Thursday 25th April 2013 at 10:58am
Employee Shareholder Status: the choice you don’t want to be given
At a time when employment law is changing, rapidly, for the worse, it is only right to report (critically) on a modest victory. For several weeks, the House of Lords and the House of Commons have been batting back and forwards between each other rival version of “employee shareholder” status, previously known as “employee ownership”, ie the scheme unveiled at last year’s Tory party conference by George Osborne, under which employees on joining a company would be required to assign various employment rights, including their right to claim unfair dismissal, in return for a small amount of shares in that company.
Yesterday (24 April), in order to bring to an end a series of defeats in the House of Lords, the government introduced an important concession into the Growth and Infrastructure Bill and the House of Lords voted to accept the scheme (having previously rejected it twice).
How the scheme will work is now as follows: an employee will only shed their unfair dismissal rights if, prior to entering into a contract, the employee has received advice from an independent advisor. Further, the employer will have to pay the costs of that advice (this puts on a statutory footing what was previously merely the common industrial practice that employers pay for employees’ advice on whether or not to accept the terms of a settlement agreement on dismissal).
My fellow employment blogger and barrister Daniel Barnett concludes that “Doubtless unions will now start charging fees for advising on employee shareholder status, and look for those fees to the employer.” If the unions can only manage to do what is good for them, he will be proved right.
The above concession needs to be set in the context of other concessions made by the government (not merely on whether the shares will be taxed; which is what the government has been emphasising), including that any social security claimant who refuses an offer with employee shareholder status will not forfeit their benefits, and existing workers will be protected from any detriment if they refuse an invitation from their employer to switch to an employee-shareholder contract
The essential idea of employee shareholder status – that an employee should assign their most important workplace protection at the start of an employment contract, as a condition of being allowed to work at all, in return for shares of modest value that it may be wholly impractical to redeem – remains wholly malign. What these concessions represent is at least an admission that it would be wrong to make workers at the start of the contract be subject to this bad bargain covertly. Workers are going to be given a choice. The best hope is that sufficient numbers of people choose no, so that the whole scheme becomes unworkable…
You can buy Struck Out with a 30% discount and free UK P&P by entering the code ‘PLUSTRUCK’ here.
Posted in News | No comments yet
Tuesday 15th January 2013 at 11:40am
Wear what you like
Employment law is often enough in the news; but it remains unusual to see government ministers side unambiguously with an appellant to the European Court of Human Rights, as David Cameron did, in the build up to today’s decision concerning Nadaia Eweida and three other Christians (Lilian Ladele, Shirley Chaplin, and Gary McFarlane) promising that if Nadaia Eweid and Shirley Chaplin lost he would change UK law to protect them.
There were two kinds of case before the Court. Ms Ladele and Mr McFarlane were employees of a local council and a charity, both providing services connected to relationships (Ladele registered marriages and civil partnership and McFarlane gave relationship counselling). Neither was willing to do anything which they said would be tantamount to condoning homosexual sex, which they believed was sinful. In practice, they sought personal opt-outs from their employer’s non-discrimination policies and were ultimately dismissed. The employers’ actions, the Court held, were in defence of equality and were lawful.
These were good decisions consistent with UK law and best understood as a rejection of the “discriminator’s defence” (i.e. if I actually treat people unequally, because of my beliefs, I should not be punished because my belief is a protected characteristic).
In 2003, when equality law in Britain was introduced, many people questioned whether it was possible to protect the rights of both LGBT and religious people. I was then working as an equality official of a union; many of its LGBT activists were worried that religious people would use the protection against discrimination on grounds of belief as a “shield” to hide discriminatory acts of their own. The decision of the Court shows that these concerns were unfounded.
In the vast majority of cases, the discrimination faced at work by LGBT people has nothing to do with the religion of the discriminator (and the same is true vice versa: far more religion or belief complaints are brought by Muslims or Sikhs than are by Christians).
