Working Relations June 2019

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HighlightsKey developmentsKey casesFuture developmentsRecent changesEvents


Highlights

This month, we have seen the Supreme Court hand down its judgment in Tillman v Egon Zehnder Ltd, scrutinising the law on restrictive covenants for the first time in over 100 years.

The issue of harassment in the workplace returns to the spotlight with the WEC publishing its report on the use of NDAs in discrimination and harassment cases, and two interesting decisions in harassment cases: one from the European Court of Human Rights in relation to reliance on private material from the claimant’s mobile phone as evidence and another in the High Court where a couple’s conduct in family proceedings amounted to harassment of the judge.

Key developments

WEC publishes report on use of NDAs in discrimination cases

On 11 June 2019, the Women and Equalities Committee (WEC) published its report on “The use of non-disclosure agreements in discrimination cases”, highlighting what is described as the “cover-up culture” whereby employers are able to use NDAs to silence victims of unlawful discrimination. The report re-emphasises the need for the Government to radically reassess the rules surrounding the use of NDAs and “address the failure of the employment tribunal system to ensure all employees who have experienced discrimination have a meaningful route of legal redress”. In particular, the WEC makes a series of recommendations, including a requirement for standard wording where such clauses are used in settlement agreements and to require named senior managers to oversee anti-discrimination policies and the use of NDAs.

EU Council formally adopts work-life balance directive

The EU Council has now formally adopted the directive on work-life balance for parents and carers. The aim of the directive is to increase the participation of women in the labour market and the take-up of family-related leave and flexible working arrangements. Key elements include allowing fathers or second parents to take a minimum of ten working days of paternity leave (compensated at a level equal to that currently set for EU maternity leave); an individual right to four months of parental leave; five days of carers’ leave per year for workers caring for relatives with serious medical conditions; and the extension of the right to request flexible working arrangements for all parents and working carers. Once the text has been published and enters into force, member states will have three years to take the necessary legal measures to comply.

See the Council press release and our Ahead of the Curve summary for further information.

EU Council formally adopts directive on transparent and predictable working conditions

On 13 June 2019, the EU Council also formally adopted the directive on transparent and predictable working conditions. The new law applies to all individuals working more than three hours per week, and introduces new minimum rights, as well as new rules on the information to be provided to workers about their working conditions. Once the text has been published and enters into force, member states will have three years to take the necessary legal measures to comply. See the Council press release for more information.

On the same day, the EU Council also adopted a regulation establishing a European Labour Authority (ELA), and Bratislava in Slovakia was selected as the seat of the future body. The purpose of the ELA is to support compliance and coordination between member states in the enforcement of EU law in the areas of labour mobility and social security. The new body is expected to start functioning at the end of this year and will have an annual budget of €50 million.

The Prudential Regulation Authority (PRA) Consultation Paper (CP12/19)

This month, the PRA released a consultation paper which sets out its proposal to amend the prescribed responsibility for recovery plans and resolution packs that form part of the SMCR for strengthening individual accountability. This would be applicable to those UK banks and building societies with a minimum of £50 billion in retail deposits on an individual or consolidated basis. The proposed amendment would mean that the senior manager who is assigned the prescribed responsibility for recovery plans and resolution packs would have an additional equivalent responsibility for resolution assessments.

In addition, the paper outlines the consequential changes to Supervisory Statement 28/15 and the ‘Senior Managers Regime: Statement of Responsibilities’ (‘SoR form’). These proposed amendments are relevant to all PRA-regulated firms.

The consultation closes on 07 August 2019. Dependent on the PRA introducing new rules in respect of resolution assessments, the final policy, rules, expectations and SoR form is expected to be published in Q4 2019.

Information Commissioner's update on GDPR one year on

With one year having passed since the General Data Protection Regulation (GDPR) was implemented, the Information Commissioner’s Office (ICO) has published a report reflecting on the impact of the GDPR, reviewing the lessons learned over the past twelve months, and setting priorities for the year ahead.

