, however, some of the shortcomings of the scheme have become more apparent.

One of these is that employees are only eligible to be furloughed by the employer whose PAYE system they were on as at the 28 February. Anyone who has started a new job in March – and that must cover thousands of individuals – will not be covered by the scheme.

The reason for this is simply that HMRC does not want to face fraudulent claims from companies entering into bogus employment arrangements purely to take advantage of the scheme. An employer should obviously not be allowed to start hiring people with the object of placing them on immediate furlough and claiming £2,500 a month for them. But the furlough scheme was only announced on 20 March. Why should someone who had been in a new post for two weeks by that time be excluded from it?

The Government’s view is that the only evidence of employment that works for them is the PAYE system. The scheme is being run and administered by HMRC and the PAYE records are something that HMRC can easily check. An employee starting in March will have all sorts of documentation showing that the appointment is a genuine one, but the system will not allow for HMRC sifting through letters of appointment and signed contracts of employment – it is PAYE that counts.

Last week the Chancellor ran an #AskSushi event on his Twitter feed. Rather predictably he was swamped with questions which allowed him to carefully select the half-dozen of so that he felt comfortable answering. In fairness however, he did address the issue of new starters. Watch this:


I am no expert on running a PAYE system (in fact that is a massive understatement), but it seems that keeping the cut off date at 28 February is the only way of ensuring that employees were not entered onto the system after the furlough scheme was announced. That at any rate appears to be the Government’s position. Any accountant or payroll professional will know better than me whether that stands up to scrutiny.

The best that the Government can offer those who are no longer employed by the employer they were with on 28th February is that the old employer can take them back and then put them on furlough. The Guidance updated on 4 April makes it clear that this applies whatever the reason for the employee leaving. It is not confined to cases where the employee was made redundant as a result of the lockdown.

But it is hopelessly unrealistic to expect that employers are going to reemploy people who have resigned or been dismissed purely so that they can be placed on furlough. To be blunt, what is in it for the employer? They incur the cost of administering the employee’s furlough pay and face potential legal difficulties when the furlough period ends.

This is an odd feature of the furlough scheme. It is designed to protect the income of employees but it is the employer that receives the funds from government. Employers are placed under no obligation to even consider furlough and there is no mechanism for employees to claim furlough as any sort of right.  With the scheme itself not due to be in place until the end of April – and that is in itself an ambitious target – it is understandable that many employers remain reluctant to commit themselves to retaining employees that they simply cannot afford to pay.

When all this is over (this too shall pass) there will be a flood of Tribunal cases picking over how employers reacted to the coronavirus outbreak. There will be claims for unlawful deductions from wages, discrimination claims arising from who was offered furlough and who was not, and unfair dismissal claims where the Tribunal will have to decide whether having the option of furlough made it unfair to dismiss an employee for redundancy.

But those cases will not be heard until next year at the earliest. Right now the priority is to cushion businesses and employees against the massive shock that has hit the economy. Widening the scheme to cover employees covered by the March payroll may increase the risk of fraud – but an employer would have to be pretty quick off the mark to invent bogus employees and set them up on the system in the 10 days following the Chancellor’s first announcement.   It is surely a risk that is worth taking.


For regular employment law news and information from me, subscribe to my monthly newsletter here

Darren Newman


Posted in Coronavirus, Uncategorized | Tagged , , | Leave a comment

Sleepover shifts and the minimum wage

Next week the Supreme Court will hear argument in two cases involving care workers. At issue is whether a care worker who ‘sleeps over’ in the care home should be regarded as working for that whole shift so that each hour counts towards their entitlement to the National Minimum Wage or whether they should only be regarded as working when they are woken during the night to perform an actual task. In this post I want to explain what the issues are, and how the law developed to this point.

The two cases

At the time of writing there are two cases scheduled to be argued over the course of a two-day hearing. It is not certain that both will make it that far. In Royal Mencap Society v Tomlinson Blake the employee provided care for vulnerable adults in their home. This involved working in the afternoon and evening and then the following morning. Between these two regular shifts she was also required to work a ‘sleep-in shift’ between 10pm and 7 am.  She had no specific duties during that shift but she was required to remain in the house, be alert to any requests from help from the service users and to respond to any incident that might arise. In the course of 16 months, the Tribunal found, she was required to intervene on six occasions. She was provided with her own bedroom with a shared bathroom and was generally expected to get a good night’s sleep on the occasions when she wasn’t needed to respond to an incident.

