The fine line between worker and employee

On 1 October 2014 we saw the usual round of increases in the national minimum wage; adults (workers aged 21 and over) saw a rise from £6.31 to £6.50 per hour.

Equal pay breach

Expectant fathers or the partner of a pregnant woman are now entitled to take unpaid time off work to attend anti-natal appointments with their partner; they will be entitled to two appointments with a maximum duration of six-and-a-half
hours each.

Pursuant to the Equality Act 2010 (Equality Pay Audit) Regulations 2014, where employers have been found to breach the equal pay provisions of the Equality Act 2010, tribunals may order those employers to carry out pay audits, if complaints were presented on or after 1 October 2014.

Claims decrease

Fees for employment tribunals and the Employment Appeal Tribunal (EAT) were introduced for complaints received on or after
29 July 2013. Recent statistics on tribunal claims from the Ministry of Justice (MoJ) for the period April to June 2014, show the amount of single claims received was 3,792; 70 per cent fewer than in the same period of 2013 and a third lower than in the previous quarter (January to March 2014).

In February, the High Court handed down its judgment in the case of R (on the application of Unison) v Lord Chancellor [2014] EWHC 218 (Admin) in which it rejected Unison’s judicial review challenge to the introduction of employment tribunal fees. However, Unison has been granted permission to appeal the decision.

Pay correction

If an employer, for whatever reason, overpays its employee, can it simply reduce the amount owed to it from the employee’s subsequent gross pay without explanation on the employee’s payslip?

This was the point of appeal before the EAT
in C A Ridge v Her Majesty’s Land Registry [2014] UKEAT/0098/10/DM. Ridge had exhausted his sick pay and had, as it transpired, been overpaid by his employer. In his subsequent pay, his employer reduced his gross pay by the correct amount owed but without explanation. Was the employer allowed to do so, or did this reduction amount to a ‘deduction’ under section 8 of the Employment Rights Act 1996 (ERA 1996), for which the purpose of the deduction must be particularised?

The EAT held the reduction was a deduction and Ridge was therefore entitled to a declaration under section 12(3)(b) of the ERA 1996 that his itemised pay statements, in particular the minus entries,
did not contain the particulars required by section 8 of the ERA 1996.

Particular note should be taken of this
judgment as some employers may innocently find themselves on the wrong side of a tribunal order under section 12(4) of the ERA 1996 to pay the employee concerned a sum not exceeding the aggregate of the unnotified deductions so made. This is the case, even though the employee had suffered no loss from the ‘expressed’ omission to particularise the deduction and may well have known of the justified reason for the deduction beforehand.

Dismissal dates

What effect, if any, can an internal appeal have
on an effective date of termination (EDT) as defined
in section 97 of the ERA 1996? The EDT is defined
as, among others, the date on which a notice
expires or, where a contract has been terminated
without notice, the date on which the termination
takes effect.

Generally, with claims of unfair dismissal, complaints must be presented to the tribunal before the end of the three month period beginning with the EDT. 

However, what happens when an employee appeals against a dismissal and the appeal hearing/outcome is more than three months after the date of dismissal? Normally, if they succeed there is not an issue. The employee, presumably, simply goes back to work. But what if the appeal is unsuccessful? Therein, potentially, lies the problem because the related complaint is likely to be time-barred. 

K Rabess v London Fire and Emergency Planning Authority UKEAT/0029/14/JOJ goes some way towards dealing with this dilemma. On 24 August 2012, K was summarily dismissed. K appealed, and for one reason or another, the appeal hearing did not take place until 9 January 2013. 

K had a bittersweet appeal. His gross misconduct was reduced to misconduct, but as he was already on a final written warning he was dismissed in any event. It was the same end but by different means. 

On 3 January 2013, K presented a complaint against his employer. The question before the EAT: was the EDT 24 August 2012 or did it change as a result of the appeal? Dismissing K’s appeal, the EAT held the EDT was 24 August 2012, which means K’s complaint presented on 3 January 2013 rather than no later than 23 November 2013 was time-barred. It held the tribunal’s finding was, “Plainly correct. The internal appeal was not allowed. The dismissal was expressly confirmed. The decision on appeal did nothing to alter the date of dismissal.”

For the purposes of section 83(2)(a) of the Equality Act 2010, employment means “employment under a contract of employment […] or a contract personally to do work.”

In Dr Z Windle v Mr F Arada and Secretary of State for Justice [2014] UKEAT/0339/13/RN and Mr F Arada v Dr Z Windle & Secretary of State for Justice [2014] UKEAT/0340/13/RN, the EAT had to decide whether the claimants, when providing their services to HMCTS as interpreters, were employees of the Secretary of State for Justice (the respondent) within the meaning of section 83(2)(a), and in particular whether, when providing those services, they were employed under a contract personally to do work.

The tribunal found they were not employed under any contract of the kind listed in section 83(2)(a) as, among other things, they were not in a subordinate relationship with the respondent and there was an absence of mutuality of obligations. As the EAT said: “The question of employee/worker or neither status has troubled courts and tribunals for many years,” and acknowledged that, “this is a difficult area of the law, as illustrated by the number of occasions on which the Supreme Court has taken a different view from the lower courts and tribunals.”

The EAT started its examination by scrutinising the statutory meaning and distinction of ‘employee’ and ‘worker’ under section 230 of the ERA 1996. In allowing the appeal, the EAT, in its very detailed judgment, held, among other things, that the tribunal fell into error, as the question regarding the appellants’ lack of mutuality between engagements was relevant to the contract of employment question but irrelevant to the separate question of employment under a contract personally to do work.

Employees abroad

Last, in Creditsights Limited v Satpal Dhunna [2014] EWCA Civ 1248, the Court of Appeal confirmed its position on the criteria to be met for an ‘employee’ working abroad to have a right not to be unfairly dismissed by his employer.

The ERA 1996 does not provide much assistance so help is sought from case law, primarily Lawson v Serco Ltd [2006] ICR 250, Duncombe v Secretary of State for Children, Schools and Families (No.2) [2011] ICR 1312 and Ravat v Halliburton Manufacturing & Services Ltd [2012] ICR 389.

From these we can deduce the right will only exceptionally cover employees who are working
or are based abroad.

In this case, D first worked for C from its London office. C’s parent company was based in New York (PC). On his recommendation, D was moved to Dubai after PC opened an office in the country.
For legal reasons, the Dubai office was made a representative/branch of the London office.
PC subsequently dismissed D for gross misconduct. In consequence, D presented a complaint of, among other things, unfair dismissal under section 94(1) of the ERA 1996. Despite the Dubai’s office connection with London for legal reasons,
the tribunal found it was not such and was in fact part of an Asian operation run by PC. This being the case, relying on Lawson, the tribunal found, among other things, that D did not have strong connections with the UK and British employment law. D appealed successfully to the EAT.

However, allowing C’s appeal, the CA confirmed the general rule that someone in D’s position was precluded from presenting a claim relying on the right not to be unfairly dismissed under section 94(1) of the ERA 1996.

Notably, the fact that C was a company incorporated in England and Wales and engaged
D under an English contract of employment
might be thought to be compelling in D’s favour. However, the CA held it was not. What counts is whether or not the employee was working in Great Britain at the time of his dismissal, rather than what was contemplated when his employment contract was made. SJ

Ryan Clement is a barrister practising from Conference Chambers