Case law updates

Holiday pay: Overturning judgments of both the employment tribunal and EAT, the Court of Appeal has held that the right to paid annual leave can be carried over to another leave year in circumstances where the leave had been taken but the worker had not been paid for it because the claimant had wrongly been treated as an independent contractor. Previously the case law limited the right to carry over paid annual leave only to situations where the worker had not taken the time off. The Court of Appeal also cast doubt on the EAT’s decision in Bear Scotland that a gap of three months between deductions or non-payment of holiday pay was sufficient to break the chain of a “series of deductions”. This case is an important development in the way time limits for holiday pay claims work, and particularly relevant to holiday claims where there has been a misclassification of employment status. (Smith v. Pimlico Plumbers)

Fire and rehire: The High Court has granted an injunction preventing an employer from using ‘fire and rehire’ (i.e., termination of employment on notice, with re-engagement on new terms) to remove a contractual entitlement to enhanced pay. Fire and rehire has come under increasing scrutiny over the pandemic, although the government has currently ruled out legislation to remove or restrict the ability for employers to use this approach when changing terms and conditions in the absence of consent. Although this case suggests that the courts are open to granting an injunction to prevent the practice, it is relevant to note that the circumstances of this case were described as “unusual” – the enhanced payment had been negotiated with a recognised trade union in response to particular circumstances, and with a number of conditions attached, including that it was to be a permanent entitlement to last as long as the employee remained in the same role. The court concluded that, in these circumstances there was an implied term preventing termination on notice for the purpose of removing the enhanced payment. (USDAW v. Tesco Stores)

Confidential information: An employer has successfully obtained an interim injunction preventing a former employee from taking and retaining confidential information relevant to pending litigation. The employee claimed he required the information for the purposes of seeking legal advice, and because he had no faith that the documentation would be disclosed during litigation. However, the court was satisfied that the former employee had no proprietary, contractual or equitable interest in the documents, and made clear that compliance with the legal obligations of disclosure should not be pre-empted, and that there was scope for recourse if there was reason to believe disclosure obligations had not been complied with. This case will be a reassuring reminder for employers in respect of their confidential information, and that the return and/or deletion of property on the termination of employment is reasonable. (Nissan v. Passi)

Agency workers: Although agency workers have the right to be notified about any vacancies at the hirer, the Court of Appeal has rejected an argument that this extends to a right to apply for such vacancies on the same basis as directly recruited employees. It was therefore not a breach of the Agency Worker Regulations 2010 for a hirer to allow directly employed staff to apply for vacancies ahead of agency workers. This decision will be of interest to employers relying on agency resource, reassuring them that although agency workers have some rights and protections, they are not fully comparable with permanent staff and when it comes to recruitment, it is not unreasonable or unlawful for existing directly employed staff to be given priority in applications for internal vacancies. (Kocur v. Royal Mail Group)

Employment status: Upholding the EAT’s decision, the Court of Appeal has held that the lack of any obligation on an individual to accept or perform a minimum amount of work is not fatal to establishing them as a ‘worker’ and entitling them to the associated employment rights. In this case the claimant worked as a fee-paid panel member on a fitness to practise committee and had an overarching contract in relation to the provision of those services. Although there was no obligation to be offered a minimum number of hearings or sitting dates, nor any obligation to accept any dates offered, any work provided had to be done personally. As such, it was found that there was an individual contract in place in respect of each hearing and the lack of an irreducible minimum of obligation was not inconsistent with worker status. (Nursing and Midwifery Council v. Somerville)

Settlement and waiver of claims: On termination of his employment, the claimant brought a claim for race discrimination which was subsequently settled by way of a COT3 agreement conciliated through Acas. When the claimant then applied for, and was rejected from, a role with a subsidiary of his former employer, he brought a claim alleging victimisation. There was a factual basis for the claimant showing that his former employer had an involvement in the decision to reject his application, but the claim turned on whether he was prevented from proceeding because of the COT3 terms. The COT3 was drafted widely, settling claims which directly or indirectly arose out of or in connection with the claimant’s employment, and including claims which the claimant may not have been aware of at the date of signing the terms. The EAT was satisfied that there was a sufficient link between the claimant’s former and prospective employers to be caught by the waiver, and so the claim could not proceed. This case is a helpful illustration of how careful drafting of settlement terms can be important, and can successfully preclude future claims even involving linked businesses. (Arvunescu v. Quick Release (Automotive) Ltd)

Unfair dismissal: An employer who invoked a contractual right to make a payment in lieu of notice (PILON) rather than requiring an employee who had resigned to work their full notice period, was found not to have dismissed the employee. The case turned on the statutory interpretation of section 95(1)(a) of the Employment Rights Act 1996, which provides that ‘dismissal’ includes where the contract of employment is terminated by the employer, with or without notice. The EAT was bound to follow an earlier EAT decision which had determined that an employer bringing forward the termination date in line with an express contractual term did not amount to a dismissal, although expressed doubt on whether that claim had correctly interpreted the legislation. It was suggested that the issue may need resolving by the Court of Appeal. (Fentem v. Outform EMEA)

Vexatious litigants: The EAT has ordered a restriction of proceedings order (RPO), of unlimited duration, against a litigant who brought multiple and regular claims for discrimination after unsuccessfully applying for job vacancies. In addition to the claims having no merit, the claimant also threatened adverse publicity or reports to regulators, and used the tribunal process to put pressure on the respondents to reach a financial settlement. RPOs are rare, and in this case the RPO resulted after the claimant had issued in excess of 40 claims over a 10 year period, but it is nevertheless reassuring that there is scope for recourse against vexatious litigants. The claimant is not barred completely from issuing another claim, but must now have permission to do so. (Attorney General v. Taheri)

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