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UK labour law quarterly update - March 2019

  • United Kingdom
  • Employment law
  • Labor law and trade union issues


Welcome to our March UK labour law quarterly update. This edition contains the following content:

Lessons learnt

Chocks away: Despite the rarity of recent employer injunctions to stop strikes, one such injunction averted flight disruption over Christmas. What are the lessons for employers?

Watch our video:

News round-up

Recent labour case law

Eversheds Sutherland labour law publications, events and training

  • A UK Guide to Labour Law: click here
  • A UK Guide to European Works Councils: click here
  • A Global Guide to Labour Standards: click here
  • Upcoming Employee Relations training, 14/15 May, London: click here
  • Further information on labour law and trade unions on our website: click here

News round-up

Ground breaking Hermes and GMB gig economy agreement

There has been widespread interest in the agreement negotiated between Hermes and the GMB union under which, it has been reported, self-employed couriers working for Hermes have the right to choose to become “self-employed plus”, giving them certain benefits including 28 days paid holiday each year and a guaranteed average hourly minimum rate of pay (£8.55) in return for following the delivery routes specified by Hermes. Couriers who do not opt in to this agreement will retain their existing higher rate of pay. Last year Hermes lost a Tribunal case over the status classification of its couriers and, as part of the agreement, Hermes has agreed not to appeal against this Tribunal decision and the GMB has agreed not to bring any more claims over the misclassification of Hermes couriers.

It remains to be seen however whether this hybrid collective arrangement is sustainable on tax, pensions and employment law grounds. For example, the couriers will ostensibly remain self-employed whilst agreeing to additional controls and receiving new benefits which opens up a risk of them being held to be employees for tax purposes.

Last year a Danish company operating through a digital platform to provide clients with the services of around 450 self-employed cleaners stated that it had entered the “world’s first collective agreement for a platform company”. The agreement, with a Danish trade union, treats the contractors as workers by providing minimum pay levels, sick and holiday pay, pension contributions and additional benefits. Given that many countries are grappling with how to support both digital services and labour rights, we can expect further innovations from digital businesses and unions to be explored and piloted in the future.

Government focus on increasing employee engagement: Good Work Plan legislation and Corporate Governance changes

More employers are reviewing their employee engagement processes in response to recent government and regulatory initiatives and requirements. These include:

  • All UK incorporated companies with an average number of more than 250 employees are required to provide an expanded statement of engagement with employees in their directors’ or strategic report (for financial years beginning on or after 1 January 2019)
  • The 2018 Corporate Governance Code (which broadly applies to all companies with a premium listing, whether incorporated in the UK or elsewhere) provides that boards should keep employee engagement mechanisms under review and should use one or a combination of: a director appointed from the workforce; a formal workforce advisory panel; or, a designated non-executive director. If the board has not chosen one of these methods, it should explain alternative arrangements and why these are considered effective
  • The government’s Good Work Plan and associated legislation will lower the threshold required for a request to set up employee information and consultation arrangements from 10% to 2% of employees (the 15 employee minimum threshold remains) from 6 April 2020.

These changes reflect the government’s aim, as stated in the Good Work Plan, of creating motivated and engaged workforces in order to improve organisational performance and boost productivity. It has said that it will go further to support engagement in sectors with high levels of casual employment.

Are the ‘no-deal’ European Works Council regulations fit for purpose?

Exiting the EU with no-deal remains a possibility (at the time of writing) and, as such, a concern over the wording in the finalised EWC Brexit legislation, which aims to provide legal certainty and continuity in a no-deal, remains a live issue for employers with UK-governed EWCs.

The government has consistently stated its intention, including in the legislation’s explanatory memo, to maintain provisions relevant to existing UK-governed EWCs where possible, including: the enforcement framework; employee representative rights and protections; and, protection for confidential information shared with the EWC. In contrast, it intended to remove the right to request a new EWC, although any request in progress on exit day would continue under the existing provisions so that the process can reach completion.

However, despite this intention, the drafting in the finalised regulations, on a literal interpretation, fails to fully achieve that end. We have raised our concerns with BEIS who are reviewing the legislation.

Meanwhile, the EU Commission has issued new EWC guidance with implications for UK-governed EWCs, but only in the event of no-deal. In broad terms, the Commission’s view is that such UK-governed EWCs will not continue under UK law – instead, the law of a remaining Member State will apply “automatically and immediately” upon a no-deal Brexit. As such, despite the above UK regulations, employers with UK-governed EWCs need to proactively consider alternative governing law given the continuing threat of no-deal. Employers affected are invited to contact for advice.

Recent labour case law

Two cases on triggering collective redundancy consultation duties: Seahorse Maritime Ltd v Nautilus International, Braine & others v The National Gallery

In Seahorse, the Court of Appeal revisited the sometimes vexed question as to what constitutes a single establishment in the context of triggering the 20 employee threshold and the obligation to consult collectively on redundancies under s188 TULRCA. The facts complicated the decision because the employer was a labour-only supplier of crew to work on another company’s ships. i.e. the workers in question were employed by a different legal person than the operator of the establishment.

The Court held that it is clear from previous EU and UK case law that the identity of the employer is not in itself a relevant factor. For example, the legislation does not say "at one establishment of his" and previous EU authorities have instead focused on functional and organisational characteristics – essentially, is there a unit and is it a single "place"? On this basis, it held that each ship was an establishment, because it was a self-contained operating unit and crew were assigned to particular ships.

In Braine, a Tribunal was asked to decide whether a claim under s188 TULRCA extends, contrary to the terms of the statute, beyond “employees” to “workers”. This was in the context of a claim by workers whose services had been terminated. Having decided that each claimant was a worker only for the duration of each assignment they performed (there being no umbrella or overarching contract), the Tribunal noted that EU and UK law contains an exclusion from collective consultation on the expiry of the fixed term or task. As the individual assignments were contracts for limited periods of time and for specific tasks, this exclusion applied. Even if that was incorrect, the Tribunal expressed a view that it would not be open to any Tribunal to read s188 as applying to “workers”, given the clear choice of “employees” by Parliament.

Appeal to be heard in important changing collective terms case: Kostal UK Ltd v Dunkley

Having been granted leave to appeal, the case is listed before the Court of Appeal on either the 22 or 23 May 2019. K is looking to overturn the EAT's decision on legislation (s145B TULRCA) which restricts employers’ ability to change employment terms in a unionised workplace without collective agreement (for more information, read our briefing). In the meantime, employers need to approach the process of varying collective terms and conditions with care and take advice if they are considering making offers to staff individually.

Joint employment judicial review decision with implications for outsourcing models: IWGB v CAC

In 2018, the IWGB union unsuccessfully applied for joint employment union recognition with two employers for one set of workers: a facilities management provider, its workers and the organisation where its services are performed. The union argued that the latter controlled the terms and conditions provided by the former. The CAC rejected the application, deciding that that the law provides for workers to collectively bargain with their direct employer only. Judgment has been given in the union’s judicial review application. The union argued a breach of human rights, however, the High Court decided that there was no such breach: there is no positive obligation to require compulsory collective bargaining (CB) in all circumstances and IWGB is free to seek voluntary CB arrangements with both employers. Even if this was wrong, the Court held that the particular UK statutory recognition legislation involved in the case is justifiable. It decided also that there are sufficient reasons for limiting the right to compulsory CB to workers and their direct employers only and that joint employment would undermine legitimate outsourcing models.