In February there were, as usual, a variety of case law developments, with particular interest for employers for whom post-termination restrictions are important. More on this below.
I have also included this month an item by Olivia Whitcroft, like me a sole practitioner but specialising in intellectual property and data protection law, about proposed new developments in the area of data protection which would have implications for employers.
In addition there are reports relating to the old favourites of sex, violence and religion, which should mean there is something for everyone.
T: +44 (0)7771 725341
In the case of Towry EJ Limited v Barry Bennett and others (2012 EWCH 224), the High Court
looked at the enforceability of a non-solicitation clause in the contracts of former Towry employees who had moved to a competitor, followed shortly afterwards by a significant number of clients.
The court held that solicitation could not necessarily be inferred only from the fact that a "tidal wave" of clients moved across to the business where former employees of Towry now worked. The old employer needed to have primary evidence of requesting, persuasion or encouragement by those
In this case Towry was not able to show that those clients had moved across not merely out of a sense of loyalty towards Towry's former employees but rather than as a result of explicit requests/persuasion/encouragement.
This case demonstrates the importance of having a "non-dealing" clause as well as a non-solicitation clause. Such a clause would have prevented the employees from having any business dealings with their former clients at all, whether they had actively 'solicited' them or not.
The case of Caterpillar Logistics Services (UK) Ltd v Huesca de Crean (2012 EWCA Civ 156) underlines the importance of an employer making sure that it clearly point out what is considered to be confidential information.
In this case the Claimant was contractually obliged not to use or divulge any trade secrets or confidential information about Caterpillar to third parties, either during or after the termination of her employment.
When she left to work for one of Caterpillar's clients, Caterpillar threatened to take legal action against her for breach of her confidentiality obligations, and sought an injunction to restrain her from using or disclosing confidential information relating to Caterpillar.
The application for the injunction was unsuccessful because the wording of the confidentiality agreement was too wide to be enforceable and because Caterpillar had not made it clear to the Claimant while she was working for them what type of information it considered to be confidential.
The leading case of Lawson v Serco identified three categories of employees working overseas who fall within the jurisdiction of employment tribunals for unfair dismissal purposes. So presumably Mr Ravat, who worked for Halliburton in Lybia and who did not fall within any of these three classes, failed in his claim. Well, no - he was protected too.
The question in every case, said the Supreme Court, is whether the right not to be unfairly dismissed applies to the particular case despite its foreign elements. Is the connection with Great Britain strong enough to overcome the general principle that the place of employment is decisive? Here there was a
stronger connection with Great Britain than with Libya, owing to factors such as Mr Ravat residing in the UK and having his travel expenses paid, and his salary being paid in £ sterling to a UK bank account. (Ravat v Halliburton Manufacturing and Services Limited (2012 UKSC 1).)
Several issues had to be decided by an employment tribunal in claims made by the union USDAW against the joint administrators of Woolworths. Of most practical significance was what constituted an 'establishment' for the purposes of deciding whether 20 or more staff were potentially to be dismissed and who should therefore benefit from formal union consultation.
The tribunal made awards against the joint administrators for consultation failures but excluded those employees employed at stores with less than 20 employees. It took the view that each Woolworths store was an establishment and the union and employee representatives' argument that the whole of
Woolworths retail operations nationwide should be aggregated to a single establishment was rejected. (USDAW and others v WW Realisation 1 Limited (in Liquidation) and another ET 3201156/2010).
'Redundancy' has a special, broader, definition for the purposes of the deciding whether the obligation to carry out collective consultation is triggered. In essence, if the reason is not related specifically to the individual the potential dismissal is for redundancy even if it is not the normal redundancy situation of a disappearing role.
In what I have to say is a surprising decision, the Employment Appeals Tribunal (EAT) has concluded that fixed term employees were dismissed at the expiry of their contracts for a "reason relating to them as individuals" and not, therefore, for redundancy. The collective consultation obligations did
not apply to them. I would treat this with considerable caution. (University of Stirling v University and College Union EATS/0001/11.)
This was the situation in two separate recent cases: Capita Hartshead Ltd v Byard (UKEAT/0445/11) and Halpin v Sandpiper Brooks (UKEAT/0171/11).
In the first, the employer failed to escape interference from the employment tribunal in its decision on a suitable selection pool. The EAT has upheld the tribunal's view that the dismissal was unfair because the employer's approach was so at odds with the applicable principles for setting an appropriate redundancy selection pool.
Contrast that with the Halpin case, in which the decision by employer to limit the pool to one person was open to it. The EAT acknowledged that such a decision cannot be easily overturned, as it is one for management.
So the moral appears to be: an employer does have a lot of discretion in this area, but it is not completely unfettered.
In Weddall v Barchester Healthcare and Wallbank v Wallbank Fox Designs Ltd (2012 EWCA Civ 25),
the Court of Appeal considered whether an employer should be liable for a violent attack by one employee on another.
For the employer to be liable there must be sufficient connection between the employee's duties and the violence.
In Mr Weddall's case, the employee came in to work when he was not due to be there and assaulted Mr Weddall. The employer was not liable as there was insufficient connection.
In Mr Wallbank's case, the employee was undertaking his normal duties, during which Mr Wallbank tried to work with him. For a reason clear only to the employee (and possibly Mr Wallbank) the employee threw Mr Wallbank onto a table, causing him injury. The employer was held to be liable as this act was closely connected with the employee's employment. (There is no report as to the fate of the table.)
In Crilly v Ballymagroarty Hazelbank Community Partnership an employment tribunal in Northern Ireland has decided that a job candidate rejected because she did not have recent paid work experience after taking time out to look after her children had suffered unlawful indirect sex discrimination.
Ms Crilly was rejected at the shortlisting stage because she did not meet one of the criteria for the post, namely two years' relevant paid experience gained within the last five years. She was unable to fulfil this requirement because she had taken time out to bring up her children, although she had done extensive unpaid work in the voluntary sector during this period.
The tribunal accepted that the requirement to have relevant experience within the last five years placed women at a particular disadvantage compared with men, quoting statistics from the Northern Ireland Labour Force Survey.
It was therefore necessary for the employer to demonstrate that the requirement was a legitimate means of achieving a legitimate aim. Therefore, although it is perfectly possible to justify such a requirement, in the particular circumstances that applied here, the employer could not provide adequate justification.
This case highlights the need to vet very carefully any recruitment wording, to ensure that the stated requirements are justifiable.
It has been unclear for some time whether cost alone can be a justification for discrimination, the general principle being that it cannot. Age discrimination seems to be changing the game on this.
The EAT has taken the view in HM Land Registry v Benson (UKEAT/0917/11) that an employer was justified in selecting for voluntary redundancy on the basis of whom it would cost least to dismiss, despite the fact that this gave rise to indirect age discrimination against employees aged 50-54.
This startling decision (especially for those of a certain age) was reached in the context of the employer's justification for selecting employees for voluntary redundancy, when its request for applications under its voluntary separation programme was oversubscribed. It therefore had to carry out a selection exercise and used cost as a deciding factor, despite the discriminatory effect on those aged 50-54. The validity of any objective justification will be fact specific and quite clearly a different view might be taken in a compulsory redundancy situation. But the outcome is notable nonetheless.
Although this is not an employment case it is relevant to any employment situation where an employee's religious beliefs clash with laws designed to avoid sexual orientation discrimination.
In the case of Bull v Hall and Preddy (2012 EWCA Civ 83) the Court of Appeal has confirmed that Christian hotel owners Mr & Mrs Bull discriminated against Messrs Preddy & Hall, who are civil partners, by refusing to allow them to share a double bed at their hotel.
The Court held that the couple should be treated in the same way as a married couple, and the only reason they were treated differently was because of their sexual orientation.
Mr & Mrs Bull argued that their policy was a manifestation of their religious belief, and therefore protected by the Human Rights Act. However, the Court held that if they chose to run a business, they had to run it in accordance with the law - which includes an obligation not to discriminate against potential customers on the grounds of their sexual orientation.
Contributed by Olivia Whitcroft - solicitor and principal of OBEP
The European Commission has published a (long-awaited) proposed new Regulation governing the processing of personal data. Of key significance in the employment context:
- Although already good practice, appointing a data protection officer would be mandatory for the public sector and organisations with over 250 employees.
- The UK would be permitted to create additional rules relating to use of personal data for employment matters. The existing Employment Practices Code published by the Information Commissioner's Office contains good practice, but the Regulation suggests binding rules may now be expected.
- Contrary to the current law, data processors (such as HR service providers) would have direct responsibilities to keep data secure from misuse, loss or damage (as well as contractual obligations to their customer). Data subjects (e.g. employees) and the regulator could take action for non-compliance.
The proposed Regulation is not yet law and must now be considered by the
European Parliament and the EU Council, who may reject it or propose amendments. Once (or if) it is adopted, there is a proposed period of two years before it comes into force.
There has been another case regarding the ever-popular issue of whether someone is an employee or self-employed contractor. The main criteria are the need for mutuality of obligation and control.
The Tax Tribunal case of Weight Watchers (UK) Ltd & Others v HMRC (2011 FTC/57-59/2010) held that "Leaders" engaged to arrange and conduct meetings of Weight Watchers' members were employees. This was despite the fact that there was detailed documentation describing them as independent contractors, a reminder that however you draft your documents, if the facts don't fit
them, the facts will prevail.
The Tribunal found that there was mutuality of obligation, and that the employer had sufficient control over the Leaders. The Tribunal particularly noted that an attempt by the drafters of the contracts to put in place a substitution clause (which allows the Leader to delegate the work to someone else) was not enough to avoid a finding of mutuality of obligation. The substitution clause had so many restrictions that it was in effect inoperable, which meant that the Leaders were not able in practice to delegate their work to anyone else.
Good drafting helps, but that is not least because it demonstrates how a relationship should be operated if the independent contractor status is to be sustainable.
As everyone else seems to be using the Olympics to help sell their product, it's clear that I need a regular reference. Thankfully Acas has come to my aid this month with the issue of their guidance
on how to deal with issues arising from the Olympic Games in the summer.
It covers issues arising for those who do, and don't, want to time off, and has a useful Q&A section for both employers and employees.