Superyacht Skipper Can Pursue Unfair Dismissal Claim in England

SuperyachtThe limited territorial reach of English Employment Tribunals (ETs) can pose difficulties to those who lead globe-trotting working lives. In a guideline case, however, the former captain of a superyacht which moved from port to port won the right to pursue his unfair dismissal claim in this country.

The captain launched proceedings before an ET in London after he was sacked for alleged gross misconduct. His employer, a Guernsey-based company that provides crews for luxury yachts, argued that the case had almost no connection to England and that the ET had no jurisdiction to consider the matter. That issue was considered at a preliminary hearing.

The ET noted that the yacht was registered in the Cayman Islands and owned by a company that was based there. Although a British citizen, the captain was resident in Florida, received his salary in euros and paid his taxes in the US. During his captaincy, the yacht had sailed widely, visiting a number of Caribbean ports.

The ET accepted that the captain’s place of work was wherever the yacht happened to be at any one time and that the UK could not be viewed as his home base. On the other side of the balance, however, was evidence that the yacht had spent about half of the relevant period in UK waters, more than in any other jurisdiction, and that she was berthed in England on the date of his dismissal.

Ruling in the captain’s favour, the ET also noted that he had been recruited and promoted in England by an English-resident businessman. The latter, whilst not his employer and whilst having no legal title to the yacht, was the vessel’s effective owner. Although an array of entities was apparently involved in running the yacht, the businessman acted as her paymaster and exercised control by issuing instructions to the captain from his home in the UK. In those circumstances, the ET found that it had jurisdiction to entertain the captain’s claim.

The ‘Good Work Plan’ Phase Two – Protecting Vulnerable Workers

Following Matthew Taylor’s 2017 independent review on modern working practices, entitled ‘Good Work’, in February 2018 the Government published its response and launched consultations on how best to implement many of the review’s recommendations.

The Government has now announced phase two of the Good Work Plan, which focuses on protecting vulnerable workers. It includes proposals to:

  • give workers enhanced rights to tackle unscrupulous employers who do not comply with the law; and
  • create a single labour market enforcement body, with powers to enforce minimum wage regulations, including ensuring agency workers are not underpaid, and the law relating to workers’ entitlement to holiday pay.

Business Secretary Greg Clark also confirmed that Matthew Taylor has been appointed as the interim Director of Labour Market Enforcement.

A consultation on the latest proposals has been launched. This closes at 11:45pm on 6 October 2019.

Self-Employed Radio Presenter Relieved of £140,000 Tax Demands

Distinguishing between employment and self-employment is a multi-faceted task and not just a matter of ticking boxes. That was certainly so in one case concerning a radio personality who was relieved of six-figure tax demands after a tribunal found that he fell into the latter category.

The man had for 18 years presented a humorous sports-related radio show. He had no contract with the radio station and was paid fees for his work through his personal service company. HM Revenue and Customs (HMRC), however, took the view that he was an employee of the radio station in all but name.

HMRC raised demands against the company for over £140,000 in Income Tax and National Insurance Contributions that it claimed should have been deducted from the man’s fees at source. It pointed out that, during the four tax years to which the demands related, he had derived about 90 per cent of his income from the radio station. On that basis, it was submitted that, far from operating as a free entity, presenting the show was effectively his job.

In upholding the man’s appeal against that decision, however, the First-tier Tribunal (FTT) accepted his evidence that the radio show was just one of the strings to his bow and that he saw himself primarily as an independent comedy script writer. He enjoyed a large measure of artistic freedom in creating the content of the show, the success of which depended on his humour and originality.

He performed no other role for the radio station and was paid in the form of a fee for each show he presented. He had no entitlement to holiday or sick pay, pension or paternity leave, and received no retainers or bonuses. He worked simultaneously for other broadcasters, and as a freelance script writer. In the circumstances, his relationship with the radio station was not one of employment.

Employment Tribunals Don’t Punish, They Compensate

Some employers treat their staff disgracefully but, no matter how bad their conduct may be, the objective of the tribunal system is not to punish them but to compensate those who suffer at their hands. A case on point concerned an immigrant worker who was plunged into depression after suffering extortion at his boss’s hands.

The man, an Indian national, was employed as a PR consultant and sales adviser by a travel agency which had sponsored his entry into the UK on a five-year visa that required him to be paid at least £23,000 a year. He purportedly received that salary, but the agency’s managing director threatened that if he did not repay half of his wages each month, his employment would be terminated.