She was paid just £29 per nine-hour sleep-in shift. The question is whether each hour in that shift should count towards her minimum wage entitlement.

The other case due to be argued is Shannon v Rampersad. As I write the claimant in this case is seeking to crowdfund his appeal and is some way short of his target, so it is not entirely clear that he will be able to take part. In any event, the facts of his case are somewhat more unusual than the normal ‘sleeping in’ case.

According to the facts found by the Tribunal, Mr Shannon was a family friend of the owner of a care home called Clifton House. At the top of the care home there was a staff flat known as ‘the Studio’ and from 1993 Mr Shannon employed as an ‘on-call night care assistant’ and given the flat to live in. He was required to be in the flat from 10pm until 7 am every night and to respond to any request for assistance from the night care worker on duty in the home.  In practice this rarely happened and he so he would normally sleep through the night undisturbed. He worked elsewhere as a driver during the day.

His wages were nominal. He was given £50 per week at first, eventually rising to £90 per week. The main benefit of the job was that he was provided with free accomodation – including all utilities. In 2013 the care home was sold and in anticipation of that sale the owner asked him to sign a contract of employment setting out a wider range of duties than he had actually carried out. He also signed a tenancy agreement under which he agreed to pay rent of £120 per week. His pay was then increased to £210 per week to cover this.

When Mr Shannon was dismissed by the new owners he brought a claim alleging that he was entitled to be paid at the rate of the minimum wage between 10pm and 7am every night. He claimed backpay going back to the introduction of the minimum wage in 1998. Although his arrangement had been nothing to do with the new owners, they would certainly be liable for any backpay due as a result of the Transfer of Undertakings Regulations 2006 (TUPE). Since the claim in total amounts to some £239,000 they can perhaps be forgiven for feeling hard done by if the claim succeeds.

To understand the issues raised by these cases we have to go all the way back to the creation of the National Minimum Wage more than 20 years ago.

The First Low Pay Commission Report

The minimum wage was introduced by the new Labour Government in the National Minimum Wage Act 1998. Now that the Conservatives are so much in favour of the minimum wage that they have effectively renamed it the National Living Wage in an attempt to share in some of the credit, it is easy to forget how controversial it was at the time. But I remember very well the suspicion if not outright hostility there was to the idea – particularly from the business  community. The Government was keen to implement the law in such a way as to build consensus around the idea of a minimum wage and to make sure it was set at a level that business could live with. It set up an independent body called the Low Pay Commission to advise on the introduction of the minimum wage and the level at which it should be set – a function that it still fulfils today. The Commission was (and still is) made up of experts from both sides of industry and academia and the National Minimum Wage Act 1998 required the Government to consult it before introducing the Regulations that would contain the detailed provisions about how the minimum wage would operate (see S.5 of the Act). Specifically the Government had to consult them about what method should be used in calculating the hourly rate at which a worker was actually being paid in order to determine whether or not they were receiving the minimum wage.

Still with me? Stick with it, this will be important later.

The first report of the Low Pay Commission was published in June 1998 and the Government confirmed that it proposed to follow its recommendations. Had they decided to depart from them they would have had to make a specific report to Parliament to that effect.

This is what the Report said about sleep-over shifts:

‘4.34 Certain workers, such as those who are required to be on-call and sleep on their employer’s premises (eg in residential homes or youth hostels), need special treatment. For hours when workers are paid to sleep on the premises, we recommend that workers and employers should agree their allowance, as they do now. But workers should be entitled to the National Minimum Wage for all times when they are awake and required to be available for work’

In the two cases that we are now concerned with the Court of Appeal placed some importance on this recommendation when interpreting the legislation. It strikes me, however, that this passage bears the hallmarks of a compromise within the Commission itself. The reference to the need for employers and employees to ‘agree their allowance’ suggests a process of negotiation. This was written at a time when the Government was also introducing a statutory right to union recognition and ‘social partnership’ was very much in vogue. The Commissioners might have thought that unions would be in a position to fill in gaps in protection left by the Minimum Wage Regulations and ensure that workers were treated fairly. The full report is almost 300 pages long. This one paragraph is the most detailed reference to sleepover shifts that it makes. I think the Court has placed more weight on this recommendation than it can reasonably be expected to bear – but we will come back to this point later.

