Category Archive: Employment

Preparing for the GDPR: New employee data subject rights could disrupt core HR procedures

The General Data Protection Regulation (GDPR), due to come into force throughout the EU including the UK on 25 May 2018, will force through a culture change in terms of attitudes to data privacy, according to the Information Commissioner Elizabeth Denham. Speaking at the Data Protection Practitioners’ Conference 2017, Denham warned that organisations risking damaging their brands and their business if they are seen to be cavalier with personal data: “If an organisation can’t demonstrate that good data protection is a cornerstone of their business policy and practices, they’re leaving themselves open to enforcement action that can damage their public reputation and possibly their bank balance. That makes data protection a boardroom issue.”

It is important to recognise that it is also a key HR issue. Data protection will become one of the major issues, and potentially source of disputes,  in the employment context in the next few years. Employers will need to adopt a whole new culture in relation to the processing of HR data in light of more restrictions on processing, new and strengthened rights for employees and much more stringent penalties.

Far from being a stand-alone issue or tick-box exercise requiring nothing more than updated data protection policies, data protection will impact the heart of the employment relationship and the operation of core HR projects and procedures.

The GDPR will make it difficult, if not impossible to rely on consent for processing in the employment context due to new and more restrictive conditions for consent and the ability to withdraw consent at any time.

The most commonly used basis for legal processing of HR data (beyond processing required by law) is therefore is likely to be legitimate interest. Employers will be able to show a legitimate interest in processing ordinary HR personal data for routine HR processes. However, employees have the right to object to their data being processed or to ask for it to be deleted where processing is based on legitimate interests grounds.  If this happens employers must stop the processing unless and until they have confirmed to the employee compelling grounds for the processing which overrides the objection.

Similarly, if employees challenge the accuracy of HR personal data processed by the employer, they can require cessation of processing or deletion of the data unless accuracy is verified.

Although in many cases the employer may be able to show an overriding need to process the data and that it is sufficiently accurate, the employer will be unable to process the data whilst this is established. These rights could be used by  employees individually or collectively to disrupt and delay HR processes such as appraisals, capability procedures, disciplinary and grievance proceedings, restructures and redundancy exercises and TUPE transfers.  Alternatively they may rely on unlawful processing to challenge management decisions in subsequent employment tribunal proceedings as well as making complaints to the Information Commissioner’s Office.

The risk for employers can be mitigated by ensuring that privacy considerations are embedded in each HR process and project, both in their design and in how they are operated.  To minimise the risk of the  disruption specifically highlighted above businesses should take the following steps as part of the wider review preparing for GDPR before it comes into force:

Legitimate Interest Objections

  • Understand where legitimate interest is the correct legal basis for HR data processing, the likelihood of objections, and whether there is likely to be an overriding compelling ground to continue processing in the event of an objection;
  • Establish a process for dealing with objections promptly and efficiently, being clear who has authority to make the judgment.

Accuracy Challenges

  • Consider how accuracy of data relied on by the business is ensured in each HR process and improve processes where necessary;
  • Build in opportunities to review accuracy or raise queries where appropriate; and
  • Establish an efficient process for dealing with accuracy challenges under GDPR including any verification required, authority for sign-off and responding to the employee.

These and other new and expanded rights under GDPR hugely increase the potential for data protection to be used as a weapon in the context of employment disputes and prospective areas of conflict. In future briefings we will focus on different practical impacts of GDPR on the employment relationship and what business can do to manage these and prepare for implementation by May 2018.

On a more general basis, the HR team needs to be an integral part of an organisation’s preparation for the GDPR. We can help you to:

  • Identify existing data systems and the personal data processed throughout the employment lifecycle from recruitment to termination and beyond;
  • Understand the legal basis for processing and identify what will need to change to comply with the new regime;
  • Identify particular risk areas where use of data could be exploited to delay or disrupt business critical decisions; and
  • Develop and implement policies or changes to HR practices and procedures to manage potential GDPR issues and support compliance.

