Category Archives: Case Law Update

Updates, and commentary on employment law related decisions

Pimlico plumbers are workers following the Supreme Court’s judgement

The UK Supreme Court has today upheld the Employment Appeal Tribunal and the Court of Appeal’s judgments that a skilled tradesman (plumber), who had been engaged as an independent contractor, was in fact a worker entitled to basic worker rights.

In short, Mr Smith was engaged by Pimlico Plumbers Ltd (‘PP’) under a contract which referred to him as an independent contractor. However, Mr Smith was working solely for PP from 2005 and until his contract was terminated in 2011 because the arrangement was such that Mr Smith was required to work minimum 40-hour per week for PP. Mr Smith was also required to wear a PP uniform and to hire and drive a PP branded van. When Mr Smith suffered a heart attack in early 2011 he asked for his 5-day working week to be reduced to 3 days per week but this was refused by PP. In May 2011 PP terminated its engagement with Mr Smith who then issued a number of claims against PP – including claims that he was entitled to workers’ rights.

When the case was first heard, the Employment Tribunal ruled that Mr Smith was in fact a worker for the purposes of s. 230(3)(b) (a ‘limb (b) worker’) of the Employment Rights Act 1996 (‘ERA’), a worker under the Working Time Regulations 1998 (‘WTR’) and an employeefor the purpose of the extended definition under s.83 of Equality Act 2010 (EqA). PP appealed the case, first to the Employment Appeal Tribunal, then to the Court of Appeal and finally to the Supreme Court.

The Supreme Court agreed with the lower courts that Mr Smith was a worker because he satisfied the test in s. 230(3)(b) in that:

  1. He was required to carry out the work for PP personally and could not send a substitute. Although there was an understanding that PP plumbers could swap assignments, Mr Smith was not entitled to use a substitute who was not already working for PP; and
  2. PP was not a client or a customer of Mr Smith and he was not in business on his own account. The reality was one of subordination with Mr Smith being an integral part of PP’s operations and subject to the disciplinary and other rules of PP.

Having decided that Mr Smith was a limb (b) worker it followed that he was also a worker for WTR purposes and an employee under the EqA.

Although the media is likely to overstate the impact this ruling will have on the gig economy, the reality is that this case does not make any substantial changes to the current law on employment status. The issues in this case are very fact sensitive and, more importantly, PP did not operate a gig model in respect of Mr Smith’s engagement. However, the media attention which this case has received combined with abolishment of employment tribunal fees may encourage an increase in claims by individuals seeking employee or worker rights.

Accordingly, businesses would be well advised to review the arrangements they currently have in place with independent contractors and consultant to ensure they do not find themselves in the same situation as the employer in this case.

The material contained in this article is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.

ebl miller rosenfalck – June 2018

Contact details: 

Sara Kennedy, Legal Director


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Supreme Court ruling on state immunity gives tribunals jurisdiction to hear embassy worker claims

Two embassy workers, one working for the Libyan embassy in London and another working for the Sudanese embassy in London, brought claims in the employment tribunal, against Libya and Sudan respectively, after being dismissed. The claims were dismissed by the tribunal, on the basis that both Libya and Sudan benefited from state immunity under the State Immunity Act 1978.

A series of appeals joined these cases together and brought them before the Supreme Court. The heart of the issue lies in an apparent tension between the State Immunity Act -the purpose of which is to ensure there are no infringements to a foreign state’s sovereignty- and article 6 of the European Convention for Human Rights (ECHR) regarding the right to a fair trial, which includes right of access to a court.

In reviewing the case-law of the European Court of Human Rights, the Supreme Court found that article 6 violations had previously been found where the application of state immunity was contrary to rules of international law. Naturally, the Secretary of State argued that state immunity in this case was consistent with customary international law.

Interestingly, the Supreme Court found that there has been insufficient international consensus for customary international law to emerge regarding an absolute doctrine of state immunity. Therefore state immunity could not be extended to the employment of embassy staff, which the court deemed to be a private act, unrelated to the concept of state sovereignty.

Those claims which were based on EU law (such as those relating to working time, discrimination and harassment) were therefore allowed to proceed, and were remitted to the employment tribunal for consideration.

This decision is likely to benefit a horde of low-paid workers who were employed in embassies in the UK, and we may see numerous tribunal claims against foreign states proceed in the employment tribunals.

Our advice to embassies is put in place an immediate review of their contractual arrangements (employment contracts and contracts for services) to ensure they comply with English employment law to avoid falling foul of local laws. Please contact our employment team to find out how we can assist.

Benkharbouche (Respondent) v Secretary of State for Foreign and Commonwealth Affairs (Appellant) and Secretary of State for Foreign and Commonwealth Affairs and Lybia (Appellants) v Janah (Respondent) [2017] UKSC 62.

ebl miller rosenfalck – December 2017

Contact details:

Philip Henson, Partner and Head of Employment Team


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Malone & Others v BA Plc – crew complements dispute

Malone & Others v BA Plc

The Court of Appeal has recently found in favour of BA Plc (“BA”) in the crew complements dispute.