The Minimum Wage Regulations

The Commission’s recommendation certainly seems at first to have made its way into the Regulations. It is a complicated story because the details of the Regulations have changed over the years. I don’t think there is much to be gained from comparing the various different forms of wording we have had since 1999 when the first Regulations were introduced. I am just going to look at what the current Regulations – the National Minimum Wage Regulations 2015 – say.

I am also going to concentrate on the definition in relation to ‘time work’ – that is work where the employee is paid by the hour. In Shannon the work in question is technically, I think, ‘salaried hours work’ which is dealt with in a different part of the Regulations. But I don’t think this makes any difference.

Here is what the Regulations say about sleep-over shifts:

Time work where worker is available at or near a place of work

32.—(1) Time work includes hours when a worker is available, and required to be available, at or near a place of work for the purposes of working unless the worker is at home.

(2) In paragraph (1), hours when a worker is “available” only includes hours when the worker is awake for the purposes of working, even if a worker by arrangement sleeps at or near a place of work and the employer provides suitable facilities for sleeping.

You may need to read this more than once. Take your time.

The meaning doesn’t exactly leap out at you does it? You don’t read this and think – ‘of course! it all makes sense now that you put it that way’.

(Personally I am baffled by the words ‘even if’. They seem to suggest that the provision of suitable facilities for sleeping would otherwise make it more likely that hours spent asleep would count as working time – which seems odd. Perhaps I’m missing something.)

Anyway. What this Regulation seems to be saying is this:

  • The time that you have to spend ‘available for work’ will count as working time if you are required to be at or near your place of work
  • But that does not apply if the place where you are required to be is your home
  • Nor does it apply to times when you are asleep – it only applies when you are ‘awake for the purposes of working’

So here comes the tricky bit.

This provision applies when workers are required to be ‘available for work‘. The implication is that they are not actually working, but the Regulations will treat them as though they are working because they are required to be at or near their place of work.

The provisions about sleeping only apply to this time when the workers are ‘available for work‘ – and it is worth noting that the Low Pay Commission report used the phrase ‘on call’ which carries the same implication of being available to do work if needed.

But what if sleeping over on the premises is the very work that you are employed to do? What if sleeping over is not something you do so that you are available for work if needed, but is an inherent part of your duties? If we can draw that distinction then we do not need to rely on Regulation 32 to turn that time spent available for work into working time because it already is. And if it already is working time then the fact that you are asleep for all or part of it does not matter because the sleeping exception only applies to time spent ‘available for work’ not to time that already counts as working time.

I think this argument is ingenious and clever.

The trouble is that, as a general rule, you do not want to present a court with ingenious and clever arguments. You want your arguments to sound like good plain common sense and I am not sure that this argument achieves that. But it has nevertheless been accepted in a number of cases. So much so that its rejection by the Court of Appeal in the cases that the Supreme Court will hear next week cases surprised almost everybody. That includes HMRC who just a few months earlier had launched a major new initiative aimed at helping the social care sector pay the huge amounts of backpay they were believed to owe workers who were working sleepover shifts. Since the Court of Appeal’s decision that has rather taken a back seat.

The Case Law

The case that first set the cat among the pigeons was British Nursing Association v Inland Revenue back in 2002. That was not about sleepover shifts, but it did challenge the traditional understanding of what ‘on-call’ or ‘stand-by’ means.  The employer ran an emergency bank nurse booking service that ran 24-hours a day. Overnight calls were answered by staff who were at home and free to do as they wished – including sleep – between calls. The Court of Appeal held that the workers were working throughout the overnight shift even when they were not taking calls. There was, after all no suggestion that the periods between calls during a normal day shift would not count as working time. Why then should the (admittedly longer and more frequent) periods between calls during the overnight shift be treated any differently?