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The clock is now ticking for employers to publish their gender pay gaps

Today marks the beginning of the one year gender pay gap reporting countdown for every employer with  250 or more employees.

Within the next 12 months, each of these employers will have to wrestle with the Government’s new complex regulations, get to grips with the various calculations, and finally publish details of their gender pay gaps on both their own websites and a specially designated Government website.   For many, there will be nervousness in relation to how competitors are managing the process, how they will fare in comparison, and when to ‘push the button’ to make the results publically available.   Many employers will already have done a dry run of the calculations or otherwise have an informed idea of their existing pay gap.  4 April 2018 is the latest date on which the information can be formally published.

We have designed a quick 30 second survey to capture current information on median* gender pay gaps by sector.  We would be really grateful if you would take the time to complete the survey on a completely anonymous basis. We will publish any representative information in due course on our Be Aware website, with the aim of assisting employers to understand how they compare in their sector marketplace.

Access the survey

If you would like to speak to one of our experts on gender pay gap reporting, or would like a copy of our Snapshot publication on the new obligations, please email Clare Gregory or Kate Hodgkiss.

*regarded by the ONS as being most representative of the pay gap as it is less affected by numbers at the extreme ends of the spectrum


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Gender pay gap reporting: The issues with bonuses

One week from today, 5 April 2017, marks the ‘snapshot’ date on which employers who are in scope need to collect the raw data on which to calculate their mean and median gender pay and bonus gaps under the Equality Act (Gender Pay Gap Information) Regulations 2017. We continue our countdown with a brief look at the issues with bonuses.

Bonus pay is defined as remuneration in the form of money, vouchers, securities, securities options or interests in securities that relates to profit sharing, productivity, performance, incentive or commission. Bonus pay comes into play in two different respects under the regulations. If bonus pay is paid in the pay period which includes 5 April, employers need to factor those payments into the calculation of hourly rates of pay. Employers will also need to separately assess all bonus payments made to employees in the 12 months ending on the 5 April (in respect of employees still employed on that date) and report 3 separate metrics: The mean and median bonus gaps, and the proportion of male and female employees who received bonus pay during that 12 month period.

All of these calculations give rise to issues with bonus. The regulations provide for pro-rating of bonuses for the hourly-rate of pay calculation; the hourly rate should include a pro-rated bonus figure which reflects the pay period, where the bonus relates to a longer period. This does limit the extent to which the timing of payments can skew the overall gap, for example where employers pay annual bonuses during the April pay period. However, it will not always be easy to determine what period the bonus payment relates to. In the case of shares and share options, will employers need to pro-rate according to the period prior to vesting/exercise? Commission which is paid on the conclusion of a particular transaction rather than periodically will be similarly difficult to pro-rate. There is also no indication as to how employers should pro-rate, for example, an annual bonus where an employee has been on maternity leave and only eligible for bonus for part of the bonus year.

When calculating the mean and median bonus gap, the regulations do not allow for making full-time or full-year equivalent comparisons for employees whose bonuses are pro-rated for part-time working or maternity leave. As these employees will disproportionately be women, this could have a significant impact on the bonus gap. Unlike for the hourly rate calculation, there is also no mechanism for pro-rating for the period to which the bonus relates. This could again lead to skewed results: An individual receiving shares worth £100 in a particular year (but which vested, and so were earned, over a 2 year period) will seem to be better paid for the purposes of the regulations than someone who received £50 of shares in that year but had already received £50 of shares in the previous year.

Bonus pay in the form of securities, securities options and interests in securities is treated as paid at the time when and in the amounts in respect of which it gives rise to taxable earnings. This means that the amounts relevant for gender pay gap reporting will depend on the type of security or interest in security. Although tax-advantaged securities options (EMI, CSOP and SAYE) will generally not give rise to a tax charge on exercise, it is not clear that the amount of the option gain is not still an amount which is reportable under the regulations.  If only taxable gains have to be reported, reporting may be skewed where an employer has a mix of tax-advantaged and non-tax-advantaged share incentive arrangements (given that only some of those may need to be taken into account in reporting).

