Redundancy, pay related court rulings and contracts

By Jill Evans, Law Content Analyst, CIPD.

For months, people professionals have been preoccupied with workforce safety, and now some are also having to turn their attention to making redundancies. Both tasks require them to check regulations while keeping an eye on contracts, especially whether they still accurately reflect how work is done in practice.

When organisations end employment, through redundancy or for another reason, tribunal claims can emerge over workplace rights. Currently tribunal claims are rising. Latest figures show they’ve more than doubled since fees were scrapped, increasing by 28,000 from around 18,000 claims in 2016-17, just prior to the abolition of fees, to more than 46,000 claims in the 2019-20 period. While tribunals have struggled to operate during lockdown, employers shouldn’t be lulled into a false sense of security as the appeal courts have continued to bring out employment law judgments.

Self employed status

The Supreme Court recently heard two cases that could have profound implications for employers. In Uber v Aslam, drivers for the app claimed they were workers and entitled to basic employment rights like paid holidays, rest breaks and the National Minimum Wage. Uber claims the drivers are self-employed sub-contractors with no employment rights. This is the company’s second appeal against an Employment Appeal Tribunal judgment, later confirmed by the Court of Appeal, which found the drivers were workers because of the amount of control the organisation had over their work, despite this not being reflected in their contracts.

There are an estimated 45,000 Uber drivers in London alone and 1,000 similar claims awaiting the outcome of the latest hearing. The law firm representing the drivers reckons they could be entitled to an average of £12,000 each in compensation if they are successful.

Equal pay hearing

Another Supreme Court hearing that employers need to watch is Asda v Brierly. This is an equal pay case in which female check-out operators and shelf-stackers are claiming equal pay with men working in the company’s distribution warehouse. Morrison’s, Sainsbury’s and Tesco face similar claims, which could cost the supermarket retailers up to £8 billion in compensation if successful. Equal pay claims in other sectors may also increase if greater pay transparency reveals other anomalies. A judgment is unlikely before the end of the year.

It’s not clear yet how much influence the European Court of Justice (ECJ) will retain post-Brexit over the UK court decisions but they are currently still bound by ECJ decisions. On business transfer law, the courts must apply UK TUPE regulations in line with the EU Acquired Rights Directive. The ECJ has recently given employers who are changing contractors a potential headache with a judgment in a Belgian case called ISS Facility Services v Govaerts. It concerns a cleaning manager whose job was split between two incoming contractors when the contract changed hands.

Under TUPE, employees transfer to the company picking up the business or service to which they are mainly assigned. The ECJ decided that under the European directive the employment should transfer pro rata to two or more employers as part-time contracts and left it to national courts to work out how this should be achieved. If splitting the employment contract was impractical or detrimental to the employee, the European court said, the contract could be terminated, with the incoming contractors picking up the costs associated with the dismissal.

TUPE recognises two different types of transfer: business transfers and service provision changes, both of which can be involved when businesses change hands. The European directive doesn’t distinguish between the two. If UK courts find it impossible to interpret TUPE in line with this decision, UK regulations may need to change. Whether this happens depends on what legal arrangements are negotiated as part of the Brexit deal.

COVID-19 redundancy changes

Meanwhile, regulatory changes associated with COVID-19 continue. On 31 July 2020, the government introduced rules requiring employers to calculate statutory redundancy pay based on furloughed employees’ normal pay rather than their reduced pay rate under the Coronavirus Job Retention Scheme. Redundancy payments before this date are unaffected.

Watch out for other changes in the pipeline, as yet with no enforcement date, which will affect employers’ criminal record checks, public sector exit payments and redundancy protection for pregnant women and parents returning from family leave. And employers need to remember the statutory changes that came in during April when the Coronavirus pandemic was at its height in this country.

For more details on these and other legislative changes, go to our Recent and forthcoming legislation page

For a list of member-only resources on a range of legal topics, go to our Employment Law A-Z

Thank you for your comments. There may be a short delay in this going live on the blog page as we moderate the comments added to our blogs.