Next was the case of  Scottbridge Construction Ltd v Wright in 2003. The employee was a ‘nightwatchman’  on the premises of a construction company. He came in at 5pm each evening and stayed until 7am the next morning. His tasks were described as ‘not onerous’ and for long stretches at time (including midnight to 5am) there was nothing specific for him to do. There was a TV that he could watch and a mattress that he could sleep on when he was not needed. The Inner House of the Court of Session (the Scottish equivalent of the Court of Appeal) held that the work he was hired to do was to be the nightwatchman for the whole of his shift. The fact that he had little or nothing to do for extended periods and was allowed to sleep on the job did not alter the fact that he was performing his duties throughout.

In 2008 these two cases were followed by the EAT in  Burrow Down Support Services Ltd v Rossiter. The employee in that case was hired to provide overnight security for a care home. he worked two nights a week running from 10pm to 8am. Apart from a handover when he arrived and a requirement to assist with breakfast from 7am he was free to sleep through the night if nothing untoward occurred. The EAT agreed with the Tribunal that the whole of his overnight shift should be treated as working time. The employee was not just ‘available for work’ overnight, the overnight shift was the work he was employed to do.  This meant that there was no need to deem him to be working under Regulation 15 and that the sleepover exception that applied under that Regulations was irrelevant.

The Burrow Down case opened the way for care workers working a sleepover shift to claim that they were working even while they slept. That was the conclusion in each of the following cases:

The cases do not all go the same way, however. On a number of occasions it was held that an employee was not working throughout an overnight shift but could properly be seen as being merely ‘available for work’ so that the time spent sleeping would not count. See, for example:

And indeed in the case of Shannon v Rampersad, now due to go before the Supreme Court, the Tribunal held – and the EAT agreed – that the employee could not really be said to be working throughout the night. His was genuinely a case in which he was merely ‘available for work’ – with the result that the time he spent sleeping did not count.

The Court of Appeal Decision

The decision of the Court of Appeal in the two joined cases of Mencap v Tomlinson Blake and Shannon v Rampersad runs to a pretty epic 70 pages. But its actual reasoning is easy to summarise. Basically the Court held that the Burrow Down case (see above) was wrongly decided. The idea that someone on a sleepover shift could be regarded as working throughout so that Regulation 32 did not apply to them was contrary to the ‘clear meaning of the Regulations’.

In Burrow Down the EAT had relied on the British Nursing Association case and the Scottbridge case. But in British Nursing the Court of Appeal’s decision was based on the assumption that the employees were effectively working throughout the shift – albeit with predicable lulls in the volume of calls they received. There was no suggestion that the Court would have taken the same view if the employee had actually been expected to sleep throughout the night.

In Scottbridge, the circumstances were also different from those of a genuine ‘sleep in’ arrangement. While the employee was allowed to sleep on a mattress when there was nothing for him to do it was not the case that he was specifically expected to sleep through the night with only infrequent interruptions. The Court of Appeal accepted that the distinction between working and merely being available for work was ‘subtle’ but held that it was artificial to treat a worker as working throughout a shift when it was positively expected that they would spend most of the time asleep.

The Court also placed a surprising amount of emphasis on that 1998 report of the Low Pay Commission. Since the Regulations were intended to implement the recommendations made in that report, this bolstered the view that workers on a sleepover shift should not be treated as working when they were actually sleeping.

On that basis, the Court overturned the finding in the Mencap case that the employee was working throughout her sleepover shift. She was merely available for work and so – in accordance with Reg 32 – the time she spent asleep did not count towards her minimum wage entitlement.

In Shannon the Tribunal had held that the employee was merely ‘available for work’ rather than actually working while he slept. The Court of Appeal held that this was ‘plainly right’. Since he was merely available for work it followed that Reg 32 applied and the time that Mr Shannon spent either at home or asleep did not attract the minimum wage.

So now it’s over to the Supreme Court to decide this issue once and for all.

What will the Supreme Court say?

