Employment Law Update – February 2018

Here’s Deminos litigator Ed McFarlane with his insight on the latest Employment Law updates, including the big equal pay story that could have far reaching consequences for Tesco, plus the Taylor Report on Modern Working Practices, which could signify big changes yet to come.


1. Equal Pay at Tesco? – Media reports indicate that Tesco may be facing a claim for equal pay, valued by some at up to £4bn, from women employed in customer-facing jobs who are claiming equal pay with male warehouse staff.


The argument would be that the women are doing work ‘of equal value’ to the men, and therefore Equal Pay law requires that they be paid the same as men. This aspect of equality law operates on the basis that an expert will evaluate different jobs done predominantly by men and by women to see if the demands of the jobs are such that the effort, skill and decision-making required are essentially the same.


If so, equal pay is awarded to the lower-paid, and this could go back to 1983 for someone employed since then. Similar arguments have been successfully applied to local authorities where predominantly female workforces have been compared with predominantly male workforces, e.g. caterers and care workers compared with road sweepers, gardeners and refuse collectors, leaving Birmingham City Council with a £1bn back pay liability.


Tesco maintain that they pay staff fairly.



2. The Taylor Report on Modern Working Practices has come out, (115 pages of toner-hungry print) and it contains a long list of reforms to employment law, most of which are about tidying-up and spreading out rights, and are generally incremental in extending rights, although there is a potentially significant proposed ‘right to return to work’ after long sick leave [see k) below], and a hint at changes to the tax and National Insurance situation [see c) below], the proposals, which could take several years to implement, include:


a) Maintaining the distinction between ‘employees’ and ‘workers’, but renaming ‘workers’ as ‘dependent contractors’ with some harmonising of legal definitions of these categories;


b) ‘Gig economy’ workers being paid through an app (e.g. Uber, Deliveroo), would be employed on ‘output work’ so they are paid for time undertaking work rather than time ‘logged-on’ and available, where the NMW would apply to the entire period logged-on.


c) Tax: Putting ‘workers/dependent contractors’ on Schedule E for PAYE, the report indicates that businesses should structure their workforces in the most efficient way possible, without consideration of National Insurance costs ‘skewing’ the chosen status, i.e. some form of harmonisation of the National Insurance situation for ‘employees’ and ‘dependent contractors’ (and employer contributions?) is foreshadowed;


d) Written statements: Extending the right to a written statement of contractual particulars to workers, and requiring for employers to provide the statement on Day 1 of work (rather than in the first two months). This would include a free-standing right to compensation if a statement is not provided (currently the award of 2-4 weeks’ pay, can only ‘piggy-back’ on another Tribunal claim);


e) Holiday pay: Increasing the reference period for holiday pay calculations to 52 weeks from the current 12, which would even out ‘overtime’ calculations, and permit ‘rolled-up’ holiday pay (which is technically unlawful but generally accepted);


f) Giving agency workers who have worked 12 months at the same hirer the right to request a direct contract with the hirer, and obliging the hirer to consider the request in a reasonable manner;


g) Abolishing the ‘Swedish Derogation’ that allows agencies to avoid the 12-week pay-matching provisions for agency workers by providing pay between assignments;


h) Giving zero-hour workers the right, after 12 months, to request a contract to reflect the actual hours worked i.e. guaranteed hours;


i) A suggestion that flexible working requests could cover temporary as well as permanent changes to work if the employee has a ‘caring’ requirement;


j) Making SSP applicable to all ‘workers’ i.e. ‘employees’ and ‘dependent contractors’ regardless of earnings and making it accrue in a manner similar to holiday pay, with HMRC enforcing the right (rather than simply adjudicating on it);


k) A right to return to work after a period of sick leave, similar to the right to return after maternity leave. This would involve engagement with the Fit to Work Service where a return is recommended, and this could have a significant impact on managing absence and capability for work;


l) In Employment Tribunals, allowing claims to be brought simply to determine employment status (rather than having to go to a full hearing). This would speed up decisions on whether particular rights apply. However, there is also a proposal to reverse the burden of proof so that an employer would have to prove that particular rights (i.e. employee rights) do not apply. There would also be a power for Tribunals to impose penalties on employers who do not extend ‘test cases’ to their wider workforce.


The full report is here:



The government’s press release is here:


Author David Ralph

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