Miss Elizabeth Anne Malone was selected as one of three lead claimants’ on behalf of 5000+ claimants’, all cabin crew workers from Heathrow, who brought breach of contract claims against BA -hence the Malone title.

Those claims were considered in the High Court by Sir Christopher Holland in February this year. The claimants’ argued that BA’s decision to unilaterally reduce the crew complements on its aircraft in October 2009, below the levels which had been agreed through collective bargaining between the employer and the employees’ trade union (Unite), amounted to a breach of contract. They sought declarations as to their contractual terms, injunctions requiring BA to comply with the crew complement levels in operation before the unilateral reduction, damages and costs.

The claimants’ alleged that the collective agreement which stipulated crew complement levels had been incorporated into their individual contracts of employment and was enforceable by them on an individual basis. BA argued that, even though some collective agreements negotiated between it and Unite were incorporated into the employees contracts of employment, the particular provisions relating to crew complements were not; and that these terms were not intended to be included in the individual contracts (“the incorporation issue”). BA raised an alternative defence that the employment contracts of about 60% of the claimants’ contained a clause which entitled BA to make reasonable changes to the terms, and in light of the company’s “parlous financial position”, the reductions in crew complements were reasonable changes which could be made unilaterally (“the reasonable changes issue”). The High Court accepted the submissions of BA and dismissed the claims. Malone, and others, then appealed that decision.

In the Court of Appeal Lady Justice Smith opined that the relationship between BA and the trade union branches’ representing the cabin crews was, “rather unusual”; and that issues which might usually be regarded as falling within the sphere of management are the subject of bilateral negotiation resulting in collective agreements.

It was noted that there are several collective agreements between BA and the trade unions which cover almost every aspect of the cabin crew working terms and conditions; although none of those collective agreements was enforceable between BA and the trade union as in none of them is there any express intention recorded that the agreement should be enforceable – which is a requirement of section 179 of the Trade Union and Labour Relations (Consolidation) Act (“TULCRA”) 1992.

Lady Justice Smith emphasised that it had been difficult to decide the aptness of the incorporation of the crew agreements, and that the various relevant considerations “point in both directions”, for and against incorporation; and that even within the same section of the agreements there are enforceable and unenforceable provisions within the same section.

BA’s QC argued that if section 7.1 of the Worldwide Scheduling Agreement (WSA) were to be individually enforceable, individual crew members could, with impunity, refuse to fly with a reduced crew complement which, as Lady Justice Smith noted, would have “disastrous consequences” for BA if the term were to be individually enforceable – described as being “so serious as to be unthinkable”.

However, Lady Justice Smith did not share Sir Christopher Holland’s view (obiter) that even if he had found that section 7.1 was individually enforceable he would not have granted injunctions requiring BA to reinstate their former cabin crew complements; commenting that the main issue (when considering whether there should be a permanent injunction after a full hearing) is whether damages would be an adequate remedy for the claimants; and it was clear that damages would not be an adequate remedy for the claimants’ in this case. However, this was hypothetical as it was found that there was no breach.

 Dismissing the appeal Lady Justice Smith held that the true construction was intended as an undertaking by the employer towards its cabin crew employees collectively, intended to be binding “only in honour”.

The Malone case reiterates the need for clear drafting of collective agreements (and perhaps negotiator training), specifically the status of those agreements; and highlights the up hill struggle which trade unions will face when trying to argue that provisions of collective agreements are suitable for individual incorporation into employment contracts.

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Directive on equal treatment between self-employed men and women entered into force

On 4 August 2010, Directive 2010/41/EU of 7 July 2010 on the application of the principle of equal treatment between men and women engaged in an activity in a self-employed capacity entered into force. It improves the protection of female self-employed workers and the assisting spouses or life partners of self-employed workers, particularly also during maternity. They are granted a maternity allowance and leave of at least 14 weeks, should they choose to take it. At EU level, this is the first time a maternity allowance has been granted to self-employed workers.

 The new Directive notes that although the original Council Directive 86/613/EEC was intended to provide equal treatment for men and women working “in a self-employed capacity”, it has “not been very effective”[1] in fulfilling this objective.

 Article 5 of the Directive further provides that Member States may take “Positive action” to address gender inequality, for example by “promoting entrepreneurship initiatives among women”, at a time when one in three entrepreneurs is a woman.[2]

 The Directive will no doubt be welcomed by the assisting spouses and life partners of the self-employed, particularly where their self-employed partner is the couple’s sole source of income. One notable caveat of the Directive is that the validity of the life partner relationship must be recognised under national law in order to fall under the scope of the Directive. EU member states now have to implement the Directive into their national laws within two years.

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The end of salary sacrifice schemes? – Astra Zeneca v HMRC

Astra Zeneca provided part payment of salary to some of its employees by way of retail vouchers, as it was able to acquire these vouchers at less than their face value (the Court using the example of acquiring a voucher with a face value of £10 for £9.50) in order that their employees were able to acquire the vouchers at below face value and hence receive a benefit.

Astra Zeneca claimed that it should not have to charge VAT on the provision of the vouchers to its employees because they were not a “supply of goods or services effected for consideration” as per Directive 2006/112/EC (the Sixth Directive), but claimed that it should receive credit for the input tax incurred in purchasing the vouchers as they were a “business overhead”.