The most important thing to remember is that the Supreme Court is not bound by any of the earlier case law. There will be lots of discussion about these cases, but when push comes to shove the Supreme Court is entitled to ignore them all. The central question the five Justices will have to decide is whether they think it makes sense to regard someone who is expected to sleep through the night as working rather than simply making themselves available for work.

In my view the Court of Appeal decision is too dismissive of the idea that someone on a sleepover shift can be working even if they are permitted to sleep for most of it. I also think the Court’s reliance on a 1998 report from the Low Pay Commission in interpreting the Regulations is just bizarre and I hope the Supreme Court does not vanish down that particular rabbit hole.

This case is actually an opportunity for the Supreme Court to consider what we mean by ‘work’. It is an odd feature of the Minimum Wage Regulations that there is no overarching definition of what constitutes work. We do have a definition in the Working Time Regulations, but that does not apply in this context and I doubt the Court will find any reference to that definition helpful.

So what is ‘work’?  To my mind you are working when you are performing a service at the behest of your employer. That might involve frantic activity, but in some circumstances it may involve no more than your physical presence – if that is the service that the employer requires of you. A care worker who works a sleepover shift does not tell their family ‘I’m off to be available for work in case I’m needed’ –  they say ‘I’m working tonight’. They sacrifice their freedom to spend their time as they choose because the employer needs them to be at work. They are not likely to be spending a restful night in a comfortable bed. Sleeping arrangements in a care home will probably not match the comfort they get at home. I don’t think it’s unreasonable to regard them as doing a night’s work in those circumstances and to expect employers to pay properly for the service that care workers are providing.

If I were sitting on the Supreme Court I think I would uphold the Tribunal’s decision in both cases. I would agree with the Tribunal that Ms Tomlinson-Blake was working when she had to stay overnight with her service users. But I would also agree that Mr Shannon falls on the other side of the line and cannot really be said to be working except on those rare occasions when he was actually called upon to help. This is the sort of distinction that should be left to employment tribunals to draw.

And yet… What niggles about this view is that I don’t think it leaves much room for Regulation 32. What is it actually there for? If being required to be present in the workplace is treated as essentially being required to work rather than just be available for work, then there is no need for a provision deeming it to be work at all.  The Supreme Court can’t just say ‘Look, Regulation 32 is a bit of a mess, lets just work around it’. They have to give it meaning. The best argument in favour of the Court of Appeal’s approach (much as I dislike it) is that it does just that. It doesn’t rely on a clever and ingenious approach and accords with what many people – particularly those who don’t have to work a sleepover shift in a care home – would regard as common sense.

Obviously I don’t know what the Supreme Court will actually say – and we will probably have to wait until late spring / early summer for a result. It should however be a fascinating case to watch on Supreme Court Live. I plan to be an enthusiastically partisan observer.










Posted in national minimum wage, Uncategorized, Wages | Tagged , , , , | 5 Comments

Forstater v CGD Europe – what the Tribunal actually found

Debating transgender issues can be really difficult. It is one of those areas where you cannot really articulate a position without using vocabulary that at least some people will find objectionable. Writing about it feels like treading through a minefield –  one wrong step and you’ve caused offence.

But I’m going to try anyway because the case of Forstater v CGD Europe is a potentially important case about philosophical belief. It is also a case where much of the media debate is likely to miss the actual point of the decision.

The case has been brought by the Claimant Maya Forstater – a public policy researcher and writer who had a consultancy agreement with a not-for-profit think tank called the Centre for Global Development (CGD). She claims that following the end of her contract in December 2018 the CGD refused to engage her further because of comments she had made on Twitter and other forums expressing her beliefs about trans issues.

Now there is a temptation in a case like this to pick the side you are on before you look at the law or the actual evidence. You may take an instinctive stance based on your view of the nature of gender identity and how it relates to sex. There is a heated debate about ‘self-identification’ in particular and whether women only services or facilities are threatened by reforms that have been proposed to the Gender Recognition Act 2004.

This case is not about the rights and wrongs of that debate. Nor is it an unfair dismissal case. It seems clear that whatever the nature of the Claimant’s relationship with the CGD she did not have a contract of employment. Her complaint is not about dismissal. She is arguing that after December 2018 she was an applicant for employment within the meaning of the Equality Act 2010 – which has a wider definition of what counts as employment  – and that the refusal to engage her was discriminatory.