Even in situations where there is a genuine conflict, a perfectly workable compromise can usually be reached by saying that each group’s rights are protected (as indeed are everyone else’s) so long as neither acts in a discriminatory way towards the other. Religion does not trump LGBT rights, nor vice versa: the only trump card is equality. Where a person is unwilling to put aside their own prejudice, as a pure matter of good sense, they lose their protection. In both these cases, the difficulty was caused an employee who was not willing to uphold equality principles, and they could hardly be surprised if they were the ones to suffer a sanction.
Eweida and Chaplin’s cases raised different issues. In both cases they were about wearing religious items at work: on an airline and in a hospital. In both cases, the employer said that it needed to protect its corporate image. The hospital had the additional concern that it could not guarantee that a cross might not get in the way during operations. Various compromises were discussed which Ms Chaplin was unwilling to accept.
The Court analysed this as a proportionality exercise. On the one hand, the right to wear religious symbols is a fundamental right: “because a healthy democratic society needs to tolerate and sustain pluralism and diversity; but also because of the value to an individual who has made religion a central tenet of his or her life.” On the other side was the employer’s ability to control its own dress code, to which the Court gave real weight.
Eweida’s employer since has changed its dress code to allow the wearing of crosses. It followed that the justification for its old dress code was weak. In Chaplin’s case the reason for asking her to remove the cross, i.e. the protection of health and safety on a hospital ward, was inherently of a greater magnitude. Accordingly, the ECHR decided the Eweida case in favour of the employee (awarding only modest damages) and Chaplin in favour of the employer.
Again, it is easy to see why the Court determined these cases in the way that it did. Chaplin in particular seems to have been unwilling to make modest compromises, eg wearing her cross with her identity badge, which she refused, as it might come off.
On the issue of principle, my own view is that the employer’s desire to protect a corporate image should rarely be a decisive factor. There are so many aspects of how all of us dress that are integral to our personalities: whether that is a trade unionist wearing a union pin, an LGBT person wearing the rainbow flag, a Muslim woman wearing a hijab, or a Christian a cross. This is one place, surely, where the employee’s choice should be prioritised.
Posted in News | No comments yet
Wednesday 21st November 2012 at 11:35am
Struck Out re-covered
Meet Amanda, a Unison rep, studying on the TUC diploma in Employment law at the College of North East London.
She is holding her own copy of Struck Out, which she has personalised by giving it the cover that its contents deserve.
Posted in News | No comments yet
Monday 24th September 2012 at 1:00pm
ET statistics 2011-2012 and the shifting balance of power between employers and workers
The annual figures for Tribunal claims have now been published. The figures I always look at first are the absolute number of tribunal and especially unfair dismissal claims (unfair dismissals are the bread and butter of the Tribunal’s work), the relative success of unfair dismissal claims at full merits hearings (including reinstatement rates), and the relative success of race discrimination claims compared to other discrimination claims.
Given the press coverage earlier in the year predicting a big rise in discrimination claims, I also wanted to look at those, plus the figures for costs applications (which, just anecdotally, seem to be becoming a far more common feature of ordinary Tribunal litigation).
Starting with the number of claims and unfair dismissal claims. Both have fallen, for the third year in a row. Note, this is before any of the coalition’s employment reforms have taken effect, with far sharper falls likely in 2012-2013 (as the unfair dismissal changes take effect) and in 2013-2014 (fees).
The total number of claims in the system have fallen as follows: 2009-2010 392,800 2010-2011 382,400, 2011-2012 321,800 – by my reckoning, that’s an 18% fall in two years.
(Note to any Daily Mail journalists reading this and thinking “even at 320,000 that’s a lot of judicial time wasted by vexatious employment disputes”; this figure includes a lot of double and even triple-counting of the same claim where the claim has been submitted in more than one jurisdiction, and in any event most claims settle before the final hearing: there are only 43,000 Tribunal final hearings a year; and claimants’ overall success rates at final hearings of around 62% haven’t changed much in 12 months).
More interestingly the total number of unfair dismissal claims have fallen over the same time as follows: 2009-2010 57,400 2010-2011 47,900, 2011-2012 46,300 – by my reckoning, that’s a 20% fall in two years.
