Employment Law Roundup – May ’19

Usually, employment law cases are conducted in public and the press may report on them. In cases involving sexual harassment and sexual offences, employment tribunals may grant privacy orders in the interests of justice or to protect people’s privacy under the European Convention on Human Rights (‘ECHR’). Orders can include anonymising the parties, holding hearings in private and restricted reporting orders. In granting these orders, the employment tribunal must properly balance privacy rights against the principle of ‘open justice’.

In A and B v X and Y and Times Newpapers Limited, a household name (Y) was accused of harassment, including alleged sexual offences. A and B brought claims against their employer (X) and Y. The employees were entitled to anonymity under the Sexual Offences (Amendment) Act 1992. They also sought an anonymity order in the employment tribunal. X and Y also asked for anonymity and a restricted reporting order. The employment tribunal refused everyone anonymity. However, they granted a restricted reporting order until after any remedy hearing. The judge said the employees had the equivalent of such an order because of their anonymity under the Sexual Offences Act, and Y should be similarly protected. It would ensure Y remained innocent until proven guilty and guard against misreporting.

The Employment Appeal Tribunal said the tribunal had not applied the test properly. Conducting the hearing in public was not enough to achieve open justice. The tribunal should have specifically considered the issue of press reporting. The danger of misreporting was irrelevant – open justice assumes reporting will be accurate. The tribunal was wrong to restrict reporting in order to put Y in the same position as the employees. The Sexual Offences Act chose to deal with victims and alleged perpetrators differently and that must be respected. It was also wrong to grant the order until remedy. The order should only be in place until the truth about the allegations is known, which is the liability decision. The case was sent back to a new tribunal panel to consider the restricted reporting order issue again.

Restricted reporting orders are rare. Privacy rights must be carefully balanced against the principle of open justice. Interestingly, the fact that Y is famous was irrelevant to the issue of restricted reporting. The rich and famous might get special treatment elsewhere, but not in the employment tribunal.

ACAS guidance on Brexit

ACAS has issued new guidance to assist both employers and employees in understanding the impact of Brexit in the workplace. Much employment law comes from EU directives so being prepared is vital. Whilst the government still appears to be doing the hokey-cokey when it comes to Brexit, the guidance will help employers be prepared if the UK does leave the EU.

The guidance covers some key queries employers may have, including the rights of EU citizens working in the UK. It looks at changes to legislation and the impact of Brexit on employment tribunal and court decisions, most importantly the removal of an appeal to EU courts after Brexit. There are links to government technical guidance, including how to prepare for a no deal Brexit. The guidance also encourages talking to employees about Brexit and how it might affect both them and the business.

Find the guidance here.

Vicarious liability

The High Court has recently looked at another Christmas party case where an employee was injured and then sued her employer. In Shelbourne v Cancer Research UK, the employer held a Christmas party for its staff at its research institute. They did a risk assessment before the party and took appropriate steps including hiring security to prevent access to research labs. At the party, an employee was seriously injured on the dance floor after being picked up and accidentally dropped by a scientist.

The employee sued her employer for negligence and vicarious liability. The County Court dismissed her claims, so she appealed. The High Court confirmed that the employer owed the employee a duty of care but not the extent the employee alleged. She said that for parties involving alcohol, the heightened risk of inappropriate behaviour required extra steps. These included requiring attendees to sign a declaration saying they wouldn’t behave inappropriately, a risk assessment covering the risks posed by potential inappropriate behaviour, and trained staff at the party to look out for it.

The High Court said the employee’s list of requirements was not reasonable for any Christmas party. The employer’s risk assessment was adequate. It did not have to deal with the risk of someone who had consumed alcohol doing something untoward on the dance floor. The employer was not vicariously liable for the injury either. The scientist’s role with Cancer Research was his research work. This was not sufficiently connected with what happened at the party to give rise to vicarious liability.