Although he complained that he did not have enough to live on, he initially complied with that demand. Following an angry confrontation with his boss, however, he went on sick leave, suffering from anxiety and depression. He had been in the job for only about six months and was still on sick leave when he was dismissed.

After he launched proceedings, an Employment Tribunal (ET) found that he had been automatically unfairly dismissed for making a protected disclosure. His boss’s demand was nothing short of extortion and, in subsequently claiming that he had been given two previous warnings and had committed an act of gross misconduct, the agency had sought to contrive bogus reasons for his dismissal.

Despite the relatively brief duration of his employment, the ET awarded him a total of £124,658 in compensation. That included the pay he should have received had he remained in the agency’s employ throughout the period of his visa. A 25 per cent uplift was applied to the award to reflect the agency’s complete failure to comply with the Acas Code of Practice.

In upholding the agency’s challenge to the award, the Employment Appeal Tribunal (EAT) found that the ET had erred in law in a number of respects. Amongst other things, it had awarded full loss of earnings in respect of the man’s post-dismissal sickness period without making any finding as to whether, or to what extent, the dismissal had worsened or prolonged his depression.

The ET had also failed to consider whether he could have been lawfully dismissed on the basis of long-term sickness absence and whether he could reasonably have been expected to mitigate his loss by returning to India in search of alternative work. The ET should also have stood back and considered the overall size of the award before deciding to apply the full 25 per cent uplift. Given that the man had valued his claim at only about £64,000 in his schedule of loss, the award of almost double that sum had effectively taken the agency by surprise.

The EAT noted that, in cases of such serious employer misconduct, there is always a danger that ETs may, consciously or subconsciously, adopt a punitive approach. However, it was satisfied that the ET in this case had not fallen into that trap. In the circumstances, the matter was sent back to the same ET for reassessment of the man’s compensation in the light of the EAT’s ruling.

Sexual Stereotyping in the Workplace Exists – But How to Prove It?

Businesses in which women are under-represented in senior roles invite speculation that the imbalance results from discriminatory sexual stereotyping. However, as a case in the context of the banking sector showed, Employment Tribunals (ETs) are required to base their decisions not on surmise but on hard evidence.

The case concerned a female vice-president who worked in a multinational bank’s compliance department. She claimed, amongst other things, that she had been passed over for a promotion due to her sex. Her sex discrimination and harassment claims were upheld by an ET, principally on the basis that a senior manager’s decision to appoint a male external candidate to the role she had coveted was infected by sexual stereotyping.

In its decision, the ET noted that, whilst men in the workplace may be praised for their ambition, forceful personalities and commitment to their jobs, women in the same position may be criticised for their obsession with work. Another common stereotype is that women are more divisive, causing toxic relations by becoming too emotionally involved in office politics. Sexual imbalance in senior positions also tends to be perpetuated by the propensity of men to prefer the views and qualities of other men.

In upholding the bank’s challenge to the ET’s decision, however, the Employment Appeal Tribunal (EAT) noted that it had been no part of the woman’s pleaded case that the manager’s decisions were based on stereotypical sexual assumptions. That suggestion was not the focus of evidence in the case and had been raised for the first time in the ET’s ruling. The bank and its witnesses had thus been deprived of any fair opportunity to respond to the contention. The woman’s sex discrimination and harassment claims were sent back to a fresh ET for reconsideration.

The EAT, however, went on to dismiss the bank’s challenge to the ET’s finding that the woman had suffered maternity leave discrimination. Because of assumptions made as to what women should be doing whilst on maternity leave, she had been discouraged from attending a quarterly review meeting. Advantage of her absence had also been taken in sidelining her and passing significant elements of her role to another employee. There had been no real intention to reinstate those aspects of her work on her return.

Restrictive Covenants and Restraint of Trade – Supreme Court Guidance

Professionally drafted restrictive covenants in employment contracts are a legitimate means of protecting businesses from unfair competition – but only insofar as they do not amount to an unreasonable restraint on an individual’s freedom to work. In an important test case, the Supreme Court considered where the balance is to be struck between those two competing interests.

