Education Law Speed Read – 18/06/18

Equal pay legislation

This week’s Speed Read concerns equal pay legislation and what effect, if any, changes in the circumstances of comparators (such as promotion in this case) have on an employee’s ability to make a claim. This is following the judgment of the Employment Appeal Tribunal (EAT) in Reading Borough Council v James (UKEAT/0222/17).

Facts

A group of female employees brought a joint claim for equal pay from 2002 to present on the basis that the work they performed was of an equal value to two male comparators. The Council challenged this on the basis that one of the comparators had been promoted in 2006 and the role of the other comparator had been assimilated into another role at lower pay in 2011. This, according to the Council, meant they were no longer valid comparators. Therefore, the Council argued that the employees would need to rely on other, less favourable, comparators for their claims in relation to the time after the comparators’ job roles were changed.

The Tribunal at first instance disagreed with the Council’s arguments, ordering the Council to pay the employees for the full duration from 2002, rather than the claims being curtailed.

The Council appealed this decision and argued that, where a comparator leaves their position during a comparison period and there are other people who could be used as suitable comparators, these should be substituted.

EAT decision

The EAT held that once a comparator has been selected, the Council were not permitted to lobby for a “better” lower paid comparator. Therefore, once the provisions of the payment equality clause were satisfied it took effect and amended the Claimants’ contracts so as to equalise them with their chosen comparator. The employees were therefore tied to the chosen comparator and there was no restriction, time or otherwise, on the use of this comparator. Therefore, until the employees’ contracts were validly amended, to remove this comparator, or terminated, the employees’ right to use this comparator would continue.

The EAT rejected the Council’s argument that the situation was different due to the comparators no longer remaining in post. The EAT held that this was inconsistent with previous case law which stated that only mutual agreement or statutory variation would operate to amend an employee’s entitlement to use a comparator.

Effect

Schools should be wary of the comparators employees choose for equal pay purposes. This case indicates that simply leaving their post will not operate to make a comparator unsuitable in the eyes of the law and schools should not assume that they can choose to consider another employee to be a valid comparator.

As was shown here, mistakes around equal pay can be costly and can go back a number of years. It is therefore essential that schools understand who is being used as a comparator and seek an employee’s agreement to amend this if they no longer feel their current comparator is suitable.

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Pimlico Plumbers Ltd and another v Mr Gary Smith

In Pimlico Plumbers Ltd and another v Mr Gary Smith, the Supreme Court held that Mr Smith was a worker and not a self-employed contractor.

Background 

Mr Smith was a plumber who carried out work for Pimlico Plumbers Ltd (“Pimlico”) between August 2005 and April 2011.

In August 2011, Mr Smith issued Employment Tribunal proceedings against Pimlico. His claims included unfair dismissal and claims for unlawful deduction of wages and holiday pay.

Pimlico argued that Mr Smith was a self-employed contractor.  Although the ET found that Mr Smith was not an employee (and could therefore not bring an unfair dismissal claim). They found that he was not self-employed and instead had the status of worker. Therefore, his claims for unlawful deduction of wages and holiday pay could proceed.

Pimlico unsuccessfully appealed this decision to the Employment Appeal Tribunal and the Court of Appeal, with both courts upholding that Mr Smith was a worker. Pimlico subsequently appealed to the Supreme Court.

Supreme Court 

In order to determine whether Mr Smith was a “worker” the Supreme Court dealt with two issues:

• whether Mr Smith was under an obligation to personally perform the work or services for Pimlico; and
• whether Pimlico should be regarded as a client or customer of Mr Smith.

Pimlico argued that Mr Smith had no personal obligation to perform the work as he had the right to substitute his work to others. The Court dismissed this argument, noting that Mr Smith only had a very limited right to substitute work, as the substitute had to be another Pimlico operative. Consequently, the Supreme Court held that the Tribunal was correct in finding that Mr Smith was under an obligation to personally perform the work for Pimlico.

When determining whether Pimlico was just a client or customer of Mr Smith, the Court placed emphasis on the amount of control that Pimlico had in the working relationship.

The Supreme Court noted that Pimlico’s “tight control over him was reflected in its requirements that he should wear the branded Pimlico uniform; drive its branded van, to which Pimlico applied a tracker; carry its identity card; and closely follow the administration of its control room”.

Consequently, the Supreme Court found that these factors demonstrated that Pimlico was not a client or customer of Mr Smith.

Therefore, the Supreme Court held that the Tribunal was entitled to find that Mr Smith was a worker and not a self-employed contractor carrying out work for Pimlico.

Comment 

Although this case does not decide anything new, it is a warning to businesses that heavily rely on self-employed contractors to perform their work.

The publicity surrounding this case, and the further challenges being brought against ‘gig-economy’ businesses like Uber and Deliveroo, could mean that challenges from those categorised as self-employed will become more frequent.

Businesses should be aware, that if they do not provide self-employed contractors with the ability to appoint a substitute and assert a high level of control over these contractors, they could be classed as “workers”.

If you have any queries on the above and how it will affect you, please do not hesitate to contact a member of our education team.