POSTED: February 09 2017
Employment tribunal implications and the quacking duck

Employment tribunal implications and the quacking duck

 

It’s not just Brexit that is about to cause anxiety for HR professionals with recent tribunal rulings also about to shake things up. We discuss some recent cases that will require many employers to rethink.

From employment status for Uber drivers, national minimum wage and how tribunals focus on disability we look at recent cases.

We have in the past focussed on the ground-breaking legal case involving Uber drivers. Further information about this case is now available. The following details will help you determine whether this affects you.

A reminder about this case.

The key decision in this case was that Uber drivers won their claim to be classed employees rather than being self-employed. The GMB union described the decision as a “monumental victory” but Uber said it would appeal against the decision which means that drivers will be entitled to holiday pay, the minimum wage and unpaid rest breaks.

When deciding on this case, the Tribunal Judges applied a “walks like a duck / quacks like a duck” test. This enabled them to decide whether the features of an employment relationship existed or whether the Uber drivers were independent contractors.

The Uber business model relies on devolving as much flexibility to their staff as possible, such as letting them choose if/when to work, and absorbing the risk of whether there is work. For example, Uber pays more to drivers for driving at times of peak demand.

The tribunal said “The notion that Uber is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our mind faintly ridiculous.”

The quacking duck

Here are the features of the contract between Uber and their drivers that, in the opinion of the tribunal, make it look more like an employment contract, in the eyes of employment law:

  • Uber has sole and absolute discretion to accept or decline bookings
  • They interview and recruit drivers
  • They control key information like passenger contact details and the destination. Drivers don’t even know where they are going until the trip starts
  • Though drivers can choose when to work, they can’t turn down trips
  • Uber sets the route
  • They fix the fare and drivers can’t negotiate a higher one (as an independent contractor would be able to)
  • They impose conditions such as the type of car that drivers must use
  • Uber subjects drivers to performance management and disciplinary procedures
  • Uber decides issues such as rebates without involving the driver
  • Uber, not the driver, takes on risk of loss such as in the case of fraudulent passengers
  • Uber handles complaints by passengers
  • Uber can change the drivers’ terms unilaterally
  • Drivers are not allowed to contact passengers after rides (a contractor would normally be able to contact his clients)
  • Uber uses terms like “on-duty”, “off-duty” and “our vehicles” when corresponding with drivers.

The future for employment law

This was a case by two drivers in one employment tribunal. However, these two are on the same contracts as tens of thousands of drivers around the country. The ruling could pave the way for big changes in the economy but until it is appealed there won’t be a ruling that affects other drivers.

Implications for ADVO clients

Now may be a good time to re-examine the employment status of people you have working for you who you have up until now regarded as self-employed. If any of the “quacking duck” examples above sound familiar to your business, you may be well advised to formalise the relationship with these individuals and budget for employment related costs such as holiday pay, employer’s national insurance and other employee benefits.

There has since been a new chapter to this story with a recent Appeal Tribunal Judgement that reinforces how the view of employment status is changing. Click here to see the update.

Another recent case may affect those of you who pay National Minimum Wage.

Background to the case

3,400 care workers have received a total of £650,000 in back pay following an HMRC investigation into the sector’s national minimum wage situation. At least 130 care providers have been investigated in the last 12 months and fines totaling £122,249 have been issued to companies that were paying staff below the minimum wage since April 2015.

Many of the cases involved care workers who were not paid for the time they took travelling between jobs. Others were underpaid for the hours they spent delivering live-in care. To exclude this time can result in the National Minimum Wage Act being breached.

17 care workers, employed on zero-hours contracts are currently involved in ongoing legal action against contractor Sevacare. They claim they are paid just £3.27 an hour, as they are effectively working 24 hours a day once waiting time is included. In one case, they live in the home of an elderly woman with severe dementia for seven days at a time.

The minimum wage currently stands at £7.20 per hour for over 25s, but estimates are that about 16,000 care jobs are paid below this level, leading to an average underpayment of £815 a year per worker. This case is arguably the most significant ever intervention by HMRC into pay issues in an individual sector, and was carried out in response to a series of complaints from unions and individual care workers. HMRC has said that its next target could be employers that use freelance staff on a long-term basis.

Implications for ADVO clients

Clients of ADVO who pay National Minimum Wage are therefore advised to check that they are paying staff for hours that are deemed to be “working hours” such as travelling between jobs – otherwise you may be liable for back pay.

And some good news for employers – a recent Employment Appeal Tribunal (EAT) decision has provided some clarification about stress and dyslexia and whether they constitute a disability (Herry v Dudley Metropolitan Council).

The case involved a teacher, Mr. Herry, who claimed disability and race discrimination. For the employee to prove that they are disabled they must be able to show that their condition has a substantial adverse long-term effect on day-to-day activities.

Mr. Herry had had various periods of sickness absence, latterly for stress. He was also dyslexic, but hadn’t asked for adjustments to be made. The disability discrimination element of his claim related to dyslexia, stress and depression.

The tribunal held that Mr. Herry’ dyslexia did not mean he was disabled. He had used coping strategies and the fact that he was able to work as a teacher indicated that his coping strategies were effective. As for stress, there was little or no evidence that it had had any effect on his ability to carry out normal activities. His stress was mainly a result of his unhappiness about his perceived unfair treatment; it was a reaction to life events. And depression wasn’t referred to in any of the relevant sickness certificates.

The EAT agreed with the tribunal’s decision. Although Mr. Herry had been certified unfit for work for a long period because of stress, that didn’t mean that he had a disability. He hadn’t established a mental impairment, or the necessary substantial long-term adverse effect.

The implications for employers is therefore that stress and dyslexia, both relatively common conditions, will not necessarily constitute a disability under the Equality Act 2010.

 

If you need further information or wish to discuss your situation please contact ADVO’s HR consultancy, HR Experts on hrexperts@advogroup.co.uk