Quarterly Case Law Update

In our second quarterly case law update of 2022, we take a look at three interesting cases and consider the lessons that can be learned from them.

In Kocur v Angard Staffing Solutions & Royal Mail, the Court of Appeal gave guidance on the scope of Regulation 13(1) of The Agency Workers Regulations 2010. Regulation 13(1) provides agency workers with the right to be informed, during an assignment to a hirer, of any relevant and vacant posts.

The issue that arose in Kocur was whether the right provided by Regulation 13(1) was breached in circumstances where permanent employees were allowed to apply for vacancies when they were put up on a noticeboard in the work place, but agency workers could only apply when the vacancies were advertised externally.

The Employment Tribunal and Employment Appeal Tribunal reached different conclusions as to the scope of Regulation 13(1). The Employment Tribunal held that the right to receive information included an implied right for agency workers to apply for relevant vacancies. However, the Employment Appeal Tribunal disagreed, finding that Regulation 13(1) only required the hirer to provide agency workers with the same information about vacancies, and notify them in the same way, as their directly recruited employees, and did not afford agency workers the same rights to apply and be considered for the role.

The claimant appealed this decision, arguing that the Employment Appeal Tribunal’s interpretation allowed hirers to reject applications for vacancies based only on the fact that they were made by agency workers.

The Court of Appeal rejected the claimant’s appeal and confirmed that the underlying purpose of the EU Directive did not have the intention of expanding agency workers’ rights to notification beyond its natural parameters. In the Court of Appeal’s view, if the directive had been intended to grant agency workers the right to apply for vacancies, this would have been explicitly stated.

The Court of Appeal’s analysis of the scope of the right provided by Regulation 13(1) provides helpful clarification for employers who rely on agency workers of the extent of the right held by agency workers when it comes to notification of vacancies, and the corresponding obligation placed on the hirer.

Fire and re-hire

The controversial practice of ‘fire and rehire’ has been subject to intense scrutiny in recent years. The case of Union of Shop, Distributive and Allied Workers (USDAW) v Tesco Stores Ltd saw the High Court take a look at an example of this practice.

Tesco and USDAW agreed arrangements for ‘retained pay’ as an incentive for staff affected by store closures or restructures to relocate to another store. Entitlement to retained pay was communicated to staff as being available for as long as they were employed in their current role and could not be negotiated away. A joint announcement between Tesco and USDAW described it as “guaranteed for life”.

A number of years later, Tesco announced its intention to remove retained pay and offered staff a lump sum payment in return for giving up the entitlement, failing which employees would be dismissed and offered new terms which did not include retained pay.

USDAW sought a declaration from the High Court that affected employees’ contracts were subject to an implied term preventing Tesco from exercising its contractual right to terminate for the purpose of removing or diminishing entitlement to retained pay, and an injunction preventing the proposed terminations. The High Court granted the relief sought.

The High Court looked at the intention of the contracted parties and took the view that a reasonable person would construe the reference to the permanence of the contractual entitlement to retained pay to mean for as long as the employee was employed by Tesco in the same role. It went on to find that a term that Tesco would not exercise its right to terminate for the purpose of removing or diminishing retained pay could be implied into the employees’ contracts.

This case has demonstrated the courts’ willingness to look beyond the express wording in contracts, to the parties’ true intentions on entering into agreements. It highlights the potential risks to employers of using definitive language about the duration or permanence of a contractual term and the potential for this to restrict their ability to make changes to or remove the term if circumstances change in the future. The case was quite unusual in terms of its facts and does not mean that employers can no longer use “fire and re-hire” but this must be in appropriate circumstances.

Holiday pay

Holiday pay claims have been a stalwart of employment litigation for many years and the recent decision of the Court of Appeal in the case of Smith v Pimlico Plumbers has added to the fray.

Mr Smith worked for Pimlico Plumbers for around six years, and during the course of his engagement was treated as an independent contractor. He had taken days off over the course of his engagement, but received no pay. After his engagement ended in May 2011, he brought a claim and was found as a preliminary matter to be a worker of Pimlico Plumbers, meaning that he was in principle entitled to 5.6 weeks’ annual leave a year under the Working Time Regulations, including 4 weeks’ leave under the Working Time Directive (“Euro-Leave”).

Mr Smith’s claims relating to holiday pay were dismissed by the Employment Tribunal and the Employment Appeal Tribunal. He appealed to the Court of Appeal, who considered whether the right to holiday pay can be carried over from one year to the next in circumstances like those of Mr Smith. They took the view that the right to annual leave and to pay during leave are part of a single composite right and, as a result, where an employer refuses to pay for annual leave it prevents the worker from exercising their statutory right. The Court of Appeal found that Mr Smith was entitled to payment in lieu of all of his accrued Euro-Leave on termination.

This case could have significant impact for employers, particularly those in the gig economy or other sectors which rely on self-employed individuals. If an individual is found to be a worker, but has not been allowed to take paid annual leave, they will be entitled to carry over their Euro-Leave indefinitely and either take it whilst they remain engaged or be paid in lieu on termination. Employers faced with claims in such situations could find themselves faced with a significant bill.