Rogers & Norton News

Employment Law Bulletin May 2014

Friday, May 9, 2014

Welcome

The big news this month is that Acas early conciliation is now compulsory.
 
From 6th May, anyone who wants to bring a claim in an employment tribunal must first submit an early conciliation form alerting Acas to the case (it’s been optional since April). What follows will be a period of talking through the issues and trying to avoid getting the tribunal involved in the dispute.
 
There’s one proviso – and it’s a big one. It’s that both parties must agree to conciliate. No one can be forced into it. So ‘compulsory’ on one sense, but still a little voluntary.  The compulsory aspect is really little more than the employee having to tell Acas s/he’s planning to bring a claim.
 
Our view? Conciliation is well worth a shot. There will rarely be anything to lose, and it gives employers a chance to avoid litigation by settling cases before positions become entrenched. The scheme’s success though will depend on everyone seeing it that way.

When whistleblowing isn’t the reason
Panayiotou v Kernaghan

 
Whistleblowing laws protect people who make protected disclosures from being treated badly by their employer as a consequence. Where an employee is dismissed for having blown the whistle, that dismissal will be automatically unfair and there is no cap on the amount of compensation that can be awarded by a tribunal.
 
The issue in Panayiotou v Kernaghan was whether the employee was dismissed because he had made protected disclosures, or because he had refused to let issues relating to those disclosures lie.
 
Mr Panayiotou was a police officer. He had made a number of protected disclosures about his colleagues’ treatment of victims of crime and, on the whole, his complaints were well-founded.
 
Mr Panayiotou believed that action hadn’t been taken to remedy the issues and so he began to take matters into his own hands. That made him increasingly difficult to manage, according to his employer, and he was eventually dismissed. He claimed automatically unfair dismissal.
 
The tribunal (and the Employment Appeal Tribunal) held that Mr Panayiotou had been badly treated, but not because he had made protected disclosures. The reason was his employer’s frustration with him. While that was linked to the disclosures, it wasn’t the same thing. So the claim failed.
 
Employers should be clear about their reason for bringing employment to an end. Avoid a claim like Mr Panayiotou’s by stating explicitly that it is the employee’s behaviour, not their protected disclosure, which gives grounds for dismissing.

Court corrects glitch in restrictive covenant

Prophet plc v Huggett

It’s easy to get hung up on the wording of contracts. But the courts do try hard to make contracts work in the real world, even when the wording has gone a bit wrong. This means that sometimes the wording will be adjusted, just slightly, so that they make business sense.

That’s what happened in Prophet v Huggett where the High Court allowed an employer to enforce a defective 12-month restrictive covenant.

The problem was in the drafting; the clause didn’t work. It didn’t protect Prophet from commercial harm caused by employees leaving to work for competitors. In essence, it read so as to prevent Mr Huggett – a sales manager – from being engaged or employed in connection with any products which he’d been involved with while working for Prophet. But as Prophet’s products were unique (no competitors sold what Prophet sold), the clause was worth little more than the paper it was written on.  
When Mr Huggett resigned, Prophet applied for an injunction to prevent him working for one of its direct competitors. The Court granted the application, in spite of the deficiencies in the restrictive covenant. It was important to look at what the parties would have intended, and here they must have meant for the restriction to have applied more broadly than drafted. (The simple addition of “or similar products” would be enough to make the clause work for the employer.)

The important point here was that Prophet had a clear and legitimate business interest to protect and the court acknowledged that. While that is some comfort, avoid disputes like these by triple checking restrictive covenants on an ongoing basis to make sure that they offer the protection you need.

TUPE change

A new rule applies to TUPE transfers that take place on or after 1 May. 
 
It used to be the case that a transferor had to give a transferee employee liability information 14 days before the transfer. That information includes the names of transferring employees and details of any disciplinary action taken against them or legal action they have brought.
 
That 14 day period has been extended to 28 days before transfer. In practice this means more time for the transferee to plan and to take issue with the information they’re being given.

Inspection of employees’ computers ordered
Warm Zones v Thurley and another

The courts recognise that commercial confidentiality is serious business. Judges dislike attempts by individuals to take and use information which doesn’t belong to them.

