Frontline UK Employment Law Update Edition 29 2024 - Case Updates

1. British Airways plc v De Mello and others [2024]
2. Secretary of State for Business and Trade v Mercer [2024]
3. Dr Therese Mary William v Lewisham and Greenwich NHS Trust [2024] EAT 58
4. Groom v Maritime & Coastguard Agency [2024] EAT 71

British Airways plc v De Mello and others [2024] (LINK)

In this case, the Employment Appeal Tribunal (“EAT”) considered the calculation of holiday pay for employees, focusing on which allowances should be included in "normal pay" and the principles governing the timing of claims for underpayment of holiday pay. The EAT reviewed multiple claims dating back to 2007, examining whether specific allowances should be included in statutory holiday pay.

The central issue to be decided was which allowances paid to the Claimants counted towards "normal pay" for holiday purposes (and which were therefore required to be included in the calculation of holiday pay for at least four weeks of the worker’s statutory holiday entitlement). This involved distinguishing between performance payments, which count, and expense payments, which do not. Another significant aspect was the concept of a "series" of deductions and how gaps in time between payments affect claims, especially following the Supreme Court decision in Chief Constable of the Police Service of Northern Ireland v Agnew.

The Employment Tribunal (“ET”) had to decide whether allowances paid to cabin crew, including meal allowances, commission on duty-free sales, and a specific “Back-2-Back” allowance should be included in normal pay. The ET emphasized the need for holiday pay to reflect normal remuneration, in line with EU law (now codified into domestic legislation). Payments intrinsically linked to job performance should be included, while those meant to cover occasional or ancillary costs should not.

The ET initially decided that:

• meal allowances (which exceeded the expenses they were paid to cover) were required to be included in holiday pay but deferred the precise calculation for further submissions, recognising the complexity of determining what proportion of the allowance was genuinely for covering costs versus being part of normal remuneration;
• although commissions on duty-free sales were linked to job performance, their exclusion from holiday pay was unlikely to deter workers from taking leave and so was not required to be included; and

in respect of the Back-2-Back allowance, one of the Claimants was not entitled to its inclusion in his holiday pay because he only became eligible for it part way through the year and then received only three payments in the remaining five months of the year. Three payments in a 12-month period were not sufficient for the payment to count as normal pay, according to the ET. On appeal, the EAT held that these findings were wrong. It held that ETs should not try to apportion an expenses payment in the way envisaged. Rather, they must assess whether the whole allowance is either remuneration for work, or a payment to cover costs. This is a factual assessment based on all of the evidence. The EAT also held that the ET should not have excluded the sales commission on the basis that the payments were too small to act as a deterrent to the taking of leave: any payment which amounts to “normal pay” must be included. Furthermore, the ET had been wrong to find that the Back-2-Back allowance

was not part of normal pay for the reasons given. The ET should have determined what was a sufficiently representative reference period. A period during which an employee was not working in a role eligible for the payment could not be properly treated as representative, so it was incorrect to use a 12-month reference period which included seven months in an ineligible role.

The ET had also held that a gap of more than three months between underpayments of holiday pay broke the series of deductions, such that a claim for any underpayments prior the break would be timed out. On appeal, the EAT clarified that lawful payments or intervals of over three months do not necessarily end a series. The Supreme Court’s decision in Agnew had confirmed this. The deductions must be “sufficiently similar” to amount to a series; the EAT held that if there are similar features of the deductions, such that they would meet the test of similarity for these purposes, then the ET should conclude that there is sufficient similarity, notwithstanding that, if it descended to a more granular level of factual analysis, differences of factual detail might be detected. In this case the “undisputed” facts were that all of the payments from which the Claimants claimed that there were unlawful deductions were of holiday pay, and in all cases, they claimed that the deductions came about because of a failure to factor in one or more allowances that should have counted towards normal pay. On that basis, the ET would have been bound to conclude that the payments were “sufficiently similar”. As to whether there was a sufficient temporal connection between underpayments, it is possible that underpayments may be so distant from each other in time that the series is broken but this must be looked at in the round, considering the purpose of the holiday pay regime of protecting vulnerable workers.