The case concerned a senior employee’s contract of employment with an executive search and recruitment company. It included a non-competition covenant which, for six months following her departure, forbade her from being engaged, concerned or interested in any competitor business. Shortly after her employment came to an end, she informed the company of her intention to start working for a competitor. She contended that the covenant was an unreasonable restraint of trade and void.

The company launched proceedings and obtained an interim injunction against the former employee, holding her to the terms of the covenant. That order was, however, subsequently overturned by the Court of Appeal on the basis that the covenant was unreasonable, in that the term ‘interested in’ was so wide as to prevent her from having even a minor shareholding in any competing business.

In ruling on the company’s appeal against that decision, the Supreme Court noted that the term ‘interested in’ has long been included in standard precedents used in the drafting of non-competition clauses. However, on the basis of its natural and ordinary meaning, the term sought to prohibit the former employee from any shareholding, large or small, in any competing business. That objective was too broad and amounted to an unlawful restraint of trade.

In unanimously upholding the appeal, however, the Court ruled that the offending words could be severed from the covenant, rendering the balance of its contents valid and enforceable. Applying a blue pencil to the term ‘interested in’ neither fundamentally changed the character of the contract nor did it generate any major change in the overall effect of the post-termination restrictions on the former employee’s conduct. Although those restrictions had long since expired, the Court formally reinstated the injunction.

Perceived Disability – Police Officer Discrimination Victim Wins Damages

Even those whose medical conditions or incapacities are not so grave as to amount to disabilities can win compensation if they suffer discrimination in the workplace. The Court of Appeal made that clear in upholding a substantial damages award made to a police officer whose hearing was mildly impaired.

Police carThe officer’s hearing loss had never caused her any problems in doing her job and it was agreed that it was not a disability within the meaning of the Equality Act 2010. However, her application to be transferred to a different force was rejected on the basis of the decision-maker’s perception that her hearing problem meant that she was, or might become, incapable of performing front-line duties.

After she brought proceedings, an Employment Tribunal found that she had suffered direct discrimination, contrary to Section 13 of the Act, and awarded her £26,616 in damages. The decision-maker treated her less favourably on the basis of an actual or potential disability, which amounted to a protected characteristic. That decision was subsequently upheld by the Employment Appeal Tribunal.

In dismissing the force’s challenge to that outcome, the Court found that, although the officer was not disabled, what mattered was the decision-maker’s perception that she was, or might become so. The decision-maker believed that she was suffering from a progressive condition that might have a substantial adverse impact on her ability to perform normal day-to-day activities.

The ET was thus entitled to conclude that the decision-maker’s refusal to engage her involved, perhaps subconsciously, a motive or mental process which was affected by a stereotypical assumption about the effects of her perceived disability. The officer had previously performed perfectly satisfactorily in a front-line role and the Court observed that its conclusions in terms of employment law had achieved a just outcome on the merits.

Circumventing a Collective Bargaining Process is Not Always Unlawful

Employers are generally barred from circumventing collective bargaining agreements by going behind trade unions’ backs and making direct offers to the workers they represent. In a ground-breaking decision, however, the Court of Appeal has ruled that that does not amount to trade unions having a veto over even the most minor changes to their members’ terms and conditions of employment.

The case concerned a technology company which had recognised the sole rights of a trade union to represent its workforce. After collective bargaining failed to achieve an accord in respect of workers’ pay, terms and conditions, a ballot resulted in 80 per cent of the union’s members voting to reject the company’s offer.

The company later made two offers directly to its employees. The first of those offers warned them that a failure to accept the company’s proposals would jeopardise their Christmas bonuses. The dispute was only finally settled, largely in the company’s favour, after the union called for an overtime ban.

In those circumstances, 55 workers launched proceedings under Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992. An Employment Tribunal (ET) upheld their complaints that the offers had achieved the prohibited result that their terms and conditions would not, or would no longer be, determined by collective agreement, negotiated by or on behalf of the union. In a ruling that was later upheld by the Employment Appeal Tribunal, the company was ordered to pay each of the workers £7,600 in compensation, a total of £418,000.

In challenging that decision, the company explained that it had written to employees individually because it had no idea how many of them were union members and whether or not the union represented the majority. Direct contact with workers had been made for sound business reasons, not least the company’s desire that they should receive their Christmas bonuses.

In ruling on the company’s appeal, the Court noted this was the first time Section 145B had been considered at appellate level. Although no anti-union motivation on the company’s part had been established, the ET was entitled to find that its purpose in making the direct offers was to circumvent the collective bargaining process. However, it did not follow that that was a prohibited result.

