Frontline UK Employment Law Update Edition 31 2024 - Case Updates

1. British Airways Plc v Rollett & Ors [2024] EAT 131
2. Tesco Stores Ltd v Union of Shop, Distributive and Allied Workers [2024] UKSC 28
3. Ms M Thandi and Others v Next Retail Limited and Next Distribution Ltd: 1302019/2018 and Others
4. HMRC v Professional Game Match Officials Ltd [2024] UKSC 29
5. Thomas v Surrey and Borders Partnership [2024] EAT 141
6. Turner-Robson v Chief Constable of Thames Valley Police ET 3314825/2022 and others

British Airways Plc v Rollett & Ors [2024] EAT 131 (LINK)

In this case, the Employment Appeal Tribunal (“EAT”) upheld the jurisdiction of the Employment Tribunal (“ET”) to consider claims of indirect discrimination from individuals who do not share the same protected characteristic as the disadvantaged group but suffer the same disadvantage. 

The case was brought (in around January 2021) by a group of Claimants alleging that they experienced indirect discrimination following a restructuring exercise by the Respondent in the wake of the COVID-19 pandemic. The Claimants were a mix of individuals with the relevant protected characteristics (including non-British nationals and women) and individuals without the protected characteristics. The latter were seeking to bring claims of what has been referred to as "associative" or "same disadvantage" indirect discrimination against the Respondent, and the former, pursued claims of indirect discrimination under section 19 of the Equality Act (“EqA”).

The Claimants argued that the Respondent’s scheduling changes, brought about by the restructuring exercise, affected and disadvantaged (i) employees who lived abroad and commuted (who were predominantly non-British nationals) compared with commuters from the UK, and (ii) employees who had caring responsibilities (predominantly women) compared with those who didn’t. 

The ET held that it had jurisdiction to consider indirect discrimination claims under section 19 EqA when a provision, criterion, or practice (“PCP”) applied by an employer puts people with a particular protected characteristic at a disadvantage, and the claimant, who does not have the same protected characteristic as the disadvantaged group, also suffers that disadvantage. The Respondent appealed this decision.

Upon review, the EAT dismissed the appeal and found that the ET made no error of law. The EAT reiterated the ET's jurisdiction to consider indirect discrimination claims under section 19 EqA, where a PCP applied by an employer puts people with a particular protected characteristic at a disadvantage. Importantly, it was clarified that in such cases, the claimant must also suffer that disadvantage, but need not share the same protected characteristic as the disadvantaged group.

It is important to note that this was a preliminary issue in the case. The ET will now consider the substantive indirect discrimination claims; the EAT has merely established that the ET has the authority to examine the case. 

Since the case was brought by the Claimants, the UK government has amended the EqA to introduce new section 19A, which came into effect on 1 January 2024, with the aim of preserving existing EU case law in UK domestic law following Brexit. New s19A now expressly enables claimants to bring “same disadvantage” indirect discrimination claims (i.e. where they do not have the protected characteristic of the disadvantaged group but experience the same disadvantage). 

The EAT’s decision confirms that such claims are therefore possible in relation to events that took place before the amendments to the EqA on 1 January 2024 (as in this case).  As a result, employers should not presume that employees who do not share a protected characteristic with a disadvantaged group cannot suffer indirect discrimination claim as those who possess it, if they experience the same disadvantage.

Tesco Stores Ltd v Union of Shop, Distributive and Allied Workers [2024] UKSC 28 (LINK)

In this case, the Supreme Court (“SC”) upheld an injunction restraining the Respondent employer from dismissing and re-hiring employees with the intention of removing or diminishing a “retained pay” arrangement. 

In 2007, as part of a broader restructuring, the Respondent closed several distribution centres. To retain experienced employees from these sites, it offered a "retained pay" package to incentivise them to relocate to other locations, significantly distant from their original workplaces. This package was enshrined in a collective agreement incorporated into the employees' contracts, stating that the retained pay would remain a permanent feature of their contractual entitlements and could only be changed by mutual consent.

In 2021, the Respondent attempted to negotiate away the retained pay entitlement, proposing either an enhanced payment as compensation or dismissal and re-engagement on the same terms without the retained pay (so called ‘fire and rehire’). This led to legal proceedings initiated by the affected employees in the High Court. The High Court found that there was an implied term in the employees’ employment contracts that prevented the Respondent from exercising the right to terminate for the purpose of removing or diminishing the employees’ right to retained pay. An injunction was granted, restraining the Respondent from dismissing the employees on this basis.