This case emphasises, amongst other things, that ETs must not take an excessively detailed approach to assessing whether underpayments were part of a series or not. Technical arguments that underpayments are different because they relate to different elements of pay are unlikely to persuade an ET that are not “sufficiently similar” to amount to a series.

Secretary of State for Business and Trade v Mercer [2024] (LINK)

In this case, the UK Supreme Court (“UKSC”) ruled on the correct interpretation of section 146 of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”) and whether it protects employees from detriment short of dismissal for participating in lawful strike action.

The Claimant, a support worker, was suspended by her employer, the Respondent, during lawful strike action. The Claimant argued her suspension was intended to deter her participation in union activities, her right to which was protected under section 146 of TULRCA.

Section 146 states that worker has the right not to be subjected to any detriment by his or her employer for the sole or main purpose of preventing or deterring the worker from taking part in trade union activities at an appropriate time (defined as excluding working hours, unless the employer has consented to the worker taking part in such activities during working hours. Taking part in industrial action is not one of the activities protected under section 146, according to prior Employment Appeal Tribunal (“EAT”) case law.

The Claimant argued that the legislation should be interpreted to protect workers from detriment for participating in strike action so as to comply with Article 11 of the European Convention on Human Rights (“ECHR”), which protects the human right to freedom of association and assembly, including union activities, without restriction unless such restriction is prescribed by law and necessary in a democratic society. Where domestic legislation is not compatible with the ECHR, an appeal court may

issue a “declaration of incompatibility”; a Claimant can then pursue a case at the European Court of Human Rights if the government does not amend the offending legislation.

In this case, the EAT had held that section 146 can and should be interpreted compatibly with Article 11, suggesting that "appropriate time" should include strike participation during working hours. This interpretation was seen as necessary to protect workers' rights under the ECHR.

The Court of Appeal (“CA”) overturned the EAT's decision, maintaining that section 146 did not cover participation in lawful strikes. It acknowledged that this might breach Article 11 but deemed it inappropriate for the courts to effectively legislate by redefining statutory terms. The CA refrained from issuing a declaration of incompatibility under the Human Rights Act 1998, citing that the issue represented a legislative gap rather than a specific statutory provision incompatible with human rights.

On appeal, the UKSC focussed on three key issues: whether Article 11 protects union members against sanctions for participating in lawful strikes, whether section 146 could be interpreted to align with Article 11, and whether a declaration of incompatibility should be granted if such interpretation was impossible.

The UKSC agreed with the CA that interpreting section 146 to cover participation in strike action would amount to judicial legislation, a role reserved for Parliament. The UKSC issued a declaration of incompatibility, on the basis that section 146 breaches Article 11 of the ECHR encourages and legitimises unfair and unreasonable conduct by employers and meant that the Claimant had no legal redress for detriments to which she had been subjected.

Whilst the UKSC’s declaration of incompatibility has no immediate effect on section 146, which remains in force “as is” unless and until Parliament amends it, an incoming Labour government will be expected to address this promptly if (or when) elected. If the current Conservative government remains in power, action to address this incompatibility seems likely to be less forthcoming.

Dr Therese Mary William v Lewisham and Greenwich NHS Trust [2024] EAT 58 (LINK)

In this case, the Employment Appeal Tribunal (“EAT”) held that the Employment Tribunal (“ET”) was correct to dismiss the Claimant’s whistleblowing detriment complaint under section 47B of the Employment Rights Act 1996 because she had not been subjected to detriments by the Respondent on the ground that she had made one or more protected disclosures.

The Claimant was a consultant paediatrician and neonatologist at the University Hospital Lewisham. She was suspended and subsequently faced disciplinary action, which she alleged was due to her raising concerns about patient safety and management procedures at her employer.

The Claimant brought a claim against the Respondent that she had been subjected to detriments due to her making one or more protected disclosures, under the Employment Rights Act 1996.

The ET dismissed her complaint, determining that whilst she had made a protected disclosure, and had suffered various detriments (e.g. her suspension, subsequent investigation and written warning), there was no causal link between them. Specifically, her employer’s detrimental decisions were not materially influenced or motivated by her protected disclosure because the managers who had placed her on suspension and issued the written warning did not know about the protected disclosure.