This means that whatever else the Claimant’s case is about, it is not about whether the CGD acted fairly or reasonably. Those are not issues for the Tribunal to decide as they are irrelevant to her case. She is claiming direct discrimination and the question to be decided is simply whether or not she was refused employment because of a protected characteristic. If she was then she will win – and there will be no room for the CGD to argue that they acted fairly in refusing to engage her. If she was not refused employment because of a protected characteristic then she will lose (subject to an outstanding indirect sex discrimination claim) no matter how unfairly she may have been treated.

The first stage in winning her claim is to show the belief that she holds – and because of which she says she was refused employment – is protected by the Equality Act. The decision that has just been published comes from a preliminary hearing to decide that question.

The belief at issue is quite a complex one and I don’t want to over simplify or misrepresent it.  Paragraph 41 of the Tribunal decision encapsulates, I think, what the Tribunal found the essence of her belief to be:

When questioned during live evidence the Claimant stated that biological males cannot be women. She consider that if a trans woman says she is a woman that is untrue, even if she has a Gender Recognition Certificate. On the totality of the Claimant’s evidence it was clear that she considers there are two sexes, male and female, there is no spectrum in sex and there are no circumstances whatsoever in which a person can change from one sex to another, or to being of neither sex. She would generally seek to be polite to trans persons and would usually seek to respect their choice of pronoun but would not feel bound to; mainly if a trans person who was not assigned female at birth was in a “woman’s space”, but also more generally. If a person has a Gender Recognition Certificate this would not alter the Claimant’s position. The Claimant made it clear that her view is that the words man and woman describe a person’s sex and are immutable. A person is either one or the other, there is nothing in between and it is impossible to change form one sex to the other.

So the question is whether this falls within the concept of ‘Religion or belief’ –  one of the nine protected characteristics set out in S.4 of the Equality Act. Section 10 of the Act says ‘Belief means any religious or philosophical belief’ – but the Act doesn’t really give you anything else to go on.

There is no suggestion that the Claimant’s belief is a religious one, so the Tribunal has to decide whether it is a ‘philosophical belief’. The leading case on defining a philosophical belief is Grainger plc v Nicholson in which the EAT held that the employee’s belief in anthropogenic climate change was protected under the Equality Act. That case set out five criteria against which a belief should be judged in deciding whether it should count as ‘philosophical’:

(i) The belief must be genuinely held.
(ii) It must be a belief and not… an opinion or viewpoint based on the present state of information available.
(iii) It must be a belief as to a weighty and substantial aspect of human life and behaviour.
(iv) It must attain a certain level of cogency, seriousness, cohesion and importance.
(v) It must be worthy of respect in a democratic society, be not incompatible with human dignity and not conflict with the fundamental rights of others

The Tribunal applied these criteria and held that the Claimant’s belief met the first four of them but did not meet the last. Her belief was not worthy of respect in a democratic society because it was incompatible with human dignity and conflicted with the fundamental rights of others.

It must be quite a body blow to be told that  fundamental belief that you hold is not worthy of respect in a democratic society. But this finding has not been plucked out of nowhere.

The Grainger criteria were based on the case law of the European Court of Human Rights. And importantly, the right of a trans person to have their acquired gender fully recognised in law was established by that Court in Goodwin v United Kingdom.  It was as a result of that case that the UK Government introduced the Gender Recognition Act 2004 and the concept of a Gender Recognition Certificate – the effect of which is that:

…the person’s gender becomes for all purposes the acquired gender (so that, if the acquired gender is the male gender, the person’s sex becomes that of a man and, if it is the female gender, the person’s sex becomes that of a woman).