The Respondent appealed the decision to the Court of Appeal, where it was upheld and the case was then appealed to the SC by USDAW, representing the employees. The SC unanimously upheld the appeal. It interpreted the express retained pay term to mean that the employees were entitled to this benefit as long as they remained in the same role. The SC ruled that the term "permanent" in the agreement had to carry a meaning other than “cannot be removed by collective bargaining”. Hence, a term was implied that the Respondent’s contractual right to dismiss on notice could not be exercised for the purpose of depriving the employees of their right to permanent retained pay. This decision was based on the principles of business efficacy and obviousness, in that it was “inconceivable” that in agreeing for the term to be “permanent” the parties had agreed that the entitlement to retained pay could be unilaterally terminated by the Respondent providing notice, which would also have meant the employees had agreed to a greater risk of dismissal.  

The SC therefore upheld the injunction restraining the Respondent from dismissing the employees for reason of re-hiring them with lower pay. 

While the case specifics are unique and the wider impact of the case remains to be seen, it serves as a warning that the practice of 'fire and rehire' may not be a simple solution for removing costly contractual benefits, particularly if they are expressly stated to be permanent. The new Labour government has pledged to restrict the use of 'fire and rehire', and while the exact measures and their implementation remain uncertain, it is likely that employers' ability to change terms and conditions through this method may be further limited in the coming months.

Ms M Thandi and Others v Next Retail Limited and Next Distribution Ltd: 1302019/2018 and Others (LINK)

In this case, the Employment Tribunal (“ET”) decided that the Respondent employer had breached equal pay law by paying its warehouse staff higher pay than its shop-floor sales staff. The ET also clarified that purely cost-cutting measures and market forces are not sufficient to constitute a “material factor” which would allow employers to justify pay differentials. 

The ET ruled that the Respondent had breached equal pay law by compensating warehouse staff, who had a slight male majority (52.78%) at a higher rate than shop-floor sales staff, who were predominantly female (77.5%), despite the two groups performing work of equal value (which the ET had previously decided as a preliminary issue in the case). The ET had to consider if the material factor defence, which can be invoked by an employer to justify differences in pay, could apply.

The Respondent’s justification for the difference in pay centred around cost-cutting, and it sought to rely on various “material factors” such as market forces, market price, recruitment difficulties, and the performance of the company and its subsidiaries, to justify the pay disparity. However, the ET dismissed these arguments, ruling that these factors were indirectly discriminatory and could not be objectively justified. 

The Respondent, however, was successful in defending some payments and bonuses that were exclusive to warehouse staff. The ET agreed that these were linked to specific challenges the Respondent faced in incentivising and retaining warehouse staff at the times the bonuses and one-off sums were paid.

The ET's decision carries significant implications. The back pay and compensation claimed is estimated to exceed £30m, divided between 3,540 claimants. The Respondent has stated that it will appeal the judgment.

Whilst this decision is not binding on other Tribunals (as it is a first instance decision), it is likely to be significant considering the number of similar on-going equal pay cases being made against other UK retailers. In fact, the judgment came shortly before the start of an equal pay claim against another larger retailer involving more than 60,000 staff. As demonstrated by this case, the value of back pay and compensation can be substantial and employers may face difficulties in justifying pay differences on the basis of market forces alone.

HMRC v Professional Game Match Officials Ltd [2024] UKSC 29 (LINK)

In this case, the Supreme Court (“SC”) decided that there was mutuality of obligation and control by PGMOL (a company that provides referees for major professional football matches in England), over part-time referees that PGMOL treated as self-employed. It returned the case to the First-tier tax Tribunal to determine if the part-time referees are engaged for individual matches under a contract of employment. 

PGMOL engages a set of full-time referees under contracts of employment, primarily for Premier League matches.  It also engages a pool of part-time referees who officiate matches in their spare time. The case concerned the pool of part-time referees, which PGMOL treated as self-employed, and therefore did not treat the fees paid to them as employment income. HMRC challenged this.

The referees were appointed to the pool annually, subject to passing a fitness test and attending an introductory seminar. They were provided with a match-day procedures document and a code of conduct. PGMOL offered matches to referees via an event management system. Once a referee accepted a match, they were effectively ‘booked’ for the match, though both the referee and PGMOL could cancel the booking. The case focused on whether or not the individual match day contracts between PGMOL and the part-time referees were employment contracts. 

In determining whether there was an employment contract, three elements had to be assessed:

1. Mutuality of obligation i.e. did the referees personally have to perform the work in return for payment by PGMOL;
2. control i.e. did PGMOL exercise a ‘sufficient framework of control’ over the referees; and
3. whether the provisions of the contract were consistent with it being an employment contract.

The First-tier Tribunal and Upper Tribunal found in favour of PGMOL, but the Court of Appeal did not and PGMOL therefore appealed to the SC to determine whether the first two key elements of employment were met, namely ‘mutuality of obligation’ and 'control'. 

