Employment Law - Willans LLP

Employment Law

Willans LLP I solicitors

dispatches Welcome

May/June 2016

Upcoming employment law talks - dates & topics

Welcome to the latest edition of ‘dispatches’. In this issue we update you on recent developments in employment law - noncompete restrictions, disability discrimination, TUPE, religious discrimination, to name a few. Please call if you wish to discuss any of these issues in more detail, and as always, any feedback is gratefully received. matthew. [email protected]

29 June, 8.15am - 4pm

Early Nov, 7.30am - 9am

Top tips for protecting your business legally Growing Gloucestershire Conference, Gloucester

Everything you ought to know about employment contracts, Cheltenham

22 Sept, 9am - 1.30pm

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Handling grievances & conflict management, Cheltenham

Legislation review With Matthew Clayton [email protected]

Non-compete restrictions – do they stifle innovation?

Matthew Clayton Partner and head of employment – Chambers UK rated: “He is responsive, commercial, understands where employers are coming from and gets right to the point, with meaningful and practical advice.”

You may have read in the news that at the end of April, Business Secretary Sajid Javid announced plans to look into whether non-compete clauses in employment contracts might be stifling British entrepreneurship. Non-compete clauses, also known as restrictive covenants or post-termination restrictions, are often used by businesses to protect their confidential business information and customer connections for a period of time, sometimes up to 12 months, after an employee leaves their employment. These restrictions are only enforceable in a court of law if they protect a legitimate business interest and if they are reasonable in their scope and length of application. If the former employer can justify it, such clauses can even prevent an employee from working for a competitor for a period of time or from starting up a competing business. The government is concerned that these restrictions could hinder start-ups from hiring the best and brightest talent, so the government has asked for views from individuals and employers on whether this type of practice is acting as a barrier to

innovation and employment. This ‘call for evidence’ is the latest move by the government in developing an ‘Innovation Plan’ with the aim of making Britain the best place in Europe to innovate and start up a new business and to turn ideas into new products and technologies. We should not think that this constitutes any sort of policy statement that the government intends to ban non-compete clauses. However it certainly indicates that questions are being asked about whether they stifle innovation. I cannot help thinking that the government is looking down the wrong end of the telescope at this question. A vital factor in the ability of a business (particularly a young business) to grow, flourish and innovate, is stability. That stability is undermined if employees with key knowledge (gained at their employer’s expense) are able to leave at will, use that knowledge for the benefit of a competing business, exercise their influence over their former employer’s customers,

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Employment law dispatches

and perhaps even encourage other staff to leave and join them. Any sensible business owner or investor would be discouraged from investing in innovation, if there was a risk that this might happen. Posttermination restrictions play an important role in preventing such activity, and give businesses a vital breathing space in which to regroup and secure their external relationships after a key staff departure.

The government should be applauded for seeking to promote business innovation, but this particular initiative seems to be a case of looking for a problem which doesn’t need solving.

The courts are already well versed in ensuring that former employers do not use these powers unfairly. It is not possible to stop someone from starting up or working for a competing business just for the sake of it. The former employer would have to show that doing so is the only practical way of ensuring that its confidential business information or customer connections are not being misused; and that is a rare case indeed.

Case law watch With Jenny Hawrot [email protected]

Disability discrimination and imputed knowledge The case of Gallop v Newport City Council has been gracing the halls of the courts and tribunals since 2010. There is insufficient space to summarise the considerable history of this case here, so this report will focus solely on the March 2016 judgement of the Employment Appeal Tribunal (EAT) relating to direct disability discrimination. Mr Gallop was signed off work and referred to external occupational health advisers (OH). OH advised that he was suffering with work related stress. He was subsequently dismissed following his return to work, due to allegations of bullying against him. He brought a claim for direct disability discrimination. The central point in this case is that the employee was, in fact, disabled, the employer just didn’t know it. This is because the employer failed to ask the correct questions of OH. Had they done so, and not blindly followed OH’s advice, without further investigation, they would have realised that the employee was disabled.

The employee argued that OH was aware that he was disabled, and therefore the employer would have implied, constructive, knowledge of his disability. The EAT found that knowledge cannot be implied or imputed, even where that knowledge was available within the organisation. What is important is the thought process and the motivation of the dismissing officer. As the dismissing officer was unaware of the employee’s disability, it was found that the dismissal could not have been motivated by discrimination on the grounds of disability.

What should I do? Whilst the EAT was clear in its findings, the ruling in this case actually conflicts with the Equality and Human Rights Commission’s Statutory Code of Practice on Employment. This confirms that employers are unable to claim lack of knowledge of a disability as a defence in relation to disability discrimination claims. This decision is therefore likely to be appealed and should be approached with caution.

TUPE: service provision change The EAT has held that the whole of a service does not need to transfer for the TUPE service provision change regime to apply. In Arch Initiatives v Greater Manchester West Mental Health NHS Foundation Trust, the EAT found that there is nothing in the TUPE Regulations which says that a whole service has to be transferred, in order that a service provision change applies.

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What should I do? If you are considering outsourcing, or bringing back in-house, an element of your operations, you should consider whether the TUPE Regulations might apply to protect employee’s rights, and then take professional advice. This decision confirms that the transfer of even part of, say, a catering or cleaning function could be covered by the TUPE Regulations. Page 2


Contacting employees on sick leave ”...you should be mindful of the nature of the employee’s illness when deciding to contact them, and should make a judgement based on the condition of that employee, and your knowledge of their resilience.”

