February 28, 2022

Employment Law Update: Employer Restrained from ‘Firing and Rehiring’, Dismissal for Raising Frivolous Grievances, and Employment Status of Taxi Driver

Tesco Restrained From ‘Firing and Rehiring’ Employees

In USDAW and ors v Tesco Stores Ltd [2022] EWHC 201 (QB), the High Court (HC) granted an injunction to restrain U.K. supermarket giant, Tesco, from ‘firing and rehiring’ employees who did not agree to the removal of a permanent right to a benefit. 

The employees were contractually entitled to ‘retained pay’, a type of pay protection which was rolled out in the late 2000s. The employees were told that this entitlement would be permanent and remain in place for as long as they were employed in their current roles. However, in January 2021, Tesco announced its intention to remove retained pay and asked the employees to agree to its removal in return for a one-off payment. Tesco further told the employees that those who did not agree would be dismissed and re-engaged on new terms which were identical to their previous terms, less their retained pay entitlement. 

The HC held that if Tesco was allowed to dismiss and re-engage the employees, their entitlement to retained pay would not be permanent, which had been the intention of the parties. Therefore, it concluded that a term should be implied in the employees’ contracts to the effect that Tesco’s right to dismiss them could not be exercised for the purpose of removing their right to retained pay. 

This decision is significant as it offers a potential new legal remedy for employees whose employers are looking to ‘fire and rehire’ them in order to remove a permanent entitlement. The practice of ‘fire and rehire’ was already controversial and under increasing scrutiny prior to this decision, and it will be interesting to see the extent to which employers will try to deploy it in the future.

Dismissal of Employee Who Raised Numerous Frivolous Grievances Was Fair 

In Hope v British Medical Association [2021] UKEAT 2020-000187, the Employment Appeal Tribunal (EAT) found that the dismissal for gross misconduct of an employee who had raised several grievances but resisted their resolution was fair. 

Mr Hope was employed by the British Medical Association (BMA) as a senior policy adviser. He raised seven grievances informally but refused either to progress them to a formal stage or withdraw them. He was asked to attend a grievance meeting, which he refused to attend. The BMA considered that Mr Hope’s conduct in raising frivolous and vexatious grievances and failing to attend the grievance meeting amounted to gross misconduct, and he was dismissed on that basis.

The Employment Tribunal (ET) found that the dismissal was fair, being within the band of reasonable responses. Mr Hope appealed on the grounds that the ET had failed to consider whether his conduct amounted to gross misconduct in the contractual sense, meaning either deliberate wrongdoing or gross negligence. The EAT, concurring with the ET, dismissed the appeal and confirmed that an ET must consider whether in all the circumstances the employer had acted reasonably in dismissing the employee. A consideration of whether the employee’s conduct was in breach of contract could be relevant in some cases, but it was not required in this case as there was no contractual element to Mr Hope’s misconduct.

Though this decision will be welcomed by employers, it is important to remember that, notwithstanding the employee’s conduct, in order to successfully defend a claim of unfair dismissal, an employer must have a potentially fair reason for dismissal (as set out in the Employment Rights Act 1996) and follow a fair dismissal process. 

London Black Cab Taxi Driver Not a ‘Worker’

In Johnson v Transopco UK ltd EA-2020-000780-AT, the EAT found that a London black cab driver providing taxi rides through an app was not a worker. 

Mr Johnson worked as a self-employed London back cab driver from 2014. In 2017, he registered as a driver on the Mytaxi app. He sourced passengers via the app, but could reject jobs offered through the app and was able to continue to source passengers directly through his business as a self-employed taxi driver. In 2018 he brought a number of claims (including for holiday pay) against Transopco, Mytaxi’s operator, which could only proceed if he was a worker.

The ET found that Mr Johnson was not Transopco’s worker. In coming to this decision, it considered a number of factors including that (i) the nature of the contractual relationship between Mr Johnson, Mytaxi and the passengers meant that Mytaxi was Mr Johnson’s customer, (ii) Mr Johnson could provide his services to Mytaxi as often or as little as he wanted, (iii) he was not under the control of Transopco, and (iv) his income through Mytaxi represented less than 15% of his overall income (the other 75% coming from his business as a self-employed taxi driver). The EAT agreed with this decision and highlighted that the ET had been entitled to give weight to how Mr Johnson’s income was split.

This decision, which runs counter to several recent decisions of the U.K. courts in which individuals in the ‘gig economy’ were found to be workers, highlights the fact that each case will turn on its specific facts.

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