Employment Corner: Employment law developments for the Hotel, Hospitality & Leisure sector

 In each edition of Check-In, we will explore the latest developments in Employment law and their importance to the Hotel, Hospitality & Leisure sector. In this edition, we will look at:

• Fire and rehire in the spotlight
• Deliveroo agrees terms with GMB Union
• Employment Appeal Tribunal finds refusal of request for flexible working was sex discrimination
• Extension of ban on exclusivity clauses in employment contracts

1. Fire and Rehire – In the Spotlight

The COVID-19 pandemic and consequent lockdowns undoubtedly had a profound impact on the UK hospitality sector, with many employers dismissing staff or asking them to take cuts in pay and benefits as they tried to shore up their businesses.  The strategy known as “fire and rehire” came under the spotlight as employers sought to force through detrimental changes to terms and conditions by dismissing staff and offering them new employment on less favourable terms and conditions.  With continued uncertainty for the sector, amid strong economic headwinds, “fire and rehire” continues to stoke debate.  This article explores the practice, the key legal considerations and potential future developments in this area.   

2. Deliveroo agrees terms with GMB Union

Deliveroo has signed an agreement with the GMB Union giving the union rights to collective bargaining on pay for Deliveroo’s 90,000+ drivers.

The agreement has been criticised as it recognises the drivers as self-employed rather than workers with the statutory employment rights associated with that status (notably, the rights to a minimum hourly wage, holiday pay and to be enrolled in a pension scheme).  

This is consistent with current case law, with the Central Arbitration Committee and subsequently the Court of Appeal having held that Deliveroo riders are self-employed, on the basis that they have no obligation to provide their services personally.  

However, the Deliveroo case is something of an anomaly amongst the many other court and tribunal decisions (most notably the Supreme Court in Uber) holding that gig workers are “limb b” workers with the statutory rights that follow from that status.  The GMB agreement comes whilst another trade union, the IWGB, attempts to bring an appeal in the Supreme Court against the Court of Appeal’s 2021 decision that Deliveroo riders do not have an employment relationship with Deliveroo.  

The UK government has long promised to reform the law relating to worker rights with a view to increasing protection for vulnerable workers on low pay, following the Taylor Review in 2017.  However no specific legislative change has yet been put forward, and so the wait for clarity in this area continues.    

3. Employment Appeal Tribunal finds refusal of request for flexible working was sex discrimination 

Many jobs in the hotels, hospitality and leisure sector come with non-standard working hours.  Shift work is common and in many cases, unsocial hours are a necessary part of the role.  Employers in the sector must however combine their business needs with the statutory rights of employees (i) to request flexible working; and (ii) not to be discriminated against unlawfully (including for reasons related to their sex).  

The Employment Appeal Tribunal’s recent decision in Allen v Primark Stores Ltd [2022] EAT 57 provides a helpful reminder of the way in which an inflexible approach to flexible working requests may disadvantage female employees with childcare responsibilities.  Where female employees are disproportionately disadvantaged by a particular provision, criterion or practice (“PCP”) of the employer when compared to male employees, there will be a prima facie case of indirect sex discrimination unless the PCP can be objectively justified. 

4. Extension of ban on exclusivity clauses in employment contracts

Employers of zero hours workers are currently legally prohibited from including “exclusivity” clauses in their terms of engagement.  An exclusivity clause is one which prohibits the worker from either (i) doing work or performing services under another contract or under any other arrangement; or (ii) doing work or performing services under another contract or under any other arrangement without the employer's consent.

The UK government confirmed on 9 May 2022 that it will legislate to extend this prohibition to cover all workers who earn less than the Lower Earnings Limit (currently £123 a week).  This is intended to ensure that those on the lowest pay are free to “top up” their earnings by taking other jobs.  

It is not clear how many of the estimated 1.5 million low-paid workers falling within this group are currently restricted from taking up other work, and whether exclusivity clauses are in fact a significant barrier to them increasing their earnings.  The government’s summary of responses to its consultation on this matter states that “the consultation responses highlighted that these exclusivity clauses are not used frequently by businesses...”.  The impact of this measure may therefore be limited.