If the union were correct in arguing that Section 145B imposes a complete embargo on any direct offers which circumvent collective bargaining processes, the effect would be to confer on unions an effective veto over any direct offer to any employee concerning any term of his or her contract, major or minor, on any occasion. Such an outcome would go far beyond curing the mischief addressed by Section 145B and was extremely unlikely to have been intended by Parliament.

The company’s offers had been made to all its workers, who had not been asked to relinquish, even temporarily, their right to be represented by the union in the collective bargaining process. All that had happened was that the company went directly to the workforce and asked whether they would accept a particular change to their terms and conditions on this occasion. The Court noted that its ruling did not render unions powerless: it remained open to them to ballot their members for industrial action, as in fact occurred in this instance.

Overtime Must Be Factored In To Calculating Holiday Pay – Guideline Ruling

Should voluntary overtime count as ‘normal remuneration’ when calculating a worker’s statutory holiday pay entitlement for the four weeks’ annual leave required under the EU Working Time Directive (WTD)? The Court of Appeal came to grips with that burning issue in a guideline case concerning a group of NHS ambulance service workers.

The workers were entirely free to choose whether or not to work voluntary overtime shifts, but argued that payments they received in respect of those shifts should be factored in when calculating their holiday pay. After achieving a mixed result before an Employment Tribunal, their arguments were upheld in their entirety by the Employment Appeal Tribunal (EAT).

In dismissing their NHS trust employer’s appeal against that ruling, the Court found that the EAT’s decision reflected a true interpretation of a collective agreement incorporated within their employment contracts. The trust’s obligation to take their voluntary overtime payments into account also arose under the WTD.

The Court noted that it had been repeatedly emphasised in European legislation and case law that paid annual leave is a fundamental right. The Court of Justice of the European Union had frequently stated that there must be no disincentive to workers taking such leave and that employers cannot satisfy obligations imposed by the WTD by paying the bare minimum under workers’ contracts.

The exclusion of voluntary overtime from the calculation of holiday pay would carry the risk of encouraging employers to reduce their holiday pay liabilities by setting artificially low levels of basic contractual hours and categorising any remaining working time as overtime. The prevalence of so-called zero hours contracts in the UK meant that such a risk was far from fanciful and provided a very real objection to the trust’s arguments.

Annual leave must, in principle, be determined in such a way as to correspond with the normal remuneration received by a worker, including any voluntary overtime payments or other supplements.

The Court also confirmed that, both under their contracts and the WTD, the workers are entitled to have guaranteed overtime – worked in order to complete ongoing tasks after the end of their shifts – taken into account when calculating their holiday pay.

Sleeping Employment Judge Caused Unfairness in Museum Curator’s Case

Judges spend long hours listening to dense evidence and argument, and they would be superhuman if they did not occasionally nod off. As an employment case showed, however, the consequences of sleepy-headedness can be grave if it affects the fairness of proceedings.

The case concerned a senior curator, employed by a group of museums, who was made redundant after 33 years’ service. Her claims of wrongful and unfair dismissal, age and sex discrimination were subsequently rejected by an Employment Tribunal (ET). Four years later, she sought a position as assistant curator in response to an advert placed by the group, but her application was rejected on grounds that she was over-qualified for the relatively junior position.

After she launched a further complaint against the group, another ET accepted that her rejection for the post amounted to victimisation, contrary to the Equality Act 2010. That was on the basis that the earlier proceedings – which constituted protected acts – had influenced the decision to sift out her application.

In upholding the group’s challenge to that decision, the Employment Appeal Tribunal (EAT) was in no doubt that, very unfortunately, the employment judge who presided over the ET hearing had twice fallen fully asleep whilst the woman was undergoing cross-examination. It was not a case of mere momentary inattention and the group’s legal representative had to deliberately make a noise more than once in order to alert the judge. In those circumstances, a fair-minded and informed observer would have detected a real possibility that the fairness of the hearing had been affected.

The EAT noted that it would have allowed the appeal in any event, in that the ET had failed to reach specific and clear conclusions in respect of the group’s plea that the woman’s over-qualification was the sole reason for her rejection. The EAT directed a rehearing of the woman’s claim and expressed a preliminary view that that should take place before a freshly constituted ET.