For private companies, it may be difficult to calculate the value of the shares on exercise of an option, and companies may need to instruct their auditors or a share valuation expert.

For direct share acquisitions, there will be no taxable employment income unless the employee pays less than market value for the shares, so they are not taken into account.

It is important for employers to be proactive in assessing how different payments to employees will be treated under the regulations ahead of the requirement to report. Understanding pay arrangements will help employers manage and present information meaningfully and in context both internally and externally.

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Gender pay gap reporting: what counts as ‘pay’?

Two weeks from today, 5 April 2017, marks the ‘snapshot’ date for which employers who are in scope need to collect the raw data on which to calculate their mean and median gender pay and bonus gaps. Employers will be required to publish information on their gender pay gap by 4 April 2018.

The requirement to assess pay data is the gross hourly rate of pay in the pay period which covers 5 April. Pay is calculated using gross figures, before any deductions for PAYE, National Insurance contributions, pension contributions, student loan repayments and voluntary deductions and takes into account both ordinary pay and bonus pay.

Ordinary pay means basic pay,  allowances, pay for piecework, pay for leave; and shift premium pay. It does not include overtime pay, redundancy pay, pay in lieu of leave, or non-monetary remuneration. 

Bonus pay means as any remuneration that is in the form of money, vouchers, securities, securities options or interests in securities and that relates to profit sharing, productivity, performance, incentive or commission.

These definitions give rise to some grey areas. The draft guidance published by Acas and the Government Equalities Office makes clear that the value of benefits provided under a salary-sacrifice arrangement do not count as ordinary pay; the employer should use the employee’s gross pay after any reduction for a salary-sacrifice scheme.  

The position in relation to pension contributions is still not entirely clear. The guidance says “The amount of an employee’s ordinary pay and bonus pay must be calculated before deductions are made at ‘source’. Employee pension contributions are a deduction, so whether or not an employee makes pension contributions will not affect the gender pay gap calculations” but it is arguable that employer contributions are not a deduction. A salary supplement that an employee receives because they have opted out of a pension scheme would be included in pay.

Benefits in kind are excluded from the definition of ordinary pay. This means that an employer should disregard the value of, for example, a company car provided to an employee. However, car allowances should be included in the calculation, as allowances are included in the definition of ordinary pay. Where an employer provides an interest-free loan to employees, such as a season ticket loan, the value of the loan should not be included as pay.

Should retrospective pay rises be included in the calculation? The regulations allow employers to ignore “any amount that would normally fall to be paid in a different pay period” but this does not cover pay which should have been paid in the relevant pay period but was not. 

Overtime is another grey area. Remuneration referable to overtime is excluded from the definitions of both ordinary pay and bonus pay. This suggests that employers should exclude not only actual overtime pay but also other elements of pay (such as allowances and shift premiums) earned in respect of overtime hours. If so, employers would need to distinguish between what is earned during normal working hours and what is earned during overtime hours. However, such a distinction could be difficult to draw in respect of some elements of pay. For example, how should an employer determine which part of a performance bonus or sales commission relates to work done during overtime hours?

These grey areas are bound to lead to inconsistencies in how employers in the same sector approach their data. Ultimately this risks making comparisons between employers of limited value. The most important consideration for employers may be to ensure that they take a consistent approach internally so they can track their own progress on the gender pay gap year-on-year.



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Scope for ban on Islamic headscarves in the workplace remains limited

The European Court of Justice has decided that an internal rule which prohibits the visible wearing of any religious sign does not constitute direct discrimination based on religion or belief. Although such a rule might constitute indirect discrimination, it may be objectively justified.