Ms Thurley and Ms Buckley found themselves on the wrong end of a (fairly uncommon) injunction. They were employees of Warm Zones who left to work for a competitor. It transpired that while they were still working for Warm Zones, they had sent emails that suggested that they would share details of Warm Zones’ painstakingly and expensively compiled customer database with their new employer. Warm Zones successfully applied for an injunction to have the employees’ computers inspected to establish the extent of their confidentiality breach.

The High Court didn’t accept the employees’ contention that their emails had merely “talked up” the information they had. The company had spent a long time working up its database and it was commercially valuable, containing information which wasn’t in the public domain. The court’s decision was  influenced by the fact that Warm Zones offered to pay for the inspection. It was also influenced by the fact that the employees’ contracts contained a confidentiality clause but no restrictive covenants; that meant that the injunction application was focused on securing the confidential information and not to restricting other activities.

Anyone who has applied for an injunction to force an employee (or ex-employee) to do, or not do, something will know that it’s not an easy process. It involves a real balancing act between the company’s business interests and a person’s right to use acquired skills and knowledge in the open market – and there is a risk of injustice, whichever way the injunction application goes. In this case the Court was quick to see the value in Warm Zones’ confidential information and to prevent its misuse.

Prepare for new holiday pay rules

In Neal v Freightliner an employment tribunal held that non-guaranteed overtime should be included in holiday pay calculations. Mr Neal’s ‘voluntary’ overtime was intrinsically linked to the performance of his role and it was irrelevant whether he was contractually obliged to carry it out or not.
 
This was a step away from what employers had previously been doing in only taking into account employees’ basic pay when calculating their holiday pay.
 
The issue is on its way to the Employment Appeal Tribunal (EAT). So why are we talking about this now? Because it’s worth reviewing your holiday pay calculations now. If the decision is upheld then employers will face claims for holiday pay arrears going back many years, and the cost to some could be significant.
 
In a few months’ time, when the EAT has decided the issue (subject to any further appeal!) then we’ll be in a better position to assess the effects of the Neal case. But until then it’s a good idea to get to grips with the basis on which you have been structuring holiday pay and, for now at least, factor non-contractual payments like voluntary overtime and premium payments into your calculations. You may also want to think about renegotiating employees’ contracts to be clear about different categories of pay.

Employees blameworthy in constructive dismissals
Frith Accountants v Law

 
Sometimes things happen at work which make it impossible for employees to carry on in their job. Constructive dismissals generally cast employers in a bad light. But what about where an employee’s conduct in the lead-up to the dismissal was questionable? Can that be taken into account, as it can in unfair dismissal cases?
 
The Employment Appeal Tribunal (EAT) has made it clear that in some constructive dismissal cases tribunals can reduce a claimant’s compensation to reflect their contribution to their dismissal.
 
Ms Law worked for a firm of accountants. There were issues relating to her performance. She refused to accept that she had made some mistakes and was quite incoherent in her explanations. Her employer raised the issue with her son. Ms Law was horrified, resigned and claimed constructive dismissal.
 
She won at tribunal and at the EAT. However, the EAT said that when it came to the question of compensation, the tribunal should have taken Ms Law’s conduct into account. While in this case her actions didn’t justify a reduction, the EAT went on to say that while it may be rare, it is perfectly possible for such a reduction to be made.

And finally….

News of the dramatic fall in the number of claims being issued at employment tribunals in the UK will have been welcomed by many employers. And the House of Commons may be no exception.
 
It’s been reported that claims by staff including caterers, librarians and clerks have cost the Commons more than £91,000 in legal costs alone since the middle of 2010. According to the Huffington Post UK, 16 claims went to employment tribunal with claimants alleging grounds including victimisation, unfair dismissal and discrimination.
 
It seems that there are measures in place to improve the treatment of staff. Conservative MPs have been issued with a new code of conduct covering best practice in the workplace. Alongside the code sits a new grievance procedure.
 
As every good HR professional will testify, real change within any organisation requires an acceptance that change is needed. It also relies on behaviour being scrutinised and challenged. Let’s hope that the House of Commons is able to lead by example and make right whatever deficiencies it may have unearthed.