Read on for our monthly digest for employers on upcoming employment law changes and key, recent employment tribunal cases.
Successful Challenge of Refused Defined Certificate of Sponsorship
Hartford Care Group Ltd, R (On the Application Of) v Secretary of State for the Home Department
Since October 2023, the Home Office has required care sector sponsors to provide contracts proving their need for workers. In this case, the care home operator applied for 70 defined CoS on 9 January 2024, aiming to recruit overseas workers before the rule change on 11 March 2024 restricting dependants accompanying sponsored care workers. However, the Home Office refused the request, arguing that the operator’s flexible local authority contracts did not guarantee staff numbers or service users, thereby failing to meet their new vacancy criteria.
Instead of reapplying, the operator challenged the decision through judicial review.
The High Court ruled in favour of the care home operator, finding that the Home Office’s requirement for contracts with guaranteed hours was irrational and Wednesbury unreasonable, as such agreements are not standard in social care. The Home Office’s interpretation of the genuine vacancy requirement was deemed unlawful, and the CoS refusal quashed. The Home Office must now reconsider the request without requiring such guarantees.
Employer Takeaways
This judgment sets a precedent for care sector sponsors. Those previously refused due to contract guarantees can reapply, and vacancies based on expected demand may still meet the genuine vacancy requirement. However, sponsors must continue providing alternative evidence, such as organisational charts, to demonstrate their need for workers. The Home Office’s future approach to compliance remains uncertain.
Employment Status
Appiah v Tripod Partners Ltd
Ms Appiah, an independent social worker, was placed by Tripod Partners Ltd, a recruitment agency, on an assignment with the Home Office. Following an HMRC CEST assessment, the Home Office determined that she fell within IR35, meaning she should be taxed as an employee.
Initially contracting through an umbrella company, Ms Appiah was later given the choice of working within PAYE or through a service company. Tripod advised that there were minor differences between the options and confirmed that if she chose the service company route, income tax and national insurance contributions (NICs) would be deducted from her pay. She proceeded with the service company arrangement. However, Tripod also deducted employer NICs, leading Ms. Appiah to challenge these deductions as unlawful under ERA 1996. Tripod argued she was not a worker and, therefore, had no right to bring such a claim.
The employment tribunal ruled that Ms Appaiah, while engaged through a service company, was a worker under the Employment Rights Act 1996 (ERA 1996) and that although the contract was between two limited companies, this alone did not override statutory worker protections. Key factors demonstrated Ms. Appiah’s worker status:
- She submitted timesheets, not invoices, to Tripod.
- The contract stated she was not a worker, but this did not match the reality of the working arrangement.
- She worked full-time, personally providing services, without being in business on her own account.
- The contractual structure was merely a payment mechanism, not a genuine business-to-business relationship.
As a result, the tribunal ruled that Tripod’s deduction of employer NICs was unlawful, upholding Ms Appiah’s claim.
Employer Takeaways
This decision emphasises that tribunals evaluate the actual working relationship between parties rather than relying solely on contractual wording. This means that even if a contract states that an individual is not a worker, the tribunal may still determine worker status based on the reality of the working arrangement.
Engaging with a service company does not automatically remove employment rights. Under the Employment Rights Act 1996 (ERA 1996), statutory protections can still apply if the individual is found to be a worker in practice.
Any deductions from wages must be lawful. Employers cannot deduct employer National Insurance Contributions (NICs) from an employee’s pay unless there is clear agreement and it is legally justified.
Re-engagement Order
British Council v Sellers
In British Council v Sellers, the Employment Appeal Tribunal (EAT) ruled that a tribunal made an error in ordering the re-engagement of an employee who was unfairly dismissed following allegations of sexual misconduct.
Under section 116(3) of the Employment Rights Act 1996, before ordering re-engagement, a tribunal must assess:
- The employee’s preference for re-engagement.
- Whether it is practical for the employer to comply with the order.
- Whether it is just, especially if the employee contributed to their dismissal.
In this case, the tribunal determined that while the employer’s decision-maker genuinely believed the misconduct had occurred, this belief was unreasonably based on a flawed investigation that was not corrected in the appeals process. Before the remedy hearing, the employer commissioned a new independent investigation, which concluded that the accuser had been truthful. The employer reaffirmed its gross misconduct decision.
At the remedy hearing, the employer did not claim that the employee had contributed to his dismissal but argued that serious concerns about his conduct made re-employment impractical. The tribunal, however, reassessed the misconduct allegation and found the alleged assault had not occurred, concluding that the employer’s concerns were irrational. It ordered re-engagement, prompting the employer to appeal.
The EAT overturned the tribunal’s decision, stating that the tribunal should not have determined the truth of the misconduct allegation at the remedy stage, as section 116(3) does not require a finding on contributory conduct unless it had been addressed earlier. The tribunal also failed to consider practicability from the employer’s perspective. Instead of judging the reasonableness of the independent investigation, it should have assessed whether re-engagement was feasible given the employer’s belief that the misconduct had occurred and that trust had been lost.
As a result, the re-engagement order was set aside.
Employer Takeaways
When considering re-engagement, tribunals must assess practicability from the employer’s perspective, rather than focusing solely on whether the original investigation was fair. Even if an investigation is deemed flawed, it does not automatically justify reinstating an employee, particularly if trust in the employment relationship has been irreversibly damaged. To strengthen their position in tribunal proceedings, employers should maintain thorough documentation of any genuine concerns regarding an employee’s suitability for re-employment, ensuring they can justify decisions based on practical and operational considerations.
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Author
Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.
She is a recognised by Legal 500 and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.
Anne is an active public speaker, immigration commentator, and immigration policy contributor and regularly hosts training sessions for employers and HR professionals