There aren’t any figures for the total number of dismissals in the UK economy, so it’s hard to say whether this fall is a sign of a lesser – or greater – tendency for dismissed workers to bring claims. Certainly, there were a lot of dismissals due to the recession in 2009-2010, and there have still been a lot in 2011-2012.
Looking at wages claims, over the same period, there has been a 33% fall in claims.
Putting this figure beside the drop in unfair dismissal claims (and I think we can say, with certainty, that there has been no trend towards more accurate payment of wages as the recession has continued); my feeling is that workers in general are more nervous about bringing claims, that the figures show a certain willingness by workers in employment to tolerate underpayment of wages (or at least not to sue about it) because workers’ primary fear is losing their job and long-term unemployment, and while this drift away from litigation is clearest in wages claims, it is less evident in unfair dismissals, where workers have already been sacked, and, for that reason, have nothing to lose by suing.
What happens to claims in the system? In 2012-2012, 46,100 unfair dismissal claims reached a conclusion. 37,400 were disposed of prior to the main hearing (by settlement, or the claim or defence being struck out) and 8,700 reached a final hearing. Of these, 3,900 succeeded and 4,800 failed.
By my reckoning, the unfair dismissal “success rate” (ie the proportion of full merits hearings won by claimants in 2011-2012) is therefore 45%. This marks a distinct fall from 2010-2011 (4,200 of 9,000 hearings or 47%) and 2009-2010 (5,200 of 9,700 hearings or 54%). There are two plausible types of explanation:
One, the claims being presently before the Tribunal are objectively “weaker” than they used to be (maybe because during a recession there are different kinds of dismissals and these are for some reason harder to win).
Two, the claims being presently before the Tribunal are objectively just as weak and just as strong as they ever were, all that has changed is that Tribunal Judges and panelists have been less likely to decide them in workers’ favour, down to the Judicial equivalent of compassion fatigue (perhaps because Judges feel that dismissals are more pervasive during a recession and will expect less of an employer who dismisses workers, or because there has been an enormous press campaign about vexatious claims and Judges have been hardened by it).
My own feeling is that the second of these two explanations is more plausible, in that even 2009-2010 postdated the economic crisis, and was a year with lots of redundancies (as was 2011-2012), and in any event redundancy dismissals shouldn’t be harder to win than other kinds of dismissals, eg for conduct, and try as I might I can’t think of any plausible “objective” reason why success rates should have dropped by 10%.
Of the 3,900 claims which succeeded at a hearing, 5 resulted in orders of reinstatement or re-engagement.
This figure shows no real movement from 2010-2011. To be honest, I was expecting a movement upwards, as friends who are Judges had passed on conversations with the most recent judicial appointees suggesting that some members of the new intake had become keener on these orders. And also because some reinstatement orders made in this period have been subject to appeal (and have been determined by the EAT). A diligent researcher could therefore probably name, by checking only publicly-available documents, each of the individual workers who benefited from every re-engagement order made in 2011-2012.
I argue in my book that the reluctance to make reinstatement orders is a disgrace on the Tribunal system (and I certainly do not put it down merely to Judges; claimant lawyers are equally at fault for not guiding our clients to ask for it) and I won’t repeat those points here.
The median award for unfair dismissal was £4560, marginally down from £4591.
The success rates for discrimination claims remains low, and race remains near the bottom (15% as compared to 33% for sex). There has also been a fall in the success rates in age discrimination claims (down to 14%). By way of comparison, two years ago, 38% of sex discrimination claims that made it to a final hearing and 22% of age discrimination claims succeeded. As with the declining success of unfair dismissal claims, it is hard to put this down to anything other than a general hardening of judicial attitude towards claims.
Within discrimination claims there is a truly dramatic disparity between the highest awards and the median awards. In discrimination, the highest award was £4.4 million (it is large enough to seriously skew the average award); the median award was just £5,256.
The number of discrimination claims has not risen but fallen by over 10,000 altogether – although unevenly. There have been big falls in the number of age and sex discrimination claims (down from 6,800 to 3,700 and from 18,300 to 10,800 respectively), smaller falls in race, equal pay and sexual orientation, and modest rises in the number of disability discrimination and religion or belief claims (up from 7,200 to 7,700 and from 880 to 940 respectively). The papers who predicted discrimination claims would soar in 2012 were wrong, although (for the reasons I gave at the time), they always were going to be.
