Disputes - What to look out for in 2019: Employment Disputes

A key case on restrictive covenants, more whistleblowing detriment claims and litigation over shared parental leave are some of the issues to watch in employment disputes in 2019.

In brief

  • Many of the employment litigation trends we predict for 2019 - including diversity, whistleblowing, privilege, business protection and Brexit-related claims - span all sectors.
  • In the financial services sector, we anticipate additional risk factors in the form of claims flowing from the SMCR or circumstances involving regulatory investigations.
  • The Employment Tribunal fee regime continues to cast a long shadow, with Tribunals still adapting to the increased volume of claims and a new regime still mooted as a possibility - one to watch in 2019.

Business Protection

Following the Morrisons case and examples of reported individual custodial sentences in 2018, in connection with cases involving breaches of confidentiality, business protection claims remain a focus. With the appeal in Tillman (the leading decision on the law of severance in employment contracts) listed to be heard in January, we are advising on a rare restrictive covenant case to reach the Supreme Court. This case and others in 2018 indicate an increased willingness by employers to litigate where necessary to protect their commercial interests and we expect this to continue in 2019.

Diversity

Tribunal statistics for 2017/2018 show a more than 200% increase in the number of Equal Pay claims received. We expect this trend to continue in 2019, as the second round of gender pay gap reporting progresses and the focus again turns to equal pay issues (including with the current consultation on ethnicity pay reporting proposals).

Scrutiny of the use of non-disclosure agreements (NDAs) as part of settlements of employment claims continues, with an inquiry by the Women & Equalities Committee into the use of NDAs in discrimination/ harassment cases ongoing at the outset of 2019. Legislation over the use of NDAs remains possible and it seems likely that the trend of more employees (and/or third parties) being willing to breach them in light of #MeToo/ public sentiment will continue in 2019.

There will be appeals of two decisions on shared parental leave pay (SPL) in 2019: Hextall and Ali, due to be heard in Q2. These will, we hope, finally clarify what will constitute discrimination in the context of SPL pay.

Whistleblowing

Whistleblowing claims may still not quite have reached pre-fee regime levels, but the volume of them in the Tribunals continues to increase year on year and we expect this to continue in 2019.

For UK regulated clients in the FS sector, this remains a key regulatory priority. The FCA’s recent review of retail and wholesale banking firms’ whistleblowing arrangements highlights areas for improvement which may feed into future disputes.

Clients will continue to monitor their litigation risk in light of the developing proposals for a European Whistleblowing Directive and UK developments at regulatory and parliamentary level (including the All-Party Parliamentary Group).

Post-Osipov and the wider series of detriment claims since 2017, we also expect to see an increase in whistleblowing detriment claims against individuals.

Regulated people

With the extension of the Senior Managers and Certification Regime, we expect to see more claims arising out of conduct rule breach determinations, assessments of fitness and propriety, regulatory references and disciplinary decisions which could have a significant impact on a person’s career in a regulatory context.

Claims relating to the complex interplay between HR processes and regulatory investigations also look set to be a continuing theme in the year ahead - including claims for possible reinstatement and reengagement in the financial services sector.

Brexit

At the date of writing, the course of Brexit remains to be confirmed. We do know, however, that restructuring and redundancy exercises need careful handling to effectively manage employment law/ litigation risk. If Brexit does result in large scale restructurings in 2019, clients should take care to manage their HR process and practice risk.

Privilege

We await with interest the outcome of the appeal in X v Y, which indicated in 2018 that the cloak of legal privilege might be lost in a wider range of “iniquitous” circumstances than perhaps previously anticipated. With this and the recent series of privilege decisions impacting legal advice and litigation privilege in investigation and litigation scenarios, we expect to see more privilege challenges in 2019. See Colin Passmore’s blog post on the first instance decision. The appeal in X v Y is listed to be heard on 02 October 2019.

Parallel proceedings

Clients are increasingly having to manage employment claims which link to wider investigations or proceedings - whether by UK or overseas regulators, the SFO, police or otherwise. These claims involve significant challenges for clients and will be an ongoing issue in 2019.

Claims management

Employers can also expect additional practical issues in terms of Tribunal resourcing and timescales whilst the system adjusts to the significantly increased volume of claims since the abolition of the fee regime. For London based businesses in particular, this is currently causing some lengthy delays to scheduling, which looks likely to continue in 2019.

What it means for you

The employment law landscape shows all the signs of becoming more litigious in 2019. Employers need to be alive not only to relevant court decisions, but also to extensive regulatory, shareholder and public focus on matters including diversity, culture and conduct. Employment litigation risk in 2019 is likely to continue to be shaped as much by public sentiment and regulatory requirements as by developments in the law. With the Tribunals still adjusting to increased volumes of claims since the abolition of the fee regime, we can expect ongoing pressure on the system and the potential for more protracted timeframes for Employment Tribunal litigation in 2019.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.