The report highlights how people now have a greater awareness of the law surrounding the use of their personal data and increased confidence that their personal information is being used and stored in a way which is aligned to their data rights. Organisations have implemented significant changes including determining the legal basis under which they collected personal data, catalogued the data they held, scrutinised the use of data in their supply chains and refreshed their consents. Data Protection Officers in larger organisations have faced increased responsibility. Culture was highlighted as one of the biggest issues for implementing the GDPR, therefore satisfactory senior leadership support is considered to be vital.

Key cases

Restrictive covenants: new test for severance

Tillman v Egon Zehnder Ltd - Supreme Court, 03 July 2019

The Supreme Court handed down its long-awaited judgment in the appeal of Tillman v Egon Zehnder Ltd, setting out a new test for severance in relation to post-termination restrictions. The key points were:

a) The words “interested in”, commonly used in a non-compete restriction (in the form “x shall not engage or be concerned or interested in any business carried on in competition with the business of the Company”), were deemed to prohibit Tillman from holding even a minority shareholding in a competing business and were therefore impermissibly wide.

b) The restraint on a shareholding was part of the restraint on Tillman’s ability to work following termination of employment and therefore did fall within the doctrine against the restraint of trade.

c) Whilst the words “interested in” were impermissibly wide and an unreasonable restraint of trade, the Supreme Court held that they could be severed and removed from the covenant, such that the rest of the clause would survive. The decision has overruled existing case law and developed a new test for severance.

For more detail, see our elexica article.

Whistleblowing: disclosures did not amount to information

Dray Simpson v Cantor Fitzgerald Europe - Employment Appeal Tribunal, 21 June 2019

Simpson was the Managing Director of the Emerging Markets desk at Cantor Fitzgerald Europe (CFE). He was dismissed by CFE due to the breakdown of relationship between him and his colleagues. He then brought a whistleblowing claim, alleging he was dismissed for making a series of protected disclosures about trading practices within CFE. In the first instance, the Tribunal had found that none of the alleged disclosures (initially four, increasing to 37 at trial) were protected and said that it was “utterly fanciful” that the reason for his dismissal was that he had made these disclosures.

Simpson appealed on account of numerous grounds, including that the Tribunal failed to consider the full picture and aggregate the separate disclosures. As there was no obvious link between the communications, the EAT held that it was not an error of law not to aggregate them. Simpson also argued that the Tribunal wrongly applied a strict distinction between “information” and “allegations” (or queries). The EAT held that the Tribunal had taken the correct approach by analysing the communications in detail to assess whether any of them had sufficient factual content to show a breach of a legal obligation, and they did not. The appeal was dismissed.

Whistleblowing: allegations of taking hospital patients’ food

Elysium Healthcare No 2 Ltd v Ogunlami - Employment Appeal Tribunal, 11 June 2019

Mr Ogunlami was employed as a health care assistant by Elysium, a hospital provider for patients with mental health issues. He complained at a meeting that his supervisor was taking patient’s food and asked that it be investigated. Although it was investigated, he raised further concerns about the objectivity of the investigation with HR and a safeguarding officer. He then received an email response from the director of the hospital, warning him off pursuing the matter. He was subsequently moved to a different site and was unsuccessful in applying for a promotion. He brought whistleblowing claims, alleging that he had been subjected to detriments for making protected disclosures. His claims (for the most part) succeeded at tribunal and he was awarded £7,500 for injury to feelings.

Elysium appealed, unsuccessfully. Elysium argued that the tribunal had not established that Ogunlami had a subjective belief that a legal obligation was being breached. The EAT held that, even though he had not explicitly stated as such, he clearly considered his supervisor’s conduct as morally wrong and had referred to it as a disciplinary matter and potentially a safeguarding issue. Elysium also argued that the tribunal had not established that Ogunlami had a reasonable belief in the public interest of his disclosure. However, the EAT took the view that it was a matter of inference for the tribunal and there was clear evidence that the disclosure was made for more than purely private or personal reasons.