This case shows how fact dependent vicarious liability cases are. The result in this case differs from the Court of Appeal’s findings in Bellman v Northampton Recruitment last year. In that case, the injury took place at an after party, but where the protagonist had chosen to wear his ‘MD’ hat to lecture his staff, one of whom he punched when they challenged him. That provided sufficient connection between his work and the injury. That connection was not present in the present case.

National minimum wage

The issue of payment for being on-call has reared its head again in the Employment Appeal Tribunal. In Frudd v Partington, the employees were a husband and wife warden/receptionist team at a campsite. They lived on site. During the open season, they were on call from the end of their day shift until the next day’s shift began. The on-call period was divided into three: evening, night and early morning. The evenings were busy and involved numerous tasks. They didn’t get paid at all for evenings or early mornings and only got paid overnight if they were disturbed.

The employees said they were ‘working’ during the on-call period, which was ‘time work’ under the National Minimum Wage (NMW) legislation. They also claimed the NMW for the whole period during the closed season because they had to do an evening security patrol. The employment tribunal said that the evening period during the open season was time work and attracted the NMW. However, the employees were simply available to work during the night. They were only entitled to be paid when they were disturbed and actively working. The judge also found that they were not ‘working’ outside their shifts during the closed season. The employees appealed.

The Employment Appeal Tribunal accepted that the evening period was time work because it involved active work. They also agreed that the employees should only be paid overnight if they were called out. However, the tribunal had not considered the early morning period properly and that issue alone was sent back to the employment tribunal for reconsideration. The EAT also rejected the appeal on the closed season security patrol. Doing one patrol did not make the whole of the period ‘time work’ for the purposes of the NMW.

This case is a good one for employers and a helpful reminder of the difference between working and being available to work for the purposes of the National Minimum Wage legislation.

Written terms and conditions

Section 1 of the Employment Rights Act 1996 requires employers to provide employees with a written statement of their terms of employment within two months of starting work. Section 38 of the Employment Act 2002 allows tribunals to increase compensation in many employment claims (such as unfair dismissal and unlawful deduction from wages) if the employer is in breach of section 1 when the claim is lodged.

In Govdata v Denton, the employee was employed by Govdata from December 2015 but was not given a section 1 statement until 15 June 2016. His employment ended in August 2016. He brought numerous claims including unlawful deduction from wages and breach of section 1. The employment tribunal upheld those claims and awarded compensation. The employee asked the tribunal to increase the award because of the breach of section 1, which the tribunal did. The employer appealed.

The Employment Appeal Tribunal said that an award can be increased under section 38 only if the employer is still in breach of section 1 by the time proceedings start. The employer had been in breach of section 1 for 18 months but had complied by the time the employee lodged his claim. There could be no increase in compensation.

The employer in this case sorted the employee’s section 1 statement just in time. From April 2020, both workers and employees will have the right to a section 1 statement from day 1.  Employers should start planning for this change now.

Directors’ liability

The High Court has recently looked at whether directors can be liable for a company’s breach of employee contracts. Directors are governed by the Companies Act 2006, which requires them to act in good faith in the best interests of the company, taking into account the interests of employees. Directors must also exercise reasonable care, skill and diligence in their duties. A director will not be liable for a breach of contract if they are acting in good faith and within the scope of their authority.

In Antuzis v DJ Houghton, the employees were chicken catchers on a farm. They worked extremely long hours and were regularly underpaid. They were not paid holiday pay and underpaid in relation to overtime. Pay was sometimes withheld as a punishment. Were the directors liable for those breaches of contract, as well as the company?

The directors’ evidence in the High Court showed that they knew about the breaches of contract. Both directors were described as entirely unsatisfactory witnesses who were trying to cover their backs. They had not complied with their general duties under the Companies Act. They were not acting in good faith or in the best interests of the company. They induced the breaches of contract purely for financial gain. The High Court found that they were liable for the breaches of contract, together with the company.

The facts of this case make for difficult reading. The employees were clearly treated very badly. Most directors do not behave in this way. However, directors must ensure that they fully understand their duties under the Companies Act and ensure they always act honestly and in the company’s best interests. Not doing so can be costly.