Ms Achbita (A) was employed, in Belgium, as a receptionist by G4S and was involved in providing reception services for customers.  At the time of A’s recruitment there was an unwritten rule within G4S prohibiting employees from wearing visible signs of political, philosophical or religious belief in the workplace.   When A informed her employer that she intended to wear an Islamic headscarf at work,  she was told not to as this was contrary to the position of neutrality adopted by G4S in its contact with customers.    Shortly after, the G4S works council approved a change to the workplace regulations which provided that ‘employees are prohibited, in the workplace, from wearing any visible signs of their political, philosophical or religious beliefs and/or from engaging in any observance of such beliefs’. A was dismissed because she insisted on wearing the Islamic headscarf at work. She challenged her dismissal in the Belgian courts, which referred the matter to the ECJ.

Ms Bougnaoui (B) worked at Micropole, in France, initially as an intern and then as an employee. Before the start of her internship,  she was told by a representative of the employer that wearing an Islamic headscarf at work might pose a problem when she was in contact with customers.   B did wear an Islamic headscarf at work. Following a complaint from a customer to whom B had been assigned, Micropole reaffirmed the principle of the need for neutrality as regards its customers and asked B not to wear the veil in future. B objected and was dismissed. She challenged her dismissal in the French courts, which referred the matter to the ECJ.

The ECJ considered both cases together.

G4S decision

The Court decided that, as G4S’s internal rule refers to the wearing of visible signs of political, philosophical or religious beliefs, it covers any manifestation of such beliefs without distinction. All employees are treated in the same way and are required, generally and without differentiation, to dress neutrally.   There was no evidence that the internal rule was applied differently to A as compared to other G4S employees.

The Court concluded, therefore, that the rule is not directly discriminatory as it does not introduce a difference of treatment that is directly based on religion or belief.

The Court also considered the issue of indirect discrimination. It found that the employer’s internal rule could be indirectly discriminatory if the obligation it imposes, although apparently neutral,  in fact results in persons of particular religion being put at a particular disadvantage. Such indirect discrimination may, however, be objectively justified by a legitimate aim, provided that the means of achieving that aim are appropriate and necessary.

In terms of G4S’s rule, the ECJ gave guidance on the matters that the Belgian court should consider when assessing objective justification. According to the ECJ –

  • the pursuit by the employer, in its relations with its customers, of a policy of political, philosophical and religious neutrality is a legitimate aim, notably where the only workers involved are those who come into contact with customers;
  • the ban on the visible wearing of signs of political, philosophical or religious beliefs is appropriate for the purpose of ensuring that a policy of neutrality is properly applied, provided that that policy is pursued in a consistent and systematic manner;
  • the Belgian court will have to ascertain whether the prohibition covers only G4S workers who interact with customers. If that is the case, the prohibition must be considered strictly necessary for the purpose of achieving the aim pursued; and
  • the Belgian court should also ascertain whether it would have been possible for G4S to offer A a post not involving any visual contact with customers, instead of dismissing her.

Micropole decision

The ECJ decided that the willingness of an employer to take account of the wishes of a customer no longer to have services provided by a worker wearing an Islamic headscarf cannot be considered to be a ‘genuine and determining occupational requirement’ for discrimination purposes.   The Court pointed out that there are very limited circumstances in which a characteristic related to religion can constitute a genuine and determining occupational requirement. This concept refers to a requirement that is objectively dictated by the nature of the occupational activities concerned or of the context in which they are carried out and does not cover subjective considerations, such as the employer’s willingness to take account of the particular wishes of the customer.


Although the decision of the ECJ does allow some scope for an employer to operate a dress code which requires religious neutrality,   in reality that scope is extremely limited.   Such a code is only possible where its use is in pursuance of a legitimate business aim and, further, it must be a proportionate means of achieving that aim.   Employers should also be aware that dress codes can give rise to risks of other types of discrimination, for example sex or disability discrimination. Practical points to consider in reviewing or implementing a dress code are –

  • Addressing why the dress code is necessary by identifying a legitimate aim;
  • Considering the scope of the code and what the justification is for its different elements;
  • Deciding whether employees or employee representatives should be consulted about the code;
  • Ensuring that the code is applied consistently and systematically across the business; and
  • Considering what flexibility might be allowed within the code, where exceptions might be possible and how any flexibility can be managed consistently across the business.