(S.9(1) GRA 2004)

Back to the Tribunal’s decision in Forstater. The key piece of reasoning is, I think in paragraph 84:

84. However, I consider that the Claimant’s view, in its absolutist nature, is incompatible with human dignity and fundamental rights of others. She goes so far as to deny the right of a person with a Gender Recognition Certificate to be the sex to which they have transitioned. I do not accept the Claimant’s contention that the Gender Recognition Act produces a mere legal fiction. It provides a right, based on the assessment of the various interrelated convention rights, for a person to transition, in certain circumstances, and thereafter to be treated for all purposes as the being of the sex to which they have transitioned. In Goodwin a fundamental aspect of the reasoning of the ECHR was that a person who has transitioned should not be forced to identify their gender assigned at birth. Such a person should be entitled to live as a person of the sex to which they have transitioned. That was recognised in the Gender Recognition Act which states that the change of sex applies for “all purposes”. Therefore, if a person has transitioned from male to female and has a Gender Recognition Certificate that person is legally a woman. That is not something that the Claimant is entitled to ignore.

The Tribunal’s finding is based squarely on the absolutist nature of the Claimant’s beliefs. I don’t think it is wholly outrageous to categorise them as being incompatible with the rights of those who hold a Gender Recognition Certificate as she denies the very thing that the Certificate is intended to achieve. The rights those holding a Certificate are specifically enshrined in law and are themselves derived from the European Convention on Human Rights.

As the Tribunal puts it:

The Claimant’s position is that even if a trans woman has a Gender Recognition Certificate, she cannot honestly describe herself as a woman. That belief is not worthy of respect in a democratic society. It is incompatible with the human rights of others that have been identified and defined by the ECHR and put into effect through the Gender Recognition Act.

I assume that this case will be appealed, but to be honest I think the Tribunal’s logic is pretty sound. I have seen a lot of commentary on Twitter to the effect that the decision is wrong and drawing all sorts of conclusions about its implications. But this is a view that seems to be based on strongly identifying with the Claimant’s beliefs rather than finding an actual flaw in the Tribunal’s reasoning.

Employment law is limited. It does not protect everyone and the protection it does give can be patchy and inconsistent. I am no expert on gender identity and how it relates to biological sex and I don’t seek to minimise the concerns and fears of individuals on either side of this debate. The Claimant in this case is perfectly free to hold the beliefs that she does and to argue for them in public and in private. But that does not mean that her beliefs must be protected under the Equality Act.  If, as the Tribunal found, they are not then others are free to choose not to engage her services.


Posted in Equal pay, philosophical belief, Uncategorized | Tagged , , | 18 Comments

Workers’ Rights and the EU

The annoying thing about the debate that has blown up over the weekend about workers’ rights post Brexit is that it rarely gets down to specifics. Take the Financial Times story on Friday. It referred to the possibility of divergence between the UK and the EU when it came to employment and environmental standards but didn’t highlight any particular employment rights that might be under threat.

Andrea Leadsom (who as Secretary of State fort Business has overall responsibility for employment law) responded to the Financial Times story with a Tweet:

The line that ‘in many areas our standards are already higher then EU [sic]’ is a familiar one. But it doesn’t tell us very much. When it comes to employment law, EU standards are a floor, not a ceiling. They provide a minimum level of protection that all member states must meet. Of course we exceed minimum EU standards in some areas, it would be pretty shocking if we didn’t.

I would be more reassured about the Government’s commitment to workers’ rights if instead of vague comments about maintaining high standards, they were able to say something more specific. If Andrea Leadsom were able to say ‘I agree that there should be a 48 hour limit on the average length of a working week’ then that would be meaningful. I would also like to hear Liz Truss, the Minister for Women and Equalities, say something like ‘I believe that there should be no cap on the amount of compensation that can be awarded in a discrimination case’.

But the truth is that I struggle to envisage either Minster making such a specific commitment. When push comes to shove, the Conservative mindset is to regard employment law as ‘red tape’ that stifles innovation and competitiveness. That doesn’t mean that they want to abolish it all – but they are more likely to regard it with suspicion and something that should be kept under review. The support that they have shown in recent years for the minimum wage has been a remarkable turnaround and is more than a little out of character. Long-term, a Conservative government is going to be open to the argument that employment law is a burden on business and the Government’s job is to lighten the load.

