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A stark warning to businesses for backdated holiday pay claims

The European Union (CJEU) judgment in the case of King v Sash Window Workshop Limited is highly likely to have profound implications for businesses benefiting from the so-called “gig economy”, who engage with self-employed workers. It exposes businesses to significant backdated holiday pay claims.    

The facts

Conley King joined the Sash Window workshop in 1999 as a self-employed, commission-only salesperson.  Upon departing Sash Window Workshop in 2012, King brought a number of claims against the business on the grounds that, during his 13 years with them, he had suffered a number of unlawful deductions from his earnings, namely that he had not been paid holiday pay.

Mr King’s contract made no mention of leave, and all leave taken by King during his 13 years with the business was unpaid.  This was, his employer claimed, due to his self-employed status.  
On the contrary, King claimed that he was entitled to holiday pay, and pay for unused holiday that had accumulated over the 13-year period.  The tribunal ruled in favour of King, asserting that he was a worker and thus entitled to paid annual leave, but the case failed at the Employment Appeals Tribunal.  When King escalated the claim to the Court of Appeal, it was referred to the CJEU.

Currently, under the Working Time Directive, statutory holiday entitlement expires at the end of each leave year, and can therefore not be carried over into the following year.  This is true in all cases, unless a worker taking sickness absence is prevented from taking planned annual (paid) leave.  Nevertheless, the CJEU ruled in favour of King, arguing that it was irrelevant that King’s employer believed he was not entitled to annual leave because he was selfemployed. It decided that workers who are prevented from taking annual leave by their employers should be remunerated for the total period of annual leave accumulated during their employment.

What does this mean?

The decision essentially means that workers are entitled to be paid in respect of all accrued holiday to the date of termination. In this case, King was entitled to be paid in respect of 13 years of holiday accrued during his engagement. 

The practical consequences are likely to extend far beyond this case.  Businesses using a self-employed workforce are likely to face substantial annual leave bills, should their staff be successful in asserting their status as workers as opposed to independent contractors.

It is advised that businesses who engage with self-employed workers should review the terms of their contracts. 

If you should have any queries about this case, its implications, or wish to discuss further please get in contact with our Employment Team at either our London (0203 440 3705) or High Wycombe offices (01494 451355).  
In July 2017, Lord Justice Jackson announced his long-awaited proposals for evolving the fixed costs regime within civil litigation. The proposals are to be put before government and change will undoubtedly be on the horizon for 2018. This could see a significantly different approach to the way costs incurred throughout litigation can be recovered, and to what extent these costs can be fixed from the start.

Lord Justice Jackson intends for the proposals to change the costs involved in certain cases within the different tracks of civil claims.

Read more: Fixed Costs in Civil Litigation

The recent case of British Airways (“BA”) v Pinaud serves as a reminder that discrimination of part-time workers is unlawful under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (“PTWR”) but that employers might avoid pay-outs if such treatment can be objectively justified.

The case involved a BA crew member who, upon returning from maternity leave, became a part-time worker.  Like other part-time workers, she was contracted to work 14 days on, 14 days off. The airline’s full-time staff were scheduled to work 6 days on, 3 days off. These work patterns meant that the full-time staff were required to be available for 243 days of the year, whereas those working part-time were required to be available for 130 days. Therefore, the requirement of availability for part-time employees amounted to 53.5% of that of BA’s full-time workers. However, those part-time workers were only paid 50% of full-time salary.  

Read more: Part-Time Workers’ Discrimination - British Airways v Pinaud

In a decision described by the barristers who acted for the successful Claimant, Mr Efobi, as “a radical reconsideration of the burden of proof”, last month the Employment Appeal Tribunal handed down judgment on how to correctly interpret the burden of proof provision concerning cases of direct discrimination under the Equality Act 2010 (“EqA”).

Read more: Efobi v Royal Mail Group – Case Summary

In 2016, in the case of Barbulescu v Romania, the European Court of Human Rights ruled that an employer was lawful in monitoring an employee’s messenger account. The ruling reinforced the UK Government’s current policy, which says that employers can monitor emails, or look at which websites workers visit, as long as they explain this clearly in the staff handbook or contract.

In this case, the employee had used a Yahoo messenger account to communicate with his brother and his partner. The news was welcomed by employers across the UK, and seemed to align with the expectation that an employee should devote their full time and attention to their job when at work.

However, the decision was then appealed to the Grand Chamber, which is the final tier. This summer, in an 11 to 6 judgment, the Chamber overturned the ECHR decision and gave judgment in favour of Bogdan Barbulescu, and the right to respect for privacy under Article 8 of the European Convention on Human Rights. Mr Barbulescu was therefore entitled to compensation for the breach of his human rights.