Unfair dismissal and permanent health insurance (PHI)

PHI provides employees with pay during long term sickness or incapacity. Policies can define incapacity differently. Some policies define it as an employee’s inability to return to their actual job. Some policies define it as an inability to return to any job. Sometimes the courts get involved if the parties don’t agree on the meaning of the policy terms, as was the case in ICTS v Visram.

The employee worked at Heathrow Airport. He had a contractual PHI plan. Benefits would kick in 26 weeks after the start of absence and continue until ‘the earlier date of [his] return to work, death or retirement’. The employee was entitled to benefits if he was sick and prevented from performing ‘his own occupation’. The employee went off sick. He raised a grievance when benefits did not kick in after 26 weeks. He was eventually dismissed for capability. He won his unfair dismissal and disability discrimination claims. The question was whether his compensation should include the value of any benefits he would have received under the PHI plan. The employer argued that his benefits stopped when he was able to return to any employment, not his actual job.

The employment tribunal said the policy benefits stopped when the employee was able to return to his actual job. As he couldn’t return to that job, he was entitled compensation to reflect what he would have been paid in PHI until his death or retirement. The Employment Appeal Tribunal agreed. They said the employment tribunal had looked at the policy wording and decided that the word ‘return’ meant going back to his actual job with his original employer, not any job. They were entitled to make this decision on the policy wording.

Employers should check the wording of any PHI policy carefully before moving to dismiss an employee who is off sick long term. The cost of compensation associated with PHI payments can be very high.

Unfair dismissal

For a dismissal to be fair, an employer must have a genuine belief in an employee’s guilt, based on reasonable grounds. Usually, having reasonable grounds involves a proper investigation. Is this always necessary?

In Radia v Jeffries International, the employee was a managing director of an FCA-regulated financial services company. This is a regulated role which requires the employee to be a ‘fit and proper’ person. He brought a disability discrimination claim against his employer, which he lost. The tribunal judgement said his evidence was misleading and not credible. It also noted that his behaviour as a ‘regulated person’ was of grave concern. When they received the judgement, the employer moved straight to a disciplinary hearing, relying on the tribunal’s findings rather than conducting more investigation. The employee was given opportunity to comment on the judgement at the disciplinary hearing. He was dismissed because his behaviour was not compatible with his regulated role. Did the lack of investigation make the dismissal unfair?

The employment tribunal said no. The employee appealed. The Employment Appeal Tribunal said that there was nothing in statute or even the ACAS code which required an investigation process separate from the disciplinary hearing. The dismissal was fair on this point. However, his dismissal was unfair in relation to his appeal process and that issue was sent back to the tribunal.

In this case is unusual. The relevant facts (the MD’s lack of credibility) had already been documented by the employment tribunal in earlier proceedings. This made an active investigation less of an issue. The FCA rules specifically refer to critique in any tribunal proceedings being relevant evidence on whether someone is a ‘fit and proper’ person.  In most cases involving dismissal, an investigation will be an essential part of the fact-finding exercise. Sticking to the ACAS code is always the safest option.

And finally…

Is employee monitoring by artificial intelligence (AI) the way to boost productivity? Some UK businesses are using AI package Isaak to monitor employees at work. Data gathered can include information on who employees are emailing, who accesses and edits files and even which employees are meeting and when. Instead of relying on managers, computer algorithms are being used to manage people. The system can show how collaborative employees are. It can also measure activity data against information from other sources, like personnel files or sales figures, to give a picture on how behaviour affects productivity.  Is this a good thing?

Trade unions argue this kind of monitoring can create distrust among staff. Being monitored so closely could create a climate where people feel watched.  It could discourage people from taking breaks which might affect mental health. It might dissuade people from spending time being creative, if ‘thinking time’ isn’t logged.

Other people argue AI can remove human bias from the management process. In our precision economy, being able to gather data and identify key employees within a workforce can be good for allocating work and responsibilities. It can also identify people working too much, so loads can be lightened.

So, is this high-tech snooping or just a natural progression towards more tech-based monitoring? Even the Chