September 2019 bulletin

Welcome

Employers have an obligation under the National Minimum Wage Act 1998 (NMWA) to keep pay records showing that they pay the national minimum wage (NMW). This requirement continues after employment has ended. The Employment Appeal Tribunal has looked recently at what happens when there is a TUPE transfer – does the transferor have to keep and produce those records for employees who have transferred to another employer?

In Mears Homecare v Bradburn, the employees transferred under TUPE. A few months later they requested pay information from their old employer (the transferor) as part of a query about payment of the NMW. The transferor didn’t respond within the time limit and the employees lodged an employment tribunal claim. The tribunal decided that the transferor was the relevant ’employer’ for the purposes of the NMWA. The query about pay related to the employees’ employment with the transferor and the duty to retain and produce pay records lasted beyond the end of employment. The tribunal ordered the transferor to pay compensation.

The Employment Appeal Tribunal disagreed. The employees’ employment had not ended – it had transferred to the transferee. When there is a TUPE transfer, the transferee steps into the shoes of the transferor in relation to the employees’ contracts. All rights, duties and obligations pass from transferor to transferee, including the obligation to keep and produce NMW records. The transferee was therefore the relevant employer, not the transferor. Any request for pay information should be made to the transferee, even though the request was for pay information which pre-dated their employment of the employees.

In this case, the EAT judges accepted that this situation is inconvenient for transferees who are required to produce another business’s pay records. They said that businesses should ensure that full pay records pass from transferor to transferee as part of the transfer. It’s worth remembering that criminal liability does not transfer under TUPE. Transferors should therefore ensure that the contractual paperwork also deals with the return of pay information if the transferor is ever prosecuted in relation to transferred employees.

Unfair dismissal

Phoenix House v Stockman

In unfair dismissal cases, both the compensatory and basic awards can be reduced by the tribunal, potentially to zero, based on the employee’s conduct before dismissal. Secret recordings of meetings by an employee can be admissible evidence in cases if the tribunal thinks it is relevant. However, secretly recording a meeting might amount to misconduct, depending on the employer’s rules.

In Phoenix House v Stockman, the employee was unhappy about a restructure. She secretly recorded a meeting with HR. As part of an unfair dismissal claim, the tribunal accepted the employee’s explanation that she recorded the meeting because she felt flustered rather than to entrap the employer. They reduced her compensatory award by 10 per cent because of her conduct. The employer appealed, saying they would have dismissed the employee for gross misconduct had they known about the secret recording so her compensation should be reduced to nil. They said the secret recording was a breach of trust and confidence.

The Employment Appeal Tribunal upheld the tribunal’s decision. In the past, it was fair to assume that covert recordings were part of a plan to entrap the employer. These days, mobile phone technology makes it easier and more common to record meetings. Whilst secretly recording a meeting might usually amount to misconduct (except in the most pressing of circumstances), it isn’t necessarily gross misconduct. In this case, covert recording was not listed as a gross misconduct offence in the employer’s disciplinary rules. A secret recording doesn’t necessarily undermine trust and confidence either because it can happen for different reasons such as record keeping or to assist with getting legal advice. The EAT found that the tribunal was entitled to reduce compensation by only 10 per cent. The tribunal had correctly looked at the chances of the employee being fairly dismissed had the employer known about the recording.

This case gives employers helpful guidance on secret recordings at a time when every employee carries a device which can secretly record events. Employers may want to include covert recording of meetings as a specific example of gross misconduct in their disciplinary policies and ensure that employees understand the potential ramifications.

Discrimination

Forbes v LHR Airport

Amy harasses Bill if she does something in relation to a protected characteristic (race, sex, disability etc) which has the purpose or effect of violating Bill’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for him. If Amy harasses Bill ‘during the course of employment’ then the employer will be vicariously liable for her conduct unless they can show that they took all reasonable steps to prevent it.

In Forbes v LHR Airport, the employee’s colleague, S, shared a golliwog image on her private Facebook account together with a message saying, ‘let’s see how far he can travel before Facebook takes him off’. One of her Facebook friends was another colleague, BW, who showed the image to the employee. The employee lodged a grievance about S’s behaviour. The employer investigated, S apologised and was given a final written warning. When the employee was later moved to work with S, he went off sick and lodged an harassment claim.

The employment tribunal found that S’s actions were not done in the course of employment. She wasn’t at work when she posted the image. It was not done on a work computer. It was posted in a private group not including the employee and she didn’t mention any colleagues or her employer. The Employment Appeal Tribunal agreed. They noted that BW’s act of showing the employee the image could have been done in the course of employment. However, the employee’s case was based solely on S posting the image, not on BW’s actions. The EAT said sharing an image on Facebook might be in the course of employment where the Facebook page is used mainly for work purposes but that wasn’t the case here. The fact that the employer had dealt with the grievance did not necessarily mean the act was done in the course of employment either. Depending on policies, employers can take action for conduct which takes place outside work.

The line between work and home has become much more blurred since the introduction of technology which allows employees to work online at home. Matters are complicated by social media where work colleagues are ‘friends’ online if nowhere else. The EAT was clear not to give guidance on such matters because these cases are fact driven. However, as a rule of thumb, the bigger the crossover between work colleagues and social media friends, the more likely it is that online conduct might be dragged into the work sphere and implicate the employer. A comprehensive social media policy is essential, together with examples of inappropriate conduct outside work.

Restrictive covenants

Tillman v Egon Zehnder

Restrictive covenants are clauses in employment contracts which protect a legitimate business interest by restricting what the employee can do both during and after their employment. The clause must be reasonable and not go further than is necessary to protect the business interest. ‘Non-compete’ restrictions are the strongest form of restraint – where an employee is prevented from competing with the business for a limited period after their employment ends. The recent case of Tillman v Egon Zehnder looked at whether words can be deleted from a restrictive covenant which is otherwise too wide, to make it enforceable.

The employee’s contract contained a term which prevented her from being engaged, concerned or ‘interested in’ a competing business for 6 months after termination. She wanted to work for a competitor in that period so sought to challenge the clause. She said the restraint went further than necessary to protect a legitimate business interest because the term ‘interested in’ was too wide. It stopped her from holding an investment of even one share in a competing company and was therefore unenforceable. The company asked for an injunction to stop her working for the competitor. The High Court granted the injunction, saying the clause was valid and did not stop her owning a minor investment shareholding. The Court of Appeal disagreed and said the words ‘interested in’ did prevent any shareholding. The clause was therefore too wide and was unenforceable. The Court refused to erase the words ‘interested in’ to make it enforceable.

The Supreme Court agreed the clause was too wide but said the offending words could be erased provided it made sense without further alteration and the deletion did not change the overall effect of the restraints. The words ‘interested in’ could be removed and the remaining clause was enforceable. The clause prevented the employee from working for a competitor after termination.

This decision is a good one for employers. However, businesses should continue to guard against drafting restrictive covenants too widely. The Supreme Court indicated that employees should not have to bear the cost of paring down an employer’s unreasonably wide restraint of trade clauses. Better to have tightly drafted clauses which everyone understands and which genuinely protect the business.

Religious discrimination

Page v NHS Trust Development Authority

Employers are not allowed to discriminate against workers on the grounds of their religion or religious beliefs. In Page v NHS Trust Development Authority, the Employment Appeal Tribunal looked at whether an employee can be fairly dismissed for the way he expresses his beliefs, rather than the beliefs themselves.

Mr Page was a non-executive director of an NHS Trust. He also had a job as a magistrate. In his magistrate’s role he sat on a panel to consider an adoption by a same-sex couple. He said it was ‘not normal’ for children to be adopted by a single parent or same-sex couple and children should be brought up by a father and a mother. His magistrate colleagues complained and disciplinary action was taken. Mr Page then spoke to the press, saying his views stemmed from his Christian beliefs. The Trust heard about these comments and told him to stop talking to the press. However, he continued to do so, including primetime TV interviews. He was removed as a magistrate. He was also suspended by the Trust and his position was not renewed due to his behaviour. He brought discrimination claim against the Trust.

