London Underground Ltd v Amissah & Ors [2019] EWCA Civ 126

London Underground Ltd v Amissah & Ors [2019] EWCA Civ 125 was an appeal concerning compensation for breaches of the Agency Workers Regulations 2010 in which the Court of Appeal allowed the claim, holding that agency workers were entitled to compensation for under-payment at non-equalised rates and that apportionment of liability under regulation 14 would normally determine the hirer’s share of that compensation under regulation 18(9).

The Respondents were agency workers employed by Trainpeople.co.uk Ltd (TP) and supplied to the Appellant, London Underground Ltd (LUL), at stations in north-west London. When the Agency Workers Regulations 2010 came into force in October 2011, TP initially asserted that the Swedish derogation applied and thus the Claimants were not entitled to equalisation of pay. LUL eventually decided that the Regulations did apply and agreed both to pay TP on the basis of equalised rates from mid-October 2012 and to reimburse earlier under-payments. Although LUL paid TP the full arrears, TP never passed those sums to the Claimants and went into liquidation in November 2013. The Claimants brought proceedings against both TP and LUL under regulation 5 (which confers the right to equal basic working and employment conditions, including pay) and regulation 18 (which provides for remedies).

Employment Judge Snelson held at a liability hearing in February 2015 that LUL was 50 per cent liable for breach of regulation 5(1) under regulation 14, which apportions liability between the temporary work agency and the hirer to the extent each is responsible for the breach. LUL was criticised for delay in providing correct comparator information, though TP bore full responsibility for the original misapplication of the Swedish derogation. At a remedy hearing in October 2015, however, the Employment Judge held that the Claimants were not entitled to compensation from LUL. He reasoned that their loss was not attributable to the breach of regulation 5 but rather to TP’s (apparently fraudulent) failure to pay arrears despite being put in funds, the Claimants’ failure to pursue TP before insolvency, and TP’s ultimate liquidation. He also held, in the alternative, that even if compensation were attributable to the breach it would not be just and equitable under regulation 18(9) to require LUL to pay twice, having already funded TP.

On appeal by the Claimants, Mitting J in the Employment Appeal Tribunal allowed the appeal and remitted the matter for assessment of compensation. He held that the Employment Judge had erred by starting “at the end” – treating the loss as occurring only when TP became insolvent – rather than asking what would have happened but for the infringement. He also held that the Employment Judge’s alternative conclusion under regulation 18(9) could not stand, identifying four counter-balancing factors including that LUL had chosen to use agency workers, was partly responsible for the original under-payment, and that it was unfair to penalise the Claimants for not suing TP sooner.

On LUL’s appeal to the Court of Appeal, Lord Justice Underhill (with whom Lord Sales and Lord Justice Moylan agreed) dismissed the appeal. He held first that the Employment Judge had mis-characterised the infringement. Regulation 5(1) did not merely create a right to have equal terms stated or extended, but conferred a substantive right to receive the benefits in question, namely payment at equalised rates on each pay day. Although regulation 5 did not itself identify who owed the correlative duty, regulation 14 made the agency and the hirer each liable to the extent they were responsible for any breach. The infringement here consisted of the actual non-payment of equalised wages between 24 December 2011 and 15 October 2012, not merely a failure to “accord terms”.

Lord Justice Underhill rejected the Employment Judge’s finding that the loss of back pay was not attributable to the infringement. The breach occurred at the moment of each under-payment, and the Claimants’ loss arose immediately. It was wrong to treat the loss as occurring only when TP went into liquidation. TP’s subsequent failure to pay arrears and its insolvency, and the Claimants’ delay in pursuing recovery, did not break the connection with the original breach; they simply meant that it continued. On the correct analysis, compensation under regulation 18(10) fell to be assessed as the full amount of the under-payments, since the loss of the enhanced pay was obviously attributable to the infringement of the right to receive that pay. The only issue for remittal was calculation of quantum.

As to regulation 18(9), which provides that where there is more than one respondent the amount payable by each shall be such as is just and equitable having regard to the extent of each respondent’s responsibility for the infringement, the Court held that there was a very substantial overlap with the apportionment exercise under regulation 14. Both provisions required assessment of the extent to which the agency and the hirer were responsible for the breach, and in practice the apportionment of liability under regulation 14 would normally determine the apportionment of compensation under regulation 18(9). The reference to “just and equitable” in regulation 18(9) allowed a broad and flexible approach to assessing relative responsibility, comparable to the well-known formulation in unfair dismissal cases, but it would only be in exceptional cases, such as serious misconduct by the claimant, that justice and equity would require a respondent to pay less than the share of compensation for which it was responsible.

Lord Justice Underhill held that the Employment Judge’s conclusion that LUL should pay no compensation, notwithstanding its 50 per cent responsibility, was wrong. There was no misconduct by the Claimants. They had been under-paid for reasons that had nothing to do with them and were partly LUL’s fault. LUL had chosen to contract with TP and it was LUL, not the Claimants, who should bear the burden of TP’s dishonesty. The criticism that the Claimants had not brought proceedings sooner was not material; they could only have recovered 50 per cent of the arrears from TP in any event, and this claim was for LUL’s half. The four counter-balancing factors identified by Mitting J – that LUL had chosen to use agency workers for cost savings, had been found partly responsible under regulation 14, that it was unfair to penalise the Claimants for delay in suing TP, and that the Claimants were in a weaker bargaining position – rendered the Employment Judge’s decision not merely open to question but positively wrong.

In short, the Court of Appeal held that compensation should be assessed as the full amount of the under-payments prior to equalisation, of which LUL must pay 50 per cent in accordance with the liability apportionment under regulation 14, and remitted the case to the Employment Tribunal for assessment of quantum only.

Norton Tool Ltd v Tewson [1972] ICR 501
Dunnachie v Kingston -upon -Hull City Council [2004] UKHL 36; [2005] 1 AC 226
Sons Ltd. v Atkins [1977] AC 931
Roberts v Wilsons Solicitors LLP [2018] EWCA Civ 52; [2018] ICR 1092