The Claimant appealed this decision on four grounds:

1. A reasonable belief in her disclosures. She argued that the ET erred in finding she did not have a reasonable belief that her disclosure about the rejection of her feeding guidelines showed an endangerment to health and safety.
   
   
2. The credibility and accuracy of her disclosures. The Claimant contended that the ET wrongly assessed her credibility and the accuracy of her disclosures.
   
   
3. Causation of her detriments. The Claimant asserted that the ET failed to properly apply the statutory test of causation for the detriments she experienced, specifically her exclusion from the hospital and the disciplinary actions taken against her. The ET concluded that these actions were not motivated by her disclosures but by earlier incidents and subsequent investigations, where her behaviour and the dysfunctional relationship she had with colleagues were significant factors.
   
   
4. A material influence on her protected disclosures. The Claimant argued that the ET should have applied the Supreme Court’s decision in Royal Mail v Jhuti and did not adequately consider whether the motivations of her colleagues, who were already influenced by her disclosures, materially influenced the detrimental actions taken against her. The ET found that the main decision-makers were more influenced by the incidents directly involving the Claimant and the dysfunctional working relationships rather than the disclosures.

The EAT dismissed all grounds of the Claimant’s appeal. In particular, the EAT made it clear that the Supreme Court’s decision in Jhuti concerned a claim for automatic unfair dismissal under s103A and was therefore not relevant to a whistleblowing detriment claim under s47B. The EAT relied on existing EAT authority (Malik v Centros Securities plc) which decided that in a s47B claim, you cannot transfer the knowledge and motivation of another individual to a decision maker when determining why the decision maker acted as they did.

This case highlights that there has to be a clear causal link between the protected disclosure and alleged detriment, and the focus should be on why the decision maker acted as they did.

Groom v Maritime & Coastguard Agency [2024] EAT 71 (LINK)

The Employment Appeal Tribunal (“EAT”) recently decided that a volunteer’s employment status could be that of a ‘worker’ if they have a right to be paid for their activities.

The Claimant was a volunteer in the Coastal Rescue Service (“CRS”). The relationship was governed by a volunteer handbook, describing the relationship as entirely voluntary. Volunteers were required to follow a Code of Conduct, which confirmed that volunteers could submit monthly payment claims for certain activities.

In 2020, he was invited to a disciplinary hearing, after which the relationship between the Claimant and CRS was terminated. Following a rejected appeal, the Claimant claimed that he had been refused his right to be accompanied by a trade union representative at the disciplinary hearing. He needed to be classified as a ‘worker’ under law to qualify for such a right. He claimed that, although described by CRS as a volunteer, he was in reality, a worker.

At the Employment Tribunal (the “ET”), his claim was dismissed on the grounds that there was, in essence, no contractual relationship between the parties, primarily because there was no “automatic” right to payment for any activity and many volunteers, in reality, made no such claim. Therefore, the Claimant could not be a worker.

The Claimant appealed this decision to the EAT, which upheld his appeal for the following reasons:

• There was a contract in place during the activities which attracted the right to remuneration. This was an important consideration in determining whether a contract existed, and it did not matter that many volunteers did not actually submit a claim for payment.
  
  
• Further, the CRS’ Code of Conduct, which outlined the nature and responsibilities of the volunteer roles, required that they “maintained a reasonable level of incident attendance”. As this attendance generated a right to remuneration, this was indicative of a contract arising and therefore the volunteer being a worker.
  
  
• Finally, while the only factor which suggested there was no contract was that of frequent use of the term “voluntary”, the definition of “‘volunteer’ was not a term of art” and each instance was to be decided on a holistic examination of all available documents.

In summary, the EAT decided that a contract existed when a volunteer attended an activity for which there was a right to claim payment. The Claimant was therefore a worker when carrying out those activities. One issue left explicitly as an open question was whether a volunteer was a worker when doing unpaid activities. As this question was not raised in this case, it is left open to be decided in a future case.

Businesses that use volunteers may want to consider their employment status and review their volunteer practices as a result of this decision, being mindful however that, in this decision, worker status was only established given the right to payment for certain activities.