The SC found that there was sufficient mutuality of obligation from the point of acceptance of the assignment to officiating the match and providing the match report (for which the referees were paid). It did not matter whether there were mutual obligations between matches, or that either party was entitled to cancel the contract after the match was accepted. For the element of control, it was enough that contractual obligations were imposed on referees to meet relevant standards, and PGMOL had the ability to discipline them if standards were not met. 

Having concluded that the first two elements of the test for employment status were met, the SC returned the case to the First-tier Tribunal to decide whether, in all the circumstances, the third element of the test is met and therefore whether the referees are engaged for individual matches under a contract of employment.

Whilst this was a tax case (rather than a case looking at employment status for the purposes of statutory employment rights), it provides a useful restatement of key principles in determining employment status and particularly in the context of part-time and casual work or short duration work arrangements. It highlights the challenges that can arise when assessing whether a contractor is genuinely self-employed.

The case shows that, even if a contract is for short duration or a specific purpose, there may still be sufficient mutuality of obligation and control present for those tests of employment status to be met. The SC’s decision seems to further lower the threshold for establishing these two elements, moving the emphasis further to the third element which is highly fact-specific and currently subject to rapidly evolving case law. 

Thomas v Surrey and Borders Partnership [2024] EAT 141 (LINK)

In this case, the Employment Appeal Tribunal (“EAT”) confirmed that a belief in English Nationalism which included anti-Islamic views, conflicts with the fundamental rights of others and was not a protected belief under the Equality Act 2010 (“EqA”). 

The Claimant held “English Nationalist” views, described as being centred around the cultural unity of English people, being all people who choose to “adopt English identity and with it, allegiance to England”. 

The Claimant personally extended this belief to the view that Islam is incompatible with this belief, and consequently believed in the banning of Islam or the forcible removal of Muslims from the United Kingdom. The Claimant claimed his dismissal (on the grounds of his belief) was unlawful discrimination The Employment Tribunal found that the Claimant’s beliefs were not protected under the EqA due to their extreme anti-Islamic nature.  The Claimant subsequently appealed to the EAT.

On appeal, the Claimant asserted that his beliefs were protected, given it has been established that “views that may shock or offend” can be protected under the EqA. However, the EAT found that the Claimant’s beliefs went beyond this and amounted instead to “a generalised form of harassment targeting one particular religion”, and therefore were not characterizable as merely views that shock or offend.  The Claimant sought to rely on Forstater v CGD Europe (covered in a previous Frontline, here), which clarified that only extreme beliefs akin to totalitarianism, or Nazism would fall outside of protection under the EqA. The EAT noted that the Claimant’s views that all Muslims should be deported shared features with Nazism.

The EAT therefore upheld the Employment Tribunal’s decision that the Claimant’s anti-Islamic views were not protected by the EqA. This case adds to the growing body of case law determining the boundaries of the protected characteristic of religion or belief.

Turner-Robson v Chief Constable of Thames Valley Police ET 3314825/2022 and others (LINK)

In this case, the Employment Tribunal (“ET”) provided guidance on the boundary between positive action (which is permitted) and positive discrimination (which is unlawful) under the Equality Act 2010 (“EqA”), finding that the promotion of an ethnic minority Sergeant without a competitive recruitment process was unlawful positive discrimination.

The Respondent ran a “Positive Action Progression Program”, which provided additional training and support for ethnic minority Sergeants, to assist them in progressing and fast tracking to Inspector role. The Respondent promoted one of the members of this programme (who was an ethnic minority Sergeant) into a vacant Inspector role, without advertising the role or running a competitive recruitment programme.  Three white police officers (who had expressed an interest in promotion to Inspector rank) claimed that this amounted to direct discrimination on the grounds of their race.

The ET upheld their claim and decided that the promotion of the ethnic minority program member went further than “mere encouraging”, which would have been permitted as positive action under the EqA, and instead amounted to positive discrimination. Automatically slotting the Sergeant into the role without any real thought or consideration went beyond positive action and crossed the line into positive discrimination. The Claimants were therefore disadvantaged and treated less favourably because they were denied the opportunity to apply for the role and seek promotion, which could not be justified by the Respondent.

The ET also noted that the Respondent had failed to carry out an equality impact assessment before deciding to promote the Sergeant and no balancing exercise had been done to determine whether positive action was proportionate. Furthermore, there was a significant lack of equality and diversity training received by those who made the promotion decision, with one having not been trained for 21 years and the other having never received specific training on the law. 

This case underlines both the importance of managing positive action programs carefully to avoid crossing the line into unlawful positive discrimination, and in ensuring managers and decision makers have suitable training in how to handle these types of decisions.