Read more: Win for employees’ right to privacy

In the matter of AAZ v BBZ [2016] EWHC 3234 (Fam), Mr Justice Haddon-Cave very aptly and bluntly described the trust in this matter at para 72 of his judgement: "Thus, the way in which the Trust is intended to operate is remarkable in its simplicity: i.e. by H, qua Principal Beneficiary, asking himself, qua sole director of C Ltd, for a distribution and then H, qua Protector, asking himself whether or not such a distribution should be met. The Trustees can ignore the needs of the other beneficiaries and benefit H by transferring the whole or any part of the capital to him. The Trustees (in essence H) owe no duty of care and are free from the self-dealing rule: he can pay money to himself whenever he wishes. The Trust document is not a sham in the sense of pretending to be something that it is not. It is a remarkably candid and pellucid document which makes no pretence to be anything other than what it is, namely what is colloquially called a 'Dear me' trust for H for his lifetime." 
Under the requirements of the new Royal Charter and in a bid to make the BBC more transparent, a salary report from the BBC Remuneration Committee has been published this week. The report discloses the pay of all senior executives of the BBC who are paid more than £150,000. It is the first time that this information has been made public.

Read more: Rise in equal pay claims against employers?

Matthew Taylor’s Review of Modern Working Practices, or colloquially ‘Good Work’, was finally published this week. As part of a collaboration with Greg Marsh, Diane Nicol and Paul Broadbent, Taylor sought to consider three challenges: Firstly, tackling exploitation at work; secondly, to increase clarity in the law and inform individuals of their rights and how to exercise these; and finally, to align incentives driving the nature of the UK labour market with a modern industrial strategy and broader national objectives.

Read more: The Taylor Review - certainty for worker status on the horizon?

The former wife of an oil and gas trader has been awarded £453 million in financial remedy proceedings against her former husband. It is thought to be one of the largest divorce awards in the UK.

The husband is 61 and the wife is 44. They married in Moscow in July 1993 and moved to London in the same year. In 2012, the husband sold shares in a Russian company for US$1.375 billion. The wife had been a 'hands on' mother and housewife throughout the marriage.

In addition to a lump sum payment of £350 million (and the assets she already had of £10,165,162), the wife also sought a further £93,060,990 comprising the following:
 
(1) The chattels valued at £2,479,125;

(2) An Aston Martin valued at £350,000;

(3) A modern art collection valued on a sale basis at US$112m.
 
The Judge found the total value of the wife’s claim to be £453,576,152, and considered an award of that sum to be justified in all the circumstances.
Better protection for whistleblowers?

Appeal upheld in Dr Day -v- Health Education England
The highly anticipated Court of Appeal Judgment in Dr Day -v- Health Education England has today been handed down. 

The judgment has upheld an appeal by Dr Chris Day (a junior doctor who was employed by an NHS Trust) regarding the decision that he could not bring a whistleblowing claim against his national training body, Health Education England (“HEE”).

The judgment has helped to clarify the positon for junior doctors across the country (there are approximately 54,000 junior doctors in England) and workers who are supplied to work for other organisations, who blow the whistle.

Prior to joining Curzon Green Solicitors our Lauren McLaughlin was part of the legal team representing the Appellant, Dr Day.

Background
In January 2014, Dr Day blew the whistle to Lewisham and Greenwich NHS Trust, his employer at the time, regarding patient safety concerns. He made disclosures about the Intensive Care Unit at Queen Elizabeth Hospital being understaffed. He repeated his disclosures to HEE, the training body with whom he had entered into a training agreement.

After blowing the whistle, Dr Day alleges that he was unfairly dismissed by the Trust and that HEE subjected him to detriments, refusing to place him at a new NHS Trust unless he accepted certain conditions. HEE then removed Dr Day’s National Training Number which is essentially the trainee doctor’s passport allowing him or her to complete the training programme and become a consultant doctor. Dr Day claims that he lost his career path to consultancy.

Dr Day brought whistleblowing claims in the Employment Tribunal against both the Trust and HEE.

The issues
“Workers” are protected by law from unfair treatment. The law extends the definition of “worker” to cover those who are supplied by one organisation to work for another.

At a Preliminary Hearing in 2015, it was decided that Dr Day was not HEE’s worker and as such, he did not have whistleblowing rights as against HEE. The Tribunal found that HEE did not substantially determine the terms under which Dr Day worked. This was despite that HEE places junior doctors at particular trusts and contributes to their salaries, among other things.

Court of Appeal decision
The first issue for the Court of Appeal was whether Dr Day can be a worker of HEE, even though he had an employment contract with the Trust. The Court of Appeal decided he could, overturning the EAT’s decision. This has helpfully clarified the position for agency workers and other workers in triangular relationships.

The second issue is whether HEE “substantially determined” the junior doctor’s terms. The Court of Appeal upheld Dr Day’s appeal on this point and remitted it back to the Tribunal to decide. The Tribunal’s decision could prove to be a landmark victory for junior doctors who blow the whistle to their training bodies. We will therefore be following the case, and the Tribunal’s decision, closely.

If you have been dismissed, suspended or treated unfairly after having blown the whistle or if you wish to discuss how to implement effective and fair whistleblowing policies and investigations at your organisation, please get in touch with our Employment Team.

The full judgment can be found here: www.bailii.org/ew/cases/EWCA/Civ/2017/329.html

Please contact us today for a free no obligation consultation by calling either our London or High Wycombe offices on the telephones numbers referred to at the top of this page, or by email: This email address is being protected from spambots. You need JavaScript enabled to view it.

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