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New apprenticeship levy applies from April 2017

This week (6 to 10 March 2017) marks the 10th National Apprenticeship Week. This is quite timely, as it precedes the introduction of the apprenticeship levy next month.

The apprenticeship levy applies from 6 April 2017, and effectively shifts the cost of funding apprenticeships from the government to large employers.  The levy will be collected through the PAYE system alongside tax and National Insurance Contributions.

The rate of the levy will be 0.5% of each employer’s wage bill; effectively operating as an additional tax on employers. However, each employer will be able to offset an allowance of up to £15,000 against the levy, which in effect means that the levy only becomes payable on wage bills of over £3m (as 0.5% of £3m equals £15,000), unless the employer is “connected”.  A company is deemed to be “connected” to another if it has control of that other company, or if both companies are under the control of the same person or persons.  Therefore, generally speaking, companies in a corporate group will be connected.  Importantly, connected companies will only be entitled to one £15,000 allowance between them for each tax year.

Employers will have access to a new Digital Apprenticeship Service (DAS) account, which they can use to access funding for apprenticeships. The amount of funds available in an employer’s DAS account will be determined by the value of their apprenticeship levy and the number of their employees living in England.  The government will also apply a 10% ‘top up’ to the funds.  Funds will expire 24 months after they enter an employer’s DAS account.

More details on the levy and how it will operate are set out in the guidance manual recently published by HMRC. For advice on the apprenticeship levy, or on apprenticeships generally, contact your usual DLA contact.



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Collective Bargaining Stalemate? – Tribunal finds employer’s direct approach to employees unlawful

Employers who recognise a trade union for the purposes of collective bargaining should be aware of a recent tribunal decision which may significantly  impact on their ability to implement contract variations where union negotiations reach a stalemate.

The s.145B conundrum

This is due to a little-known section of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). Section 145B of TULRCA is complex but essentially prohibits employers making offers directly to union members to change their terms and conditions in order to avoid collective bargaining (i.e. if the employer’s “sole or main purpose” in making the offer is to achieve a “prohibited result”) .

TULCRA defines a “prohibited result”  as being that one or more of the workers’ terms “will not” or “will no longer” be determined by collective agreement. There is no binding case law on what this means in practice. In particular there is uncertainty about whether employers who, despite bargaining in good faith with the union, fail to reach agreement on a new contractual term are able to then approach employees directly to agree the change, without breaking the law.

This is an issue which arises frequently. For example, if an annual pay bargaining negotiation reaches stalemate, or an employer tries and fails to agree new working patterns with its recognised trade union then if the employer invites workers to accept its proposals directly and they accept, that particular contract term will not have then been determined collectively. The key questions are does the employers offer amount to a prohibited result and was this its sole or main purpose?

Following 3 employment tribunal cases in 2013  it was generally considered that for the legislation to be breached the employer had to be seeking either the total or partial elimination of collective bargaining.

Dunkley and others v Kostal UK Limited

This position has been called into question by the recent employment tribunal decision in Dunkley and others v Kostal UK Limited.


The employer had a recognition agreement with Unite providing for collective bargaining. In pay negotiations in November 2015 the company made a pay offer of a 2% increase in basic pay plus a 2% Christmas bonus, in return for changes to terms relating to sick pay for new starters, reduction in overtime rates and consolidation of breaks.