HMRC refused to make the input tax incurred on the vouchers tax-deductible, and argued Astra Zeneca was not entitled to credit for the input tax it incurs on buying vouchers, because the company did not use them for the purposes of any taxable transactions.

HMRC argued in the alternative, that if the input tax was recoverable it should account for VAT (the output tax) incurred on the provision of the vouchers to its employees either because the vouchers are given for consideration, or because they were made available to employees for use for a purpose other than a business purpose.

On appeal to the European Court of Justice, the Advocate General found in favour of HMRC’s alternative argument, that the input tax was recoverable, but that the part payment of salary in vouchers was a supply of services effected for consideration, and therefore was also subject to VAT.

This decision will be of interest to companies who until now, have claimed an input tax credit on the purchase of vouchers and not accounted for the ouput tax on the provision of the vouchers as part of a salary sacrifice scheme.

The result of this case would seem to be that the provision of a voucher by an employer to an employee will be chargeable for VAT purposes, unless it can be shown that there is no link between the provision of the voucher and a reduction in the employer’s salary. The result of this is that certain salary sacrifice agreements may cease to be viewed so favourably by employers and employees alike.

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Liability for “negative” references – Bullimore v Pothecary Witham Weld (Solicitors)

Both a prospective and past employer have been found liable to a solicitor whose, job offer was retracted following the provision of a “negative” reference.

Miss Bullimore worked for Witham Weld Solicitors (“WW”) which has since merged to become Pothecary Witham Weld Solicitors (“PWW”) between 1999 and 2004. Following the termination of her employment, Miss Bullimore brought a claim against WW for unfair dismissal and sex discrimination, which was settled.

In 2008, another law firm, Sebastians offered Miss Bullimore a job “subject to the receipt of satisfactory references”. She approached Mr Hawthorne, a partner at PWW who had managed her during her time at WW for a reference. Mr Hawthorne obliged, but gave a reference which was “significantly influenced” by the fact that Miss Bullimore had previously brought sex discrimination proceedings against WW.

Mr Hawthorne remarked in the reference that Miss Bullimore could “on occasion be inflexible as to her opinions”, referred “gratuitously” to the claim she had brought against WW, and made other comments which gave the reference a tone that was “negative”.

Following the receipt of this reference, Sebastians revised their job offer to Miss Bullimore to include a six month probationary period. Miss Bullimore was not prepared to accept a position on these terms, and Sebastians were unwilling to further alter them. This led to the end of the job offer.

It was found that Sebastians “were not simply responding to a negative reference” but were influenced in their decision to withdraw their offer and replace it with one which was less favourable on Miss Bullimore’s part by the knowledge that Miss Bullimore had brought sex discrimination proceedings against WW. This action was “unlawful discrimination by way of victimisation” in contravention of section 6(1) of the Sex Discrimination Act 1975.

This was, quite simply, “unlawful conduct by a firm of solicitors who should have known better.” Sebastians saw fit to pay Miss Bullimore £42,500 in settlement of her claim before the hearing to decide the extent of their liability to her.

On the appeal of Miss Bullimore, it was also decided that it would be “most unsatisfactory if a claimant who lost the opportunity of employment as the result of such a reference were unable to recover substantial damages from his former employer.

The case is therefore being remitted to the original employment tribunal to consider Miss Bullimore’s claim for loss of earnings against PWW, which was initially dismissed.

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Extent of Liability for Loss – Thaine v London School of Economics

Miss Thaine was employed by the London School of Economics (“LSE”) as a painter and decorator in the maintenance department and was the only women amongst the department’s 18 employees. She began to suffer from psychiatric health problems, which prevented her from continuing to work for LSE, and led to her dismissal.

Miss Thaine brought claims of sexual discrimination, disability discrimination and unfair dismissal against LSE, and succeeded in two of the claims of sexual discrimination. It was found that the sexually discriminatory treatment Miss Thaine had suffered at work was a “material and effective cause” of her psychiatric illness, and there was a sufficient “causal link” between the discrimination she suffered and her subsequent ill-health and loss of earnings.

When determining the amount of compensation Miss Thaine was entitled to however, there were found to be “concurrent causes” of her ill-health, which were not the result of the treatment she had suffered at work. These included her obsessive compulsive disorder, previous depressive episodes, the break-up of her relationship with her boyfriend, and her mother’s ill-health.

The compensatory award Miss Thaine was entitled to was reduced by 60% to reflect the extent to which the “concurrent causes” of her ill-health, for which LSE were not liable, contributed to her developing her illness.

Miss Thaine unsuccessfully appealed, arguing that no such deduction should be made. The Employment Appeal Tribunal stated that LSE’s conduct made it liable “only to the extent” to which its conduct had resulted in Miss Thaine’s ill-health, and that “common sense” should be exercised in determining the level of reduction of the award.

Importantly for business leaders, the Employment Appeal Tribunal saw fit to state that if an employer did not raise the argument that it was liable to an employee only to the extent of its contribution to their loss, it could be found to liable in full.

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