Employment Bulletin – August 2018

Pimlico and Hermes 'worker' rulings could affect gig economy

The Supreme Court ruling in the Pimlico Plumbers case and the Employment Tribunal decision involving Hermes help to clarify the difference between 'worker' and 'self-employed' and could have a significant impact on the gig economy.

The long running dispute involving London based Pimlico was initiated by one of its plumbers, Gary Smith.

Mr Smith had carried out work for the company for almost six years. He had entered into two agreements, stating that the company was not obliged to offer him work and he was not obliged to accept it.

The company manual stated that he was required to wear a company uniform, carry a company ID card, use a company mobile phone and hire a company van when carrying out the work. He was expected to work five days per week for 40 hours.

He had the right to decline jobs or send another company operative in his place if he could not attend.

He brought claims for unfair dismissal, unlawful deductions from wages, unpaid annual leave and disability discrimination. The Employment Tribunal concluded that he was not a "worker" under a contract of service for the purposes of the unfair dismissal claim, but he was a worker within the meaning of the Employment Rights Act, the Working Time Regulations 1998, and he was in "employment" within the meaning of the Equality Act 2010.

Those decisions have now been upheld by the Supreme Court. The justices said Mr Smith should be classed as a worker, not as self-employed, meaning he is entitled to various employment rights such as holiday pay.

In giving his ruling, Lord Wilson, said: "Although the contract did provide him with elements of operational and financial independence, Mr Smith's services to the company's customers were marketed through the company.

"More importantly, its terms enabled the company to exercise tight administrative control over him during his periods of work; to impose fierce conditions on when and how much it paid to him, which were described at one point as his wages; and to restrict his ability to compete with it for plumbing work following any termination of their relationship."

The chief executive of Pimlico Plumbers, Charlie Mullins, criticised the decision and said he would consider further legal action.

The Hermes case involved 65 of its drivers. The Employment Tribunal in Leeds held that they were workers, not self-employed contractors.

It's likely that both the Pimlico and the Hermes rulings will have an impact on the growing gig economy and may influence several other cases coming before the courts involving companies that rely on people they classify as self-employed.

The government is already considering recommendations made in the Taylor Review of working practices to improve worker rights, but no firm decisions have yet been made.

Firm discriminated against pregnant woman by extending probation

The Employment Tribunal has ruled that an employer discriminated against a woman when it extended her probationary period after discovering she was pregnant.

The employee was appointed as a contracts administrator on 8 June 2016 and agreed a start date of 20 June. However, five days before she was due to start, she discovered that she was pregnant.

The employee didn't inform the employer of her pregnancy before she took up her position as she didn't believe it was necessary to do so.

She eventually told her office manager that she was 12-weeks pregnant on 25 July. The office manager appeared to be "completely thrown" by the news but later held a meeting with the employee and told her that her employment would not be affected.

However, over the following months her probation period was twice extended amid concerns about her performance and at a meeting on 20 December, she was told she would have to undergo another probation period after returning from maternity leave.

She brought a claim of direct discrimination on the grounds of pregnancy

Under section 18 of the Equality Act 2010, an employer discriminates against a woman if in the protected period in relation to a pregnancy of hers, she is treated unfavourably because of the pregnancy.

The Employment Tribunal found in the employee's favour. The Employment Judge said: "We are entirely satisfied that the Claimant's pregnancy was an effective cause of her probationary period being extended for a second time and that the Claimant was therefore, again, subjected to unfavourable treatment because of her pregnancy."

A second hearing was scheduled to determine how the situation should be remedied and to set the level of compensation if appropriate.

Dismissing employee for failing to complete training was 'not unfair'

A pharmaceutical company was within its rights to dismiss an employee who failed to complete mandatory online training courses.

That was the decision of the Employment Appeal Tribunal in a recent case involving a medical sales rep.

In January 2016, the employee was dismissed for failing to complete two online training courses.

He took legal action claiming unfair dismissal. He didn't deny that he failed to complete the training but said that was only because he was prioritising more important tasks.

The employer claimed their trust in the employee had been damaged and dismissed him for gross misconduct, which was later reduced to serious misconduct.

The tribunal ruled in favour of the employee. It said that the employer had been wrong to consider the actions as gross misconduct. Given that this was later downgraded to serious misconduct, a warning would have been the appropriate disciplinary action.

However, the EAT has overturned that decision. A Judge described the approach of the tribunal as "fundamentally flawed".

She said there had been too much focus on the nature of the employee's misconduct when the severity of the employer's response was the key to the case.

The Judge said: "The tribunal's approach in this case was flawed: it unduly limited the potential range of reasonable responses by applying a general rule as to when dismissal might be fair in cases of conduct falling short of gross misconduct, when no such rule is laid down."

However, she added that it would not be right for the EAT to reach its own verdict regarding the case, and that it must be put before another employment tribunal to be settled.