Illegality, trust, substitutuon

12 January 2018

This article was featured in the February 2018 issue of the magazine.

Nicola Mullineux, senior employment specialist for Peninsula, reviews the decision in three cases

Baker v Abellio London Ltd

‘Statutory ban’ or ‘statutory illegality’ is one of the potentially fair reasons for dismissal where continued employment would cause the employer to break a legal duty or restriction. 

The difficulty with relying on this reason has been highlighted by the Employment Appeal Tribunal (EAT) as there will not be a fair dismissal where the employment does not actually break the law. 

The employee was a Jamaican national who had the right to live and work in the UK under the Immigration Act 1971. He was employed as a bus driver from July 2012 and, in 2015, the employer carried out an audit in to his right-to-work documentation. The employee was asked to produce one of a list of documents, such as a passport, that would provide evidence he had the right to work. The employee advised the employer that he had the right to work but didn’t have a passport because this had expired. The employee was again asked for his documentation at a meeting in February 2015 and was placed on unpaid leave until he produced this. The employer made a loan of £350 to the employee to help obtain a passport but later advised the employee that he would also have to produce visa documentation. 

The employee produced his new passport to human resources (HR) in May 2015. The HR function sought advice from the Home Office and were told this was not sufficient evidence by itself. They advised the employee of this, telling him he needed to complete a ‘no time limit’ application to provide them with the statutory excuse to continue employing him. The employee did not apply for this because he knew he did not need it and also he couldn’t afford this.  The employee was dismissed by reason of illegality for failing to produce documentation required by the law. An appeal against the dismissal was unsuccessful and the employee made a claim of unfair dismissal. 

The employment tribunal (ET) dismissed the claim and found the employer had fairly dismissed the employee by reason of statutory illegality. The tribunal found they could not continue his employment without contravening their legal obligation to gather documentary evidence proving their employees had the right to work in the UK. If they had continued his employment, the employer would potentially be liable for a fine or criminal prosecution. The employer had followed a fair process by obtaining guidance from the Home Office, loaning the necessary money to the employee and giving sufficient opportunity to apply for documents. 

In the alternative, the ET judged that the dismissal was fair under the ‘some other substantial reason’ (‘SOSR’) ground as the employee had refused to get evidence to prove he had the right to work after being given sufficient time and support to obtain this. 

On appeal, the EAT overturned the finding on the statutory illegality dismissal. They determined the dismissal did not fall within this ground because the employee was not subjected to immigration control as he had the right to work and live in the UK. Therefore, his continued employment would not lead to the employer breaking the law. 

However, the EAT decided the dismissal could fall within the SOSR ground as the employer believed they would be acting illegally if they failed to receive the documents they thought were legally required. This could amount to a substantial reason but, in cases where the belief was mistaken, a tribunal is required to assess whether the mistaken belief was reasonable. In these circumstances, this required the tribunal to take in to account what was asked of the Home Office and what was said in reply. As the tribunal had failed to determine the reasonableness of the belief, the issue of fairness of the dismissal was remitted to the tribunal. 


...dismissed by reason of illegality for failing to produce documentation required by the law


Rawlinson v Brightside Group Ltd

The EAT have examined whether the implied term of mutual trust and confidence will be breached when an employer chooses to give a false reason for dismissal. 

The employee started as the group legal counsel in December 2014. Prior to his appointment, the employer used a variety of legal firms for their legal advice. A new chief executive officer (CEO) was appointed in January 2015 and he raised concerns with the employee’s performance. The employee was aware of this, but no detailed concerns were raised with him at this time. In March 2015, the employee’s line manager asked colleagues for feedback on the employee and this was communicated to him. It was decided that the employee would be dismissed and his line manager started investigating how they would meet their legal requirements once this took place. A further meeting was held with the employee in April 2015 where he asked if any further performance feedback had been received. He was advised there was none. 

By May 2015, the employee had still not been dismissed; the CEO was frustrated there had been little movement on the contingency plans for future legal requirements and requested urgent action to be taken. The employee was invited to a meeting on 14 May 2015 where he was dismissed by his line manager. He was told that the reason for his dismissal was due to the business reviewing their approach to legal services and finding the current arrangements were not working. They wished to re-organise these to use an external provider and he was provided with three months’ notice of dismissal. 

Believing this was outsourcing of a service, the employee argued his employment was covered by the Transfer of Undertaking (Protection of Employment) Regulations 2006. He requested further information from the employer but later resigned in response to the employer’s conduct. Following a post-resignation subject access request, the employee discovered the real reason for the termination of his employment. He brought a tribunal claim for constructive wrongful dismissal claiming he had resigned in response to a breach of the implied term of mutual trust and confidence. 

The ET dismissed the claim. They found there was no breach of the implied term of mutual trust and confidence because the employer was not obliged to give him a reason for the dismissal or provide any performance feedback when requested. The only obligation on the employer was to give the contractual notice to dismiss, which they did correctly. 

Following a successful appeal, the EAT substituted a decision that there had been a breach of the implied term. Although the employer chose to give a different reason for the dismissal to “soften the blow”, they also did this with the intention of keeping the employee at work during his notice period to allow for a successful and smooth handover. This meant the implied term continued during his notice period. The term of mutual trust and confidence creates an obligation on an employer to not deliberately mislead employees and to volunteer information in good faith. The employer had failed to do this by deliberately giving a false reason for dismissal; therefore, the implied term was breached and the claim of constructive dismissal was successful. 


IWBG v Roofoods Ltd t/a Deliveroo

In another ‘gig economy’ case, the Central Arbitration Committee (CAC) have considered the employment status of Deliveroo riders.

The Independent Workers Union of Great Britain (IWGB) made a formal request to Deliveroo for trade union recognition in November 2016. They were seeking to negotiate terms including pay, hours and holiday on behalf of the Deliveroo riders. The request was rejected by Deliveroo as they alleged their riders were self-employed contractors and not workers. IWGB subsequently applied to the CAC for statutory recognition. 

To be recognised for collective bargaining, the union had to prove the riders were workers under section 296 of the Trade Union and Labour Relations (Consolidation) Act 1992. The CAC heard evidence from witnesses and reviewed the contractual documentation in place. The current contracts had been introduced in May 2017 and they removed previous aspects of control, including the requirement to wear Deliveroo-branded equipment and the restrictions on wearing competitor clothing. 

Based on the contractual arrangement, the CAC found that the riders were under no obligation to log on to the Deliveroo app to perform work at any stage. Once logged on, they could allocate themselves as ‘unavailable’ for work and could simply reject or ignore any jobs without facing a penalty. In addition, there were substitution clauses within the contracts that allowed riders to arrange for another person to perform their work before, or after, accepting specific jobs. The riders did not have to obtain prior approval to substitute themselves and there was no policing of this by the employer; it was the responsibility of the rider themselves to ensure the substitute had sufficient skills to perform the job. To substitute, the rider would either provide the individual with their app password or give them their mobile device.  

The CAC recognised that substitution in practice was rare because riders who did not want to perform the work personally could either not log on to the app, make themselves ‘unavailable’ or ignore and reject jobs that were allocated to them. There was, however, evidence that substitution was being carried out by riders in practice. Riders gave evidence that they substituted themselves for their own financial gain or would substitute themselves if they had accepted a job but then later decided they did not want to perform this. 

As the substitution right was genuine, unfettered and operated in practice, the riders were not undertaking to perform work personally. Therefore, they were not classed as workers but were self-employed. This finding was critical to the union’s case and the claim for recognition was rejected by the CAC.