The employment tribunal dismissed his claims. He was not dismissed because of his religious beliefs or his expression of it. He was dismissed because he continued speaking to the press despite being asked to stop. He appeared unable to distinguish between his own personal views and what was appropriate for a high-profile person to say to the media. The Employment Appeal Tribunal agreed. He had been dismissed for clear non-discriminatory reasons – speaking to the media against Trust instructions and in a way which could detrimentally affect the Trust’s relationship with a section of the community. A person who spoke out in a similar away about something unrelated to religious beliefs would have been treated in the same way. The instruction not to talk to the media did not affect his freedom of religion under article 9 of the European Convention on Human Rights either. He didn’t need to give interviews or make those comments in order to manifest his faith.

This case shows that a clear, non-discriminatory reason for treatment will defeat a discrimination claim. However, there remains a natural tension between religion and sexual orientation that employers must navigate sensitively and with care.

ACAS annual report

ACAS’s annual report shows that early conciliation is in high demand following the removal of tribunal fees. Early conciliation is mandatory and ensures that an employee tries to resolve any workplace dispute before lodging a tribunal claim. In 2018, tribunal proceedings were avoided in nearly three quarters of early conciliation cases, either because they settled or because the employee had a rethink. There are clear practical and financial benefits to nipping disputes in the bud. ACAS conciliation can also help during the employment tribunal process. Last year over half of employment tribunal cases were settled through ACAS.

ACAS’s services are expert, impartial and free. With fees removed, there are fewer barriers to lodging a claim. Having early intervention from someone impartial can help knock out spurious claims and help businesses to resolve claims with merit before they escalate.

You can view the report here for more information on the services ACAS offers.

Agency workers

Kocur v Royal Mail

The Agency Workers Regulations 2010 (AWR) require that agency workers who are employed for more than 12 weeks receive the same basic terms and conditions of employment as permanent staff. Regulation 6 says that entitlement includes terms and conditions relating to ‘the duration of working time’. Does this mean an agency worker can use the regulations to insist on the same hours as a permanent employee? The Court of Appeal has looked at this issue in Kocur v Royal Mail.

Mr Kocur was an agency worker who worked alongside permanent members of staff at the Royal Mail depot in Leeds. He worked on average 20 hours a week. He brought a claim, saying that regulation 6 entitled him to the same 39 hour working week as his permanent colleagues. He lost his claim in the employment tribunal and the EAT. He appealed to the Court of Appeal.

Court of Appeal said that reference to ‘the duration of working time’ was a reference to the limits imposed on working periods by the Working Time Regulations 1998. The AWR were not intended to regulate how much work agency workers were given. The flexibility provided by agency workers would be undermined if a business were required to give them the same hours as someone who is employed directly by the business.

This decision will come as a relief to companies who use agency workers during busy periods precisely because of their flexibility.

And finally…

Are your job adverts accidentally putting off potential applicants? A new LinkedIn report has looked at the language used in job adverts and found that certain things can deter a potential applicant from applying. The survey of more than 1000 employees and 250 recruitment managers found that more than half of women would be put off by an advert describing the workplace as ‘aggressive’, compared with only a third of men. Surprisingly, there are more than 50,000 jobs on LinkedIn which include the word ‘aggressive’ in their description. More women than men were put off by the term ‘born leader’ too. The approaches to annual leave and flexible working also differed between the genders, with more women than men giving these issues top priority.

The survey found that many employers don’t consider gender when writing job descriptions or track the genders of those responding to adverts. This means employers might be oblivious to the effect that certain parts of an advert might have on potential job applicants. If certain groups are put off applying for jobs, the pool of talent at a business’s disposal can shrink.

Employers should ensure that certain types of language, including ‘masculine coded’ phraseology, do not get past quality control. Make sure everyone involved in the recruitment process has proper training on appropriate language to use in job adverts and recruitment in general. The issue goes wider than this though. It is just as important to ensure that your workplace is free of accidental bias. Comprehensive equalities training for all staff should be mandatory. It’s no good talking the talk if your workplace doesn’t walk the walk.