It is important to understand that they could do that even while complying with EU standards. There are huge areas of employment law that are nothing to do with the EU at all. The National Minimum Wage, for example is an entirely domestic matter as is the law of unfair dismissal and redundancy. Discrimination law, on the other hand, owes a lot to the EU. Sceptics often point out that the Equal Pay Act predated our membership of the Common Market and that Barbara Castle, who oversaw the introduction of the Act in 1970 was opposed to us joining. But while the Equal pay Act may be have originally been made in Dagenham, much of the law as it applies today was made in Luxembourg. The concept of an equal value claim, the idea of a pay difference being ‘tainted’ by indirect discrimination and the increase in potential back-pay from two years to six years all came from Europe. We should also remember that without rulings from the ECJ there would have been no protection against pregnancy discrimination or discrimination based on gender reassignment. The EU Equality Directive led to the outlawing of discrimination based on religion and belief and on the grounds of sexual orientation – and also the abolition of the small business exception in cases of disability discrimination. Without the EU our discrimination law might look very different.

I don’t believe for a moment that a UK Government would repeal discrimination law if it were no longer bound by EU law –  but it might be tempted to undermine it in places. Back in 2011 there was a serious push made by the coalition government to find some way of capping compensation in discrimination cases. In the end EU law proved to be too much of a barrier and the idea was dropped.

It is simply undeniable that workers’ rights are stronger as a result of our membership of the EU. So I’ve always been slightly irritated by the way in which Brexiters on the left (Lexiters) tend to play down the role that the EU has played in the development of UK employment law.  In last week’s Guardian, economics editor Larry Elliot issued a broadside against the EU’s record on workers rights. Much of his focus was on trade unions and industrial action – and for many on the left, this is where their suspicion of the EU as a capitalist conspiracy comes in. The article quotes the case of International Transport Workers Federation v Viking Line ABP in which the ECJ held that a union’s right to strike (which it acknowledged) did could not be used to prevent a shipping company from exercising its rights under the EU treaty to re-flag a ship from Finland to Estonia. The case needs to be read alongside Laval v Svanska (I think that Larry Elliot has possibly merged the two cases in his mind) which involved action aimed at a contractor using workers who were posted to Sweden from Latvia. The ECJ held that the right of the Latvian company to establish itself in Sweden overrode the right of Swedish workers to take industrial action aimed forcing the Latvian company to adopt Swedish terms and conditions.

These are both complicated cases and I’ve probably oversimplified what the ECJ said (check for corrections in the comments below). But it is worth noting that in neither case was the industrial action being taken by the workers whose terms and conditions were the issue. The industrial action involved in each case would have been unlawful secondary action if it had taken place in the UK and there is no suggestion from the ECJ that either the Estonian or Latvian workers would have been prevented from taking industrial action to improve their own pay.

But even if you are critical of the ECJ’s approach in these cases, I don’t see that it justifies regarding EU law as something that actually hampers workers’ rights. The crux, of course, comes in Larry Elliot’s final paragraph:

In consequence, the only sure way to advance workers’ rights is to elect a government pledged to full employment and collective bargaining. The notion that only Brussels stands in the way of a barrage of deregulation betrays not just a misunderstanding of the way the EU operates but also a deep and irrational pessimism on the left, a belief that the Conservatives will be in power for ever no matter what they do. The left doesn’t need the EU to fight its battles. What it needs is to make the case for better working conditions and win over a public sick of a labour market loaded in favour of employers. With a bit of self-confidence it shouldn’t be that difficult.

Well yes. If we elect a majority Labour Government under Jeremy Corbyn then we certainly don’t need to worry about the deregulation of employment law. I suspect however that making that happen will take more than ‘a bit of self-confidence’. We should at least give house room to the idea that Boris Johnson might win the next election. We shall see then – and in the years that follow – what his commitment to the ‘highest possible standards’ means when it comes to employment law.

Update: for a rather more authoritative critique of Larry Elliot’s article (very much from a left wing perspective) see N Contouris and KD Ewing, ‘Don’t be fooled – workers’ rights will suffer outside the EU,’


For regular employment law news and opinion you can subscribe to the Range of Reasonable Responses Newsletter here

Posted in BREXIT, Equal pay, Equality Act, EU law, Uncategorized | Tagged , , | 2 Comments