The union balloted members on the offer, which was rejected. The employer then sent a notice to all employees summarising the deal and giving until 18 December to accept. The notice stated that failure to sign and return would result in the Christmas bonus not being paid. In January the employer sent a further letter to employees who had not accepted the offer stating that if no agreement could be reached this may lead to notice being given to terminate employment. In the meantime the dispute between the company and the union was referred to ACAS but a collective agreement in respect of pay for 2015 was not concluded until November 2016.

The claimants – all members of Unite – brought claims under s.145B.


The tribunal held that the employer had breached s.145B.  It found that the employer took the conscious decision to bypass further meaningful union negotiations in favour of a direct and conditional offer to individual employees. It was, the tribunal found, improbable that the employer did not intend to circumvent the collective bargaining process when it made the offers. If there is a recognition agreement which includes collective bargaining the employer cannot drop in and out of the collective process as and when that suits its purpose. The tribunal discounted the fact that the employer intended to determine terms and conditions collectively in the future.

Interestingly, the tribunal failed to accept the employer’s arguments that the impact of this would prevent the employer ever implementing a change to terms with union members if the Union refused to agree.  The tribunal disagreed and considered the option was still open to employers of terminating the contract and offering re-engagement on the new terms. In our view, however, this misses the point that the offer of re-engagement would in itself be in breach of s.145B if the tribunal’s interpretation of s.145B is correct.

Implications of this decision

While there is much the employer could have done differently in this case to strengthen their argument as to their true purpose in implementing the changes, the tribunal decision casts new uncertainty on the impact of s.145B and the level of restriction it places on employers with trade unions who are recognised or seeking recognition.

Although this is only a tribunal decision and therefore not strictly  binding, we are aware that Unite is already seeking to rely on it to prevent employers engaging  directly with employees in relation to terms and conditions. There is now a much higher risk that trade unions will encourage employees to bring claims if offers to change terms are made direct to union members even where collective bargaining has been followed in good faith and reached a stalemate and where the employer intends to collectively bargain on all future matters.

Why is this important?

The consequences of a breach of s.145B can be significant. An Employment Tribunal will award  £3,830 to each employee who has been made an offer in breach of the statutory provisions (whether or not they have accepted the offer) and the contract variation may not be effective. In addition, dismissal for failing to accept such an offer will be automatically unfair with no minimum service requirement. While this legislation only restricts offers to union members, making offers only to non-member employees presents other risks.

What should employers now do?

What can employers do to mitigate the potential for a breach of s.145B?

  • Be clear in communications with the union and the employees what the business reason or need is for any proposed change to terms and conditions and the reason for any urgency. Employers must prove their purpose is lawful. The stronger the business need the more likely a tribunal is to accept the business reason for the new terms is the main purpose;
  • Ensure if offers are made to employees the terms are the same as those offered via the trade union and, in most cases, that the scope of collective bargaining going forward remains unchanged;
  • Exhaust collective bargaining procedures first. Avoid expressing hostility towards  collective bargaining arrangements. In determining the employer’s purpose, the employment tribunal must take into account any evidence that  the employer had recently changed or sought to change, or did not wish to use, collective bargaining; and
  • Review collective bargaining agreements.   

Our employment team have extensive experience of advising on changes to terms and conditions where a union is recognised for collective bargaining and succeeded in defending British Airways against a s.145B claim in 2013 following a restructure. If you would like to discuss your current collective bargaining  arrangements or ongoing or anticipated change programmes, please contact your usual DLA Piper contact.

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Trade Union Act 2016 major provisions coming into force 1 March

The major provisions of the Trade Union Act 2016 will come into force on 1 March 2017. The Trade Union Act 2016 (Commencement No. 3 and Transitional) Regulations 2017 will bring into force the following provisions:

