UK News

Calling half time on 2013

May 2013

With summer fast approaching, we take stock of the 6 significant developments in employment law in the first half of 2013 and discuss the 6 key matters to consider over the next 6 months.

What has happened so far this year?

1.  Collective redundancy numbers

In April 2013, the number of days for which an employer must consult on a collective basis (in the event that 100 or more employees at one establishment are at risk of redundancy) was reduced from 90 days to 45 days. This change is intended to ease the burden on employers. However, as 45 days is only a minimum period employers may still need to extend this consultation period if necessary to meet the requirement to consult "with a view to reaching agreement". The consultation period for 20-99 redundancies remains unchanged at 30 days.

All change for collective redundancy rules.

2.  Competition and post termination restrictions.

Post termination 'non-compete' covenants have always been hard to enforce. As they prevent a former employee from competing with their former employer (rather than just restrain them from soliciting the employer's clients), they must be carefully considered and are only enforceable in the appropriate circumstances and with the appropriate time limitation.

In 2013, the High Court considered a non-compete restrictive covenant. ECD Insight Limited claimed that Mr Threlfall had breached this covenant and as such was not entitled to a previously promised equity share. Mr Threlfall successfully argued that conference moderation, the area in which he was alleged to have competed against ECD, was not within the scope of his non-compete covenant. This was because (i) when he signed his contract ECD did not carry out such moderation and (ii) when he left no one else carried out moderations and therefore there was no legitimate interest for ECD to protect. Mr Threlfall's success has caused some concern to employers and guidance remains that all covenants should be regularly updated and carefully drafted. Please see previous case law on this point below.

Fiduciary duties and updating employment contracts

Axel Threlfall v ECD Insight Limited and Glenn Whitney

3.  Obesity and discrimination

In February 2013, an employee was found to be disabled by reason of his obesity. Whilst the Employment Appeal Tribunal confirmed that obesity is not in itself a disability, in this case the employee's physical impairments arose from his obesity so he was protected under the disability legislation. This case has been sensationalised in the press but it follows the same logic used historically by the courts regarding alcoholics. Alcoholics are not deemed to be disabled unless and until they develop conditions such as a consequential liver disorder or psychiatric condition that also falls within the legal definition of disability.

Mr J C Walker v Sita Information Networking Computing Ltd

4.  The conflict of religion and the workplace

Four claims focussing on discrimination on the grounds of religious belief were decided this year by the European Court of Human Rights (ECHR). Ms Eweida won her much publicised claim against British Airways for religious discrimination when she was sent home for wearing a crucifix at work. However, Ms Ladele and Mr MacFarlane (a registrar and a Relate counsellor respectively) lost their claims that their religious rights not to have to provide their services to gay and lesbian clients trumped the rights of those gay and lesbian colleagues and clients.

In May 2013, Ms Ladele, Mr MacFarlane and Ms Chaplin (an NHS nurse who was not allowed to wear her crucifix on a necklace at work but in different circumstances to Ms Ewieda) were refused the right to appeal this decision to the ECHR's Grand Chamber.

4.  The conflict of religion and the workplace

5.  Payment in lieu of notice

The Supreme Court clarified the position in the event an employer terminates an employee's contract and pays in lieu of his notice period. Unlike the employer's clause in this case, employers are advised to ensure that their PILON clauses are drafted clearly and followed by the employer. In the absence of a PILON clause the employer must make it clear exactly when the contract terminates - without such clarity the employee can effectively choose the point of his or her termination date. As a consequence in this particular case the employee was entitled to receive a large bonus award.

Terminating employment without notice

6.  Baby P's social workers

In March 2013, the Court of Appeal upheld a previous decision that the dismissal of two of the murdered Baby P's social workers was fair. This is despite the fact that the employees were disciplined twice for the same issue and only received a written warning in the first disciplinary hearing. The Court of Appeal decided that an internal disciplinary proceeding was not "judicial" and that it was fair in these circumstances for the new management team to discipline the employees for the same matter on a second occasion.

Although an unusual case in terms of the seriousness and publicity of the underlying issue, it demonstrates that, where the circumstances warrant it, an employer is not prevented from revisiting a disciplinary process if, on reconsideration, it considers the wrong decision had originally been made.

Gillie Christou and Maria Ward v London Borough of Haringey

What should we prepare for?

1.  Employee shareholder status

After some debate between the Commons and the Lords, the Government managed to push through the new 'employee shareholder' status and it will be become law in Autumn 2013.

The 'employee shareholder' will give up their rights to claim unfair dismissal and redundancy pay and in return be allocated shares to the value of a minimum amount of £2,000 and a maximum sum of £50,000. The sums are free of Capital Gains Tax and the first £2000 is free of income tax. Employees will need the benefit of legal advice and clear information on the rights attaching to the shares before any agreement to transfer to this status is valid. Some employers are considering the value an advantages that this new status may bring to both parties.

2.  Unfair dismissal compensation

At an unconfirmed date in Summer 2013, the new compensatory award for unfair dismissal will be reduced to the lower of £74,200 or the claimant's annual salary. We analysed this issue in the article Changes to unfair dismissal protection.

3.  No dispute? No problem...

New proposals are expected to come into force on an undisclosed date this year to help employers to end employment relationships on a consensual and mutually agreeable basis through the use of a settlement agreement rather than fear an unfair dismissal claim. This is essentially a revised and more palatable version of 'protected conversations'/'off the record' discussions first raised by the Government in 2012. It will enable both parties to raise settlement discussions even when there is no dispute and as such the often misused 'without prejudice' rule does not apply.

4.  Is an LLP member a worker and as such protected if she blows the whistle?

The Supreme Court is to determine whether or not Ms Bates van Winkelhof, a former Clyde & Co partner, was a worker and as such was able to claim protection under the UK's whistleblowing legislation. The Court of Appeal decided in 2012 that members of LLPs and partners were not afforded a remedy in the event they 'blew the whistle' on an actual or potential legal or regulatory breach. As such they are not able to claim unlimited damages for a whistleblowing claim. The decision is expected to be relayed within the next 6 months and will be awaited by LLPs and partnerships alike. We analysed the Court of Appeal's decision here.

LLP member not found to be a worker - is there a gap in your compliance documents?

5.  Employment Tribunal fees, fines and conciliation

On 29 July 2013, fees will be introduced for the first time in the Employment Tribunal. The intention is to discourage employees from bringing spurious claims.

Ostensibly to balance this, on or after 25 October 2013 employers who lose an Employment Tribunal claim in circumstances where there are "aggravating factors" will, in addition to the compensation they are ordered to pay the employee, be subject to a fine of between £100 and £5000 to be paid to the Secretary of State.

In addition, a new pre-claim conciliation process is likely to come into force next year later this year but the final details have not yet been disclosed

6.  Whistleblowing

On 25th June 2013, changes relating to whistleblowing laws come into force. Workers will no longer be able to claim that a breach of their own employment contract is protected under the whistleblowing legislation. All disclosures must now be in "the reasonable belief of the worker making the disclosure...made in the public interest". These amendments are good news for employers. However, they are countered by the changes that whistleblowing protection will also now protect those workers who make disclosures in 'bad faith' which means they are motivated by revenge or money. In those cases the tribunal may reduce any compensation award by up to 25% but this is unlikely to act as a deterrent to a bitter or spiteful worker.

For further information or to discuss the issues raised, please contact Emma Clark or David Widdowson on +44 (0)20 3051 5711.

 

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