Finally, there has been an increase in costs awards – up from 487 to 1411 (with 800 of them being awarded in a single multiple-claimant case). If this anomalous, multi-claimant, case is excluded, 81% of costs awards are made to Respondents (although Respondents only succeed at 38% of final hearings) and the median costs award is £1730. To give a sense of their prevalence, while some of the costs awards would have been made at interim hearings, or even following settlements or withdrawal, these 612 costs awards need to be compared to the 43,000 final hearings in the ET system. It’s not a bad rule of thumb to say that around (strictly speaking, less than) one in sixty final hearings ends in a costs decision.
Posted in News | No comments yet
Monday 16th July 2012 at 6:00am
Underhill J’s Employment Tribunal reforms; in a little more detail
Underhill J has published both his proposed new Employment Tribunal rules, and his letter to the Ministry explaining their rationale. The documents were published on Wednesday last week, and have been well summarised by other employment law blogs, which have spotted the key proposals – a pre-hearing “sift” where Judges will be able to take action if it appears that a claim or a defence is weak; the merger of the present PHRs and CMDs into a single preliminary hearing with the power to strike out claims; removing the £20,000 cap on the amount that a Judge can order a party to pay by way of costs.
Here is my own list of the second-order proposals which I also found interesting
There will be new ET1 and ET3 forms (so far unpublished)
Style: Underhill’s team have taken real care to make the rules comprehensible. They are much clearer and easier to read, and to that extent are just better rules
Presidential guidance: although almost none of this is published yet, Underhill wants to be remembered for what might be termed “intermediate” guidance, which will not be binding (unlike rules) but illustrative, especially for unrepresented parties who want some sort of advance idea of how their case will be judged
ADR: as in all new civil codes for the past two decades, the parties are encouraged to mediate rather than litigate. There doesn’t appear to have been any real thought on how this is supposed to interact with the Coalition’s penal proposals to compel parties to spend time in the care of ACAS (without ACAS having the time or resources to do anything useful with their cases)
In the letter to the Minister, Underhill says (in effect) that he resisted pressure from the Coalition to look for changes that would increase the number of cost orders (although the removal of the £20K cap will no doubt increase the amount of costs orders, when orders are made)
Underhill dodged the question of whether / how to give powers to legal officers
And, a surprising one this, Underhill has suggested that primary legislation should be drafted enabling costs orders to be made where a party is represented by non-lawyers (this could in theory be a route back into Tribunal litigation for trade unions, whose officials could get their time paid, if the claim succeeded).
As for the rules themselves, here they are.
Posted in News | 1 comment
Friday 13th July 2012 at 4:10pm
Fees; some tinkering at the edges but the worst wrongs remain
The government published today its response to the public consultation on Employment Tribunal fees. The story has reached the news, together with the government’s planned introduction date of “summer 2013″ (which, if nothing else, contradicts the general practice in employment law of only making new changes from April or October of any year).
The government’s ostensible justification for fees has shifted to some extent. At one time the primary reason given for fees was that they would reduce the number of weak claims, but obviously this was wrong – they will reduce the total number of claims (60% of which overall are of course won by claimants), but there is no real reason to think that the axe will fall harder on the claims. Now, the primary justification for fees is austerity; fees are necessary to make the system pay for itself, or more accurately start paying for itself. The government accepts that the proposed fees are too low to achieve that, and has structured into its proposals plans to increase fees hereafter.
The majority of those responding to the Consultation opposed fees in principle and fees only for claimants (the document reports that the for most of the proposals around 67% of those responding were against); but the Coalition proposes to press on regardless.
Daniel Barnett has published this summary of the amount of fees, which is a valuable simplification of several tables in the document:
“level 1 claims (the very straightforward ones such as unlawful deductions – there is a very long list in the Response Document) – £160 issue fee; £230 hearing fee
level 2 claims (pretty much everything else) – £250 issue fee; £950 hearing fee
Employment Appeal Tribunal – £400 appeal fee; £1,200 hearing fee
there are several other fees, eg £60 for an application to dismiss following settlement and £600 for judicial mediation”
Without having checked back against the original consultation paper, these fees do just seem a little lower to me than those in the consultation document, for which I suppose we should all be grateful.