  • The 50% turnout requirement for all industrial action ballots (section 2 of the 2016 Act which amends section 226 of the Trade Union and Labour Relations (Consolidation Act 1992 – TULRCA));
  • The requirement that 40% of those entitled to vote support industrial action in important public service ballots (section 3 which amends s.226 TULRCA);
  • New rules governing the information that must be included on the ballot paper, requiring the union to provide a summary of the matters in issue in the dispute, details of the types of industrial action short of a strike and when industrial action is expected to take place (section 5 which amends s.229 TULRCA);
  • Changes to the information which must be notified to union members following a ballot (section 6, which amends section 231 TULRCA);
  • The requirement on unions to include information about industrial action and political expenditure in their annual return to the Certification Officer (sections 7 and 12, which bring into force new s.32ZA-C TULRCA);
  • The extension of the notice of industrial action to be given to employers from one week to two weeks (section 8, which amends s.234A TULRCA);
  • The expiry of the mandate for industrial action six months after the ballot (section 9 which amends s.234 TULRCA);
  • The requirement on unions to appoint a picket supervisor (section 10 which amends s.219 and brings into force new s.220A TULRCA);
  • The requirement that union members opt in to contributing to political funds, subject to a transition period of 12 months and only in respect of new joiners (section 11 which amends s.82 and brings into force new s.84A TULRCA); and
  • Restrictions on ‘check-off’ arrangements, requiring unions in the public sector to make a reasonable contribution to the cost of administration (section 15 which amends s.296 and brings into force new s.116B TULRCA).

The new rules will only apply to industrial action ballots which open on or after 1 March 2017.

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Employment tribunal developments

In the last week, we have seen a couple of developments relating to employment tribunals which will be of interest to employers. The first relates to a new online register of employment tribunal judgments; the second is the publication of the Government’s response to its consultation on transforming the justice system.

Online employment tribunal judgments

HM Courts and Tribunals has now launched its online register of employment tribunal judgments, (some time after its initial announcement about the planned availability of this service back in June 2016). The register is available here.  This is the first time that there has been a central register of judgments at employment tribunal level.  At present, the number of cases available on the new online service is limited, mainly covering cases in 2016 and 2017 (with a small number of 2015 cases). It is anticipated, however, that all new cases will be available on this register going forward. EAT judgments are still available through the Courts and Tribunals Judiciary website.

Government publishes response to its consultation on “Transforming our justice system”

Reform of the courts and tribunals system has been on the agenda for some time. Back in July 2016, Lord Justice Briggs published his final report on the Civil Courts Structure Review which contained a number of comments on the employment tribunal system and referred to the potential for a new Employment and Equalities Court (see sections 11.11-11.21).

Then, on 15 September 2016, the Lord Chancellor, Lord Chief Justice, and the Senior President of Tribunals issued a joint statement on their shared vision for the future of Her Majesty’s Courts & Tribunal Service. The statement highlighted that the case for reform of the tribunals system is “compelling” and that there is a plan to create “one system, one judiciary” with better quality outcomes.  By 2020, therefore, it is proposed that tribunals will be part of a single justice system with a single judiciary. The statement said that “tribunals will be digital by default” but with help in place for anyone who needs it – and that the needs of people who use the tribunals will be “put at the centre”, allowing all parties better quality, faster and less stressful resolution of claims.

At the same time as the publication of the joint statement, the Ministry of Justice published a consultation paper, Transforming our justice system. The consultation sought views on making the justice system faster and easier to use.  In relation to employment tribunals specifically, the proposals were limited with the consultation paper indicating that reforms being adopted elsewhere in the justice system (eg streamlining procedures, more decisions ‘on the papers’, more virtual hearings, simplifying panel composition etc) could be applied to the employment jurisdiction. The consultation generally asked for views on 3 specific elements:

  • Assisted digital facilities;
  • Online conviction and statutory fixed fine; and
  • Panel composition in tribunals.

The consultation received 790 replies and the Government’s response was published last week. Unfortunately there is no specific reference to the employment tribunal system but the response indicates that support (in the form of a national network of accessible, quality assured assistance alongside telephone and webchat services) will be put in place for any digital solutions eg services which are moved online. We shall have to wait to see how developments progress.  For now, despite the current lack of information, it seems certain that change is firmly on the agenda.