In Private Medicine Intermediaries Limited v Hodkinson, the employee, Miss Hodkinson, was absent from work due to work related depression and anxiety as a result of alleged bullying. The employer wrote asking her to raise a grievance detailing the bullying allegations. Miss Hodkinson replied stating that she was in ‘no fit state to communicate without breaking down.’ The CEO of the employer then spoke with Miss Hodkinson’s manager in an attempt to gather information regarding the allegations. As a result, a number of areas of concern about her performance came to light. The CEO then wrote to her asking to discuss these matters with her. It is worth noting here that the concerns were not very serious. Miss Hodkinson then resigned, claiming constructive unfair dismissal, on the basis that the CEO had raised concerns about her performance.

right to raise these with her, the employer was aware that she was very unwell and had a tendency to be over-sensitive. As such, the employer should have known that the letter from the CEO would have caused her to become distraught. She was therefore entitled to claim that she had been constructively, unfairly dismissed.

What should I do? This ruling does not mean that you are unable to have any contact with employees who are signed off sick. You are entitled to contact them provided that you have genuine concerns. That said, you should be mindful of the nature of the employee’s illness when deciding to contact them, and should make a judgement based on the condition of that employee, and your knowledge of their resilience. The employer failed to do so in this case.

The tribunal (upheld by the EAT on appeal) found that, whilst the employer had genuine concerns about Miss Hodkinson’s performance, and had the

Reasonableness of non-compete covenants In 1997, Mr Thornton was employed as a trainee agronomist. His contract of employment, at that time, included a particularly prohibitive ‘noncompete’ post termination restriction. Fast forward 20 years and Mr Thornton had the same contract of employment, with the same post termination restriction, but held a much more senior position with the employer. When he left Bartholomew Agri Food, his employer tried to rely on the prohibitive non-compete post termination restriction, and the High Court was asked to decide if it was, in fact, enforceable. It held that it is the reasonableness of the restriction at the time the contract was entered into that matters. Despite the restriction being reasonable for Mr Thornton after 20 years’ experience, when

he entered into the restriction in 1997, as a trainee with no experience, the restriction was patently unreasonable and amounted to a restraint of trade. Therefore, the employer could not rely on the post termination restriction.

What should I do? It is important to tailor post termination restrictions to each employee and job role, and to keep them under review if and when employees are promoted or change job roles. This will ensure that restrictions are reasonable and can therefore be relied upon to protect the business interests of the employer.

ACAS early conciliation: how long is a month? The ACAS early conciliation period can extend the time limit to issue an employment tribunal claim by a month. There has been much confusion as to what equates to a month, and now the EAT has clarified the point. In Tanveer v East London Bus and Coach Company Limited, the EAT held that where time is extended by one month, by virtue of the ACAS early conciliation period, the ‘corresponding date’ rule applies.

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For example, if a time limit is extended by one month from 15 January, the month extension will end on 15 February ie. the same date in the next month. Where a claim is extended by one month, but the following month is shorter, the relevant date will be the last day of that month (eg. 31 January to 28 February (or 29 February if it is a leap year!))

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Christian proselytising and discrimination ”...she took advantage of her position of authority by forcing her religion on her junior colleague, without consent.”

In Wasteney v East London NHS Trust, Ms Wasteney claimed that she suffered unlawful religious discrimination and harassment when she was given a formal warning for promoting Christianity to a junior colleague. A junior Muslim colleague had raised a grievance about Ms Wasteney who had, amongst other things, given her a book about a Muslim woman converting to Christianity, repeatedly invited her to services at her church, and also offered to pray with her on a number of occasions. The employer found that this amounted to unwanted and serious misconduct, particularly due to the subordinate position of her Muslim colleague and Ms Wasteney was given a formal warning. Ms Wasteney argued that this amounted to unlawful religious discrimination and harassment, but both the tribunal and the EAT disagreed.

Had Ms Wasteney been disciplined for merely displaying her Christianity, this would have amounted to unlawful discrimination. The key point in this case is that she was forcing her religion upon her subordinate colleague, which is unacceptable and, in itself, could amount to a breach of the freedom of others.

What should I do? It is important that staff have the opportunity to manifest their religious beliefs at work in appropriate ways. However the courts and tribunals have made it clear that this does not give them the right to harass others or to refuse contractual duties. Clear policies on what will and will not be tolerated will help you to set expectations and will be useful if you have to deal with a grievance or take disciplinary action.

The EAT ruled that there is a difference between ‘manifesting’ a religious belief, and improperly promoting a religious belief. In this instance the EAT found that she took advantage of her position of authority by forcing her religion on her junior colleague, without consent. The employer’s actions did not, therefore, amount to unlawful religious discrimination. The EAT also found that Ms Wasteney’s freedom of religion, under the European Convention on Human Rights, was not breached.

Contact For advice on any of the issues covered in this bulletin or any other area of law, please contact these people in the first instance.

Employment law

Agriculture & estates

Property & construction

Divorce & family law

Matthew Clayton [email protected]

Alasdair Garbutt [email protected]

Nigel Whittaker [email protected]

James Grigg [email protected]

Charities & not-for-profit

Corporate & commercial

Laurence Lucas [email protected]

Wills, probate & trusts

Margaret Austen [email protected]

Paul Symes-Thompson [email protected]

Susie Wynne [email protected]

Simon Cook [email protected]

Theresa Grech [email protected]

Jonathan Mills [email protected]

Litigation & dispute resolution Nick Cox [email protected] Paul Gordon [email protected]

Residential property Robert Draper [email protected]

More news on our website www.willans.co.uk Contact details

Willans LLP | solicitors, 28 Imperial Square, Cheltenham, Gloucestershire GL50 1RH 01242 514000

[email protected]

www.willans.co.uk

Follow us at @WillansLLP