Also, the government has dropped its discriminatory and nasty plan to nudge discrimination claimants in particular towards agreeing a capped award at the outset in return for a slightly lower fee.
Save for those modest changes, fees are to be introduced without concession.
Posted in News | No comments yet
Wednesday 25th April 2012 at 6:00am
“Protected conversations”: a bully’s charter
Part of the government’s call for evidence on compensated no-fault dismissals also deals with the latest wheeze to come out from the Department of Business, Innovation and Skills, which is to introduce what the government is terming “protected conversations”.
In the words of the latest consultation document, “We will consult later in the year on introducing a system of ‘protected conversations’, with the aim of enabling employers to more confidently raise issues such as poor performance in an open way, free from the worry it will be used as evidence in a subsequent tribunal claim”
The rationale goes something like this. It is presently common, in workplaces where a union is recognised, for an employer who is in the process of dismissing a worker to invite in the worker’s union representative for an informal and off-the-record (in lawyers’ speak “privileged”) meeting. At the meeting, the employer may make a settlement offer to the worker, sometimes a generous offer, which (if accepted) cuts off the possibility of a protracted dispute, saving both sides emotional distress and money.
The conversation has to be off-the-record because otherwise it might unfairly prejudice a party making an interim concession for the purposes of settlement only. EG an employer might say “for today, I’m willing to consider that the dismissal is unfair, in order to work out how much it might be worth to the worker, and so that I make a credible offer.” That doesn’t mean the employer actually thinks the dismissal is unfair, and if the worker was able to rely on that concession in later proceedings, you would simply never get any settlement at all.
Why not, the government suggests, introduce a similar process to benefit workers who aren’t represented, either by unions or solicitors?
The problems with the proposal are legion. Here I’ll focus on three:
1. The reason why protected conversations work between representatives is that (usually) neither side has an emotional engagement in the conversation. If you had the conversations directly between a worker and a dismissing manager, at around the time of dismissal, the worker would be constantly saying “I don’t want to be sacked” and the manager would be justifying the dismissal. IE save in the most unusual case, people wouldn’t focus on the merits or otherwise of settlement, but simply on the original decision. So “protected conversations” won’t get the benefit that’s intended for them.
2. One reason why the present system works is that there are safeguards built in for the worker. If the outcome of the conversation is an offer of settlement, that isn’t the end of the process. The worker also has the protection, before settlement is finalised, of advice from an independent representative. They may be a trade union rep, although usually it’s a solicitor and many solicitors use this process to genuinely interrogate the settlement offer.
At the same time as introducing protected conversations, the coalition is also contemplating allowing employer’s personnel departments to sign off settlement agreements on behalf of workers. IE the employer would formulate a settlement proposal, and the employer would decide whether it was a fair offer. This process is unbalanced, and very clearly opens up the possibility of protracted legal disputes – as soon as the worker gets to see an advisor of their own, and the advisor says to them: “you do know that the claim you settled for £500 was worth ten times that?”
3. One of the reasons the current system works is that – on the employer’s side – generally the negotiator isn’t the manager who took the original decision to dismiss, etc.
The government’s proposal is to push back “privilege” to an earlier stage: as the quote above from the BIS illustrates, the conversations they have in mind would be ones long predating a dismissal.
Experience of life teaches that employers generally support their own dismissal decisions, and generally react with unease (and sometimes anger) when they are challenged. This is one reason why claimant lawyers dislike unrepresented Respondents at least as much as respondent lawyers dislike unrepresented Claimants (or if anything slightly more). Owners of small companies fight over every penny and often have real difficulty granting legitimacy to workers who sue them (even when, from the perspective of lawyers or the courts, the workers are obviously right to do so).
Protecting dismissal-related conversations directly between the employer and the worker will mean that the worker will not be able to tell the Tribunal what was said to them during their dismissal. IE rather than protecting genuine settlement discussions; it will simply mean that the Tribunal can’t know what the worker was told when they began to challenge their dismissal.