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Court of Appeal decides “self-employed” plumber has worker status

Employment status is shaping up to be one of the hot employment law topics for 2017.   Early February and we already have a Court of Appeal judgment on the subject.  Today, the Court of Appeal decided,  in the case of Pimlico Plumbers Ltd v Smith,  that a plumber, who was engaged as a “self-employed operative”,  should in fact have been treated as a “worker” for employment rights purposes.  Workers have rights to, for example, paid annual leave and the national minimum wage.


Smith worked as a plumber for Pimlico Plumbers Limited for around 6 years.  He was labelled as a “self-employed operative” and described in documentation as an independent contractor, in business on his own account.    Under the arrangements between the company and the claimant –

  • He was required to wear a Pimlico Plumbers uniform;
  • He was required to drive a van with the Pimlico logo;
  • He had his movements monitored by Pimlico via GPS installed in the van;
  • He could only be contacted by customers through Pimlico;
  • Customer contracts and estimates were issued in the name of Pimlico;
  • His contract did not permit him to provide a substitute to do his work and largely pointed to personal performance. Pimlico did permit work to be transferred between operatives and where necessary allowed external specialists to be used;
  • His contract contained post-termination restrictive covenants;
  • He was paid by Pimlico against receipt of an invoice;
  • He was required to provide his own tools, equipment and materials;
  • He took personal liability for work performed by him and provided his own professional indemnity insurance;
  • He was taxed as self-employed and was VAT registered;
  • According to the contract, there was no obligation on the company to offer and no obligation on Smith to accept work, but he was required to notify the days on which he was unavailable;
  • He could ostensibly reject particular jobs and could decide his own working hours, but the tribunal accepted that he was required to do a minimum number of hours work each week.

Employment Tribunal, Appeal Tribunal and Court of Appeal agree “worker” status

Smith brought a claim to the employment tribunal alleging that, following a heart attack, he was unfairly or wrongfully dismissed by Pimlico.  His claim also alleged direct disability discrimination, discrimination by reason of failure to make reasonable adjustments, and contained allegations in respect of holiday pay and unauthorised deductions from wages.

The Employment Tribunal considered, as a preliminary issue, the question of Smith’s employment status and concluded that he was a “worker” rather than genuinely self-employed or an employee. This decision was upheld by the Employment Appeal Tribunal and has now also been approved by the Court of Appeal.

Key factors in the arrangements between Smith and Pimlico which led to the worker status finding were

  • The obligation on Smith to perform work personally and the absence of a contractual right of substitution;
  • That Smith was required to work a minimum number of hours per week, despite the documentation purporting to allow him to reject work and decide his own working hours; and
  • The degree of control exercised over Smith by Pimlico which showed that they were not a customer of a business run by him. Rather, Smith was an integral part of Pimlico’s business and was subordinate to it. The contractual restrictive covenants were important to this finding.

Key factors in the arrangements which led to Smith being held not to be an employee were –

  • The fact that there was no obligation on Pimlico to provide Smith with work;
  • The intentions and actions of the parties demonstrated they considered him to be self-employed; and
  • The financial risk which Smith bore.

The finding of worker status means that Smith will be able to pursue his disability discrimination claims and those for unlawful deductions and holiday pay. He will be unable to continue with his unfair dismissal claim.


Whether an individual is classified as self-employed, a worker or an employee will depend on the facts of each particular workplace arrangement.   However, there are some useful pointers to be taken from the outcome of this case.   First, it is crucial for businesses to be aware that a classification of self-employed for tax purposes does not automatically mean that the same classification will apply for employment rights purposes.   Further, for self-employed status to hold true, removing a requirement for personal service and allowing a right of substitution is important. In addition, the use of standard contractual documentation should be approached with caution as there is a risk that it will not reflect the reality of the arrangements between the parties and suggest a different type of “employment” arrangement to what is intended.

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