Here’s what’s inside the September edition of ByteSize Employment:
- HMRC changes policy relating to enforcing NMW penalties post-TUPE transfer
- Part-time working a relevant factor when considering dismissal due to ill health
- Plumbers held to be workers and not independent contractors
- Does voluntary overtime need to be considered when calculating holiday pay?
- What would a no-deal Brexit mean for employment rights?
HMRC changes policy relating to enforcing NMW penalties post-TUPE transfer
HMRC has made an announcement stating that from 2 July 2018 it will seek to enforce all national minimum wage (NMW”) liabilities, including penalties, against transferee employers who have acquired employees following a TUPE transfer.
The previous stance of HMRC was to charge the transferor (former employer) for all or part of the penalties where they were triggered by arrears that occurred before the employees’ employment transferred under TUPE but this announcement indicates a clear change of approach to seek to enforce against the acquiring employer.
In light of HMRC’s tougher approach it highlights the importance of thorough due diligence exercises before a TUPE transfer to establish whether employers are going to be acquiring any employees under TUPE who may have previously been underpaid the NMW.
Part-time working a relevant factor when considering dismissal due to ill health
The Employment Appeal Tribunal (EAT) has allowed an appeal against the decision of an employment tribunal that an employee, a GP, who was dismissed because he was unable to return to full-time work following a period of disability related long-term sickness, was not subject to disability discrimination.
The GP’s practice was not in a position to recruit a permanent replacement while the employee remained employed and there was no indication as to when the employee would return when he was dismissed. The employment tribunal held that the GP’s dismissal had been justified on the basis that dismissal was a proportionate means of achieving the employer’s legitimate aim, the “need to ensure that the best possible care was provided to patients”. The employment tribunal separately concluded that the dismissal had been unfair because the employer had not meaningfully considered or consulted with the employee on alternatives to dismissal, in particular, the possibility of a return to work part-time.
The EAT determined that the employment tribunal had erred when it failed to consider the issue of part-time working as a less discriminatory means of meeting their legitimate aim when reaching their decision on the disability discrimination claim.
This case is reminder to employers that when dismissal is contemplated on ill-health grounds, alternatives to dismissal should be considered and the employee consulted on this point, before a decision to dismiss is taken.
Dr J Ali v Drs Torrosian, Lechi, Ebeid & Doshi t/a Bedford Hill Family Practice
Plumbers held to be workers and not independent contractors
The Supreme Court has upheld the judgments of the Court of Appeal, EAT and employment tribunal that a plumber engaged by Pimlico Plumbers was a worker and not an independent contractor. This finding was despite the plumber’s contract stating that he was an independent contractor.
The plumber’s contract provided him a limited right to provide a substitute, obliged him to complete 40 hours a week, he was required to drive a branded van, wear a uniform and carry an identity card which was given to him. The plumber provided his own materials and tools, bore significant commercial risk, was registered for VAT and submitted invoices and filed tax returns on the basis that he was self-employed.
The Supreme Court determined that personal service was the dominate feature of the plumber’s contract even though there was a limited right to provide a substitute. The right to substitute was regarded as being insignificant as the contract was clearly directed at personal performance and the right to provide a substitute was extremely limited. In addition, the Court held that Pimlico Plumbers was not a client or customer of the plumber. The court endorsed the approach of looking at whether the alleged independent contractor actively markets his services as an independent person or whether they work as part of a principal’s organisation. In this case, the court concluded that the plumber was not genuinely in business on his own account with Pimlico Plumbers as his client.
This case follows the growing line of cases, many within the gig economy, where individuals have been held to be workers and not genuinely self-employed consultants. This is a further reminder, if one was needed, that employment tribunals will look beyond contractual terms and at the reality of the relationship between the parties when determining cases on employment or worker status.
Pimlico Plumbers Ltd and Mullins v Smith
Does voluntary overtime need to be considered when calculating holiday pay?
A decision of the EAT has continued the trend of recent decisions and held that both non-guaranteed and voluntary overtime should be taken into consideration when calculating the four weeks’ paid holiday employees are entitled to under the Working Time Directive, so long as the payments are sufficiently regular and paid over a sufficient period to become “normal”. The claims in this case were pursued under the European Working Time Directive rather than the UK’s Working Time Regulations as the employer was an NHS Trust, an emanation of the state.
The group of claimants in the case were sometimes required by their contracts to work extra time at the end of their shifts in situations such as where they needed to finish a task or deal with an emergency call. The claimants were paid for this extra working time which was “non-guaranteed overtime”. In addition the claimants could work voluntary overtime, such as accepting extra shifts, but they were free to choose not to do so.
Whilst this case is consistent with both previous decisions and the direction of travel in this area of the law, it leaves employers in a difficult position from a practical perspective. Where voluntary overtime has been worked, whether the law requires it to be factored in to an employee’s holiday pay will depend on whether the voluntary overtime has been worked sufficiently regularly or over a sufficient period of time to become part of an individual employee’s “normal remuneration”. This will require a difficult assessment of employees working patterns on an individual basis. Secondly, there is no requirement to include voluntary overtime in the calculation of holiday pay in respect of the additional 1.6 weeks’ holiday per annum an employee is entitled to under the UK’s Working Time Regulations. This complexity leaves employers and their payroll teams with difficult decisions to make in respect of how they calculate and administer holiday pay.
Mr N Flowers & others v East of England Ambulance Trust
What would a no-deal Brexit mean for employment rights?
The government has recently published technical notices to provide information and guidance on their preparations for a no-deal Brexit for UK businesses and residents.
One of the technical notices, titled “Workplace rights if there’s no Brexit Deal” advises that workers in the UK will continue to benefit from the rights they currently have under UK law which derive from EU law, such as the Working Time Directive (the Working Time Regulations), the Acquired Rights Directive (TUPE) and the Equal Treatment Directive (Equality Act).
The notice indicates that there is no current plan to change existing employment rights only to change the language of certain legislation to provide legal certainty and allow for a smooth transition on “Exit Day”. The notice points out that current UK legislation already exceeds EU-required levels of employment protection in a number of cases, an example being the law relating to service provision changes under TUPE.
Whilst it is perhaps not surprising that the technical notice seeks to reassure both businesses and workers that little will change on “Exit Day”, it will be interesting to see in the medium to long term whether Parliament looks to make more significant changes to aspects of current employment legislation post-Brexit, such as the Working Time Regulations and TUPE, where the scope for change is currently limited due to the requirement to implement EU Directives.
Posted on September 25, 2018