In all sorts of routine circumstances – eg a standard misconduct dismissal – it may be that the employer will have said something that is genuinely prejudicial to their case. EG the worker asks “You’re telling me you think I had a fight with Harry, and we both punched each other. So why are you sacking me, but not Harry?” The Tribunal may genuinely want to know the employer’s original, unguarded answer. If the answer was given during a protected conversation however, the Tribunal could not be told.
But the worst of it would be if the employer blustered during the conversation, or became aggressive, or (as happens depressingly often) tried to bully the employee into resignation (perhaps because the employer did not understand that a worker who resigns can still, potentially, bring an unfair dismissal claim). Why shouldn’t a worker be able to bring this conduct, if it was oppressive, and if it casts light on the dismissal, to the attention of the Tribunal?
Posted in News | No comments yet
Monday 19th March 2012 at 10:00am
No fault dismissals; some arguments against
Between now and 8 June, as part of a broader consultation document which also assesses the utility of the Acas Code of Practice on Discipline and Grievance, the Department for Business, Information and Skills will be seeking views on what it terms “the idea of compensated no-fault dismissal for micro-businesses with fewer than 10 employees.” “Under such a system”, a BIS press release explains, “a business would be able to dismiss a worker from a micro-business, where no fault had been identified on the part of the employee, with the payment of a set amount of compensation.”
The whole point of no-fault dismissals would be to go as far as is believed lawful under EU law to prevent employees of small businesses from bringing claims to Employment the Tribunal. The suggestion is that by doing so (and following the weird logic of neo-liberal economics in which the answer to all questions is invariably to take money from the relatively poor and give it to the relatively rich) social costs to employers would fall, and employers would employ more people.
Reading the call for evidence itself, it is striking how weakly the case is put for this proposed “reform”. A survey is quoted to the effect that 40 per cent of employers agree or strongly agree that the demands of employment regulation put them off employing staff. But when employers were asked what part of employment regulation caused them concerns, by far the biggest area of difficulty was healthy and safety law (which of course cannot give rise to Employment Tribunal claims). Unfair dismissal, by contrast, was seen as a non-issue: “Of the 40 per cent who agreed that employment regulation puts them off employing staff, only 1 per cent say that dismissal/disciplinary action is the regulation that most puts them off employing staff.”
Elsewhere in the same document, it is reported that of 35 OECD countries surveyed in 2008, only two (the US and Canada) had fewer employer law restrictions on employers dismissing workers than the UK.
Here are my own three reasons for suggesting that (whatever the question is) “no fault” dismissals are not the answer
1. The proposal is not thought-through. One of the documents asked in the question is what the level of compensation would be for a no-fault dismissal? Nowhere in the document itself is any steer given as to what this amount would be. It would surely be obvious to anyone who thought about this, that the generosity – or malice – of these proposals will inevitably be bound up with the level at which any compensation is set.
We already have a system of no-fault dismissals, called “redundancy”. If the level of compensation is set at less than the present statutory redundancy awards, the practical effect will be to abolish statutory redundancy payments by small employers.
Conversely, if the level is set at the same or more than the present redundancy awards, then (again) it must be obvious that the scheme will be unused, as employers will be able to get the same effect by paying redundancy pay, which they already understand and have been paying for years.
2. The logic of the consultation is backwards: at present, (on the drafters’ admission) employers are not asking for no-fault dismissals, so, the government proposes, to dissolve “the employers” and replace them with a new group of businesses, who will presumably tell the coalition that the reforms are just what they have always wanted
I suspect part of the reason why the coalition is having such difficulty in finding a tame group of business to cheer-lead for their proposals is that despite the press campaign to the effect that Tribunals cause untold damage to employers, with 2,000,000 businesses in the UK and around 50,000 Tribunal claims a year, it is staggeringly obvious that the vast majority of small businesses will be seeing a Tribunal claim probably around once (or less) in their entire lifetime.
3. The idea that by freeing employers to sack at will more people will be hired requires various flights of logic for which there could never be evidence.