Re-engagement: no obligation re-engage where order for re-engagement made

Mackenzie v University of Cambridge - Court of Appeal, 20 June 2019

Dismissing the claimant’s application for judicial review, the Court of Appeal ruled that a re-engagement order did not mean that an employer, the University of Cambridge, had an absolute obligation to actually re-engage its former employee who had been unfairly dismissed. This was based on reading sections 115 and 117 of the Employment Rights Act 1996 (ERA) together. Rather, a situation is created where the employer must either re-engage the employee or become liable for the awards listed in section 117 ERA. This case therefore confirms that the only remedy available for an employer’s failure to comply with an order for re-engagement is the requirement for the employer to pay an ‘additional award’, as set out in section 117 ERA.

Calculating holiday pay: should voluntary overtime be taken into account?

East of England Ambulance Service NHS Trust v Flowers - Court of Appeal, 10 June 2019

The claimants worked voluntary overtime (i.e. they could choose whether to do it or not) as ambulance crew. They brought claims against the NHS Trust on the basis that their voluntary overtime should be counted towards their “normal remuneration” and therefore taken into account for the purposes of calculating holiday pay. The Court of Appeal agreed, stating that voluntary overtime should be counted when calculating holiday pay “if it is sufficiently regular and settled for payments made in respect of it to amount to normal remuneration”. The case is also relevant to the private sector as employers will need to consider when a pattern of voluntary overtime becomes ‘sufficiently regular’.

Right to privacy: no breach when employer relied on private material from mobile phone

Garamukanwa v United Kingdom - ECtHR (European Court of Human Rights), 06 June 2019

The applicant was employed by an NHS Trust as a clinical manager. He was suspended after the police informed the Trust that he was being investigated for allegations of harassment made by a colleague. Following an internal investigation and disciplinary proceedings, he was dismissed for gross misconduct for harassing a colleague and sending anonymous malicious emails to other employees. The Trust relied upon photographs stored on his mobile phone, as well as emails and Whatsapp messages.

The applicant applied to the ECtHR, arguing that the UK courts’ decisions upholding his dismissal constituted a breach of his right to privacy under Article 8. However, the ECtHR agreed with the UK courts that he could not reasonably have expected that any of the material would remain private. This was because he had not challenged the use of such material during the disciplinary hearing and actually volunteered some of the evidence, and he had been aware for almost a year before he was suspended that the Trust considered his behaviour to be inappropriate.

Harassment: conduct during family court proceedings amounted to harassment of judge

Hilson and McCarthy v Crown Prosecution Service - High Court, 11 April 2019

A couple (who were parties in contentious family proceedings) engaged in five incidents over the course of the proceedings which were held to amount to harassment of the family judge hearing the case. The incidents involved sending a birthday card to the judge’s home address, sending documents to her personal email address, and making comments in court that inferred the couple knew where they could locate the judge’s daughter.

The appellants appealed against their convictions of harassment contrary to the Protection of Harassment Act 1997. The High Court upheld the determination of the Crown Court, which found that the incidents taken together went beyond conduct that was unattractive and unreasonable, and were capable of amounting to harassment. The appeal was dismissed as a result.

Victimisation: witness comments made during cross-examination

Aston v The Martlet Group Ltd - Employment Appeal Tribunal, 21 May 2019

The EAT considered whether a claimant could bring a victimisation claim relating to comments made by their former employer-respondent’s witnesses during cross-examination at a preliminary hearing. The comments concerned the offer of an ex-gratia payment of £4,000 as a “goodwill gesture” made when the claimant was dismissed, which was reiterated during cross-examination at the PH. However, the payment was never made. Mr Aston amended his claim to include victimisation relating to this failure to pay.

The EAT agreed with the tribunal’s decision to dismiss the victimisation claim. It held that judicial proceedings immunity applied (i.e. protection against liability for witness evidence) to the offer made during the preliminary hearing. Further, the victimisation claim did not meet the test in section 108 Equality Act 2010 of arising out of and being closely connected to the past employment relationship. Whilst it was connected to the employment relationship, it did not meet the "closely connected to" test because the claim was not based on the original offer (which had been withdrawn) but comments made by the witnesses during proceedings.

Future developments

  • Anticipated key changes to employment law in England and Wales are available here.

Recent changes

  • An overview of the recent changes to Employment law in England and Wales is available here.

Events

  • All other training materials relating to Employment, Pensions and Incentives across the European Union are available here.

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.