If employer A determines to dismiss employee B, and actually dismisses them, all we know for certain is that employee B is out of work: net employment falls by one.
Now it “may” be that employer A, finding themselves short of an employee, will recruit a replacement. Or it may be that employer A does something else with the money (if they are anything like the first company for which I worked, and for which I was briefly stand-in PA to the multi-millionaire owner, I suspect that no more positive action would be taken than the addition of a single extra person to the chairman’s “team” of family members attending Ascot with him at the company’s expense).
Over a period of six months following a dismissal, the company “could” go on to employ more (or less) people, but whether it does recruit or not will depend on all manner of factors, most of them specific to that given business, and none of them predictable in the sort of “call for evidence” that the coalition is presently undertaking.
Really, you have to have quite a perverse mindset to persuade yourself that the best way to push general employment up is by … helping companies to sack workers.
Posted in News | No comments yet
Friday 2nd March 2012 at 11:49am
Illegality, trafficking; justice
As a matter of contract law; there is a presumption that a party may not sue to enforce an illegal contract. The reasons for this originate in public policy. Imagine if a group of robbers fell out. It would be unjust for one of them to be able to sue the others in the courts complaining “I agreed to join you for wages of £1000. But you’ve only paid me £500. Now I want the rest.”
This presumption can however be displaced. The courts recognise for example that it may be that the illegality originated all on the part of the defendant. For example, if the defendant was a business that told its employees that it was paying their tax (but did not) and then defended claims of unfair dismissal by saying that in reality the employees had always been unlawfully employed, it would be wrong for that business to rely on its own illegality to frustrate its employees’ rights.
In employment law, the Judges have consistently said that where a worker has knowledge of and participates in an illegality, the contract is unlawful and unenforceable; but where the illegality is unknown to them or the worker does not participate, the contract may be enforced. (There are slightly different rules in discrimination law, which arises not in statute but tort and where a worker can potentially sue on an illegal contract, provided that the tort was separate to the illegality – but I’ll leave that to the side).
Many of the “illegality” cases arise from immigration situations.
In the recent case of Zarkasi v Anindita & Anor [2012] UKEAT 0400/11, the claimant was an Indonesian domestic worker who come to the UK, on a scheme set up by her employer, by pretending to be someone else, which involved obtaining a passport under a false name. The ET determined that she knew and participated in the illegality; accordingly she could not succeed in any contractual claim. The employee raised an important counter-argument; namely that she had been trafficked, and asked for the ordinary contractual rules to be disapplied.
There were two main issues at the EAT.
First, was the ET right to find that the claimant had not been trafficked? The scheme was organised by her employer, whose evidence to the contrary the Tribunal disbelieved, the workers’ terms were worse than she had been promised, and the employer put pressure on her not to leave the house. The Border Agency has accepted her as a trafficked person. The EAT dealt with this part of the case by saying that the conduct of the employers had not amounted to coercion or fraud (judgment para 32), and therefore the ET was right to find that the Claimant had not been trafficked. The decision of the BA was not binding on the courts.
Second, where a worker has been trafficked, should the ordinary test of knowledge and participation should be disapplied? Article 4 of the Convention on Action against Trafficking in Human Beings provides that “The consent of a victim of “trafficking in human beings … shall be irrelevant where” force or fraud have been used against them. The EAT, presided over by Langstaff J, decided that the Convention has no force in UK law (judgment para 27), i.e. where a person is trafficked, but consented to it (eg as result of fraud) they still come within the knowledge / participation test – i.e. they can bring no unfair dismissal or wages claim against the employer who fraudulently brought them here.
The court acknowledged that its decision would lead in many case to injustice (para 28), but said that this was necessary to protect the policy position that illegally employed person have no right to work in the UK and cannot benefit from illegal acts. This is the part of the judgment which I imagine will be least attractive to non-lawyers: the argument that those who come to the UK unlawfully lose any employment rights vis-a-vis those who bring them here unlawfully, even where their employer is the instigator and source of the illegality, and even where workers are brought here by coercion or fraud.
It is the passages of the judgment where the President states directly that the court must apply “policy” and not “justice” which cause the most concern.
Apart from immigration, the main context in which Tribunals have to consider illegality is tax, i.e. where a person has declared themselves a self-employed worker for tax purposes but then relies in the protection of employees in unfair dismissal law. The trend in these cases, as exemplified by Hall v Woolston Hall Leisure Ltd [2000] EWCA Civ 170 and Enfield Technical Services Ltd v Payne & Ors [2008] EWCA Civ 39, where the trend is for the court to look understandably on the reasons that might cause a worker to declare one status for one purpose and another in a second.
If, as it appears, the underlying purpose of the “knowledge and participation” test is to discourage illegal immigration: how does it deter traffickers if the courts tell them – you can treat workers as badly as you like, and they will have no rights against you?
Really: why should rogue employers be protected where the fraud is one of their own making?
Posted in News | No comments yet
Friday 17th February 2012 at 6:00am
Why Balfour lost
It is being reported that Balfour Beatty has withdrawn from the proposed “Besna” pay deal for mechanics, electricians and plumbers in the building engineering services sector. Balfour’s decision was caused by the defeat, on Thursday, of its application to the High Court for an injunction to stop strikes intended to derail the agreement. Thursday’s decision is already up on Bailii.
This episode marks a humiliating climb-down for the construction employers who only three days ago were claiming that 90% of affected employers had signed up to Besna. More significantly still, it also points to a genuine transformation in the approach of the senior judiciary to strikes.
As recently as the winter of 2009-2010, it seemed that the prevailing mood in the High Court was one in which the Judges were willing to grant injunctions prohibiting strikes almost whenever they were asked. A series of strikes by workers at Metrobus, EDF, Milford Haven and Network Rail, were stopped in this way.
The underlying logic appeared to be something like this: first, the wording of the anti-strike laws (i.e. Part V Trade Union Labour Relations Consolidation Act 1992) was so prohibitive than in almost every case, a failure on the part of the union could be found; and where there was a breach, it was appropriate to halt the strike. More fundamentally, the general test when determining whether any interim order should be made is the balance of convenience between the parties. Employers who are forced to undergo strikes are inconvenienced: large employers may lose tens of millions of pounds as a result of a single day’s strike. Workers who don’t strike, or so the argument went, lose nothing. It was fairest therefore to stop any proposed strike.
The moment when the Judges stopped granting injunctions was the decision of the Court of Appeal in the long-running British Airways strike. Why does the law require unions to publicise the number of workers who spoil their ballot papers in a strike ballot?, Lady Justice Smith asked David Reade, counsel for BA in the Court of Appeal. The evident difficulty that he had in discerning any purpose to the legislation (beyond the simple, brute, desire of a previous generation of legislators to prevent strikes), found its expression in due course in a decision of the court not enforce legislation which the Judges could see no good reason to read literally.
Maybe the old wisdom – that any strike contravened principle – was just too blunt.
Part of the purpose of the law is always to determine disputes in favour of those who already wealthy and powerful; but part of the point also is to encourage social peace by showing the vast majority of people that their disputes can be resolved fairly. These two principles are always in tension, and (at least with respect to industrial action) we appear to be in a moment where the second of these principles is winning out.
In Balfour Beatty v Unite, the court was told that the union had not done enough to specify the job titles and the sites of the workers it proposed to call out. Mr Justice Eady’s decision shows that he too saw no reason to read Part IV against the union: “it is clear from the evidence of Unite, and in particular from the witness statements of Mr Nick Drysdale, that he and others at Unite have gone to painstaking (and no doubt also time-consuming and expensive) lengths to verify the information in their possession.”
Another factor that may have been felt in court was the context of the electricians’ strikes: many of them unofficial, with the workers showing every sign of being ready to strike whether or not the balloting requirements had been satisfied, and irrespective of any threats made against their union by the employer.
Unions should not get too comfortable in their present position. We have come through a century of judicial intervention, almost all of which has made life more difficult for unions. Although there appears to be no Denning at present among the higher judiciary, there are plenty of Judges who could yet play that role. For the moment, the default position of the judiciary appears to be that strikes should only be injuncted where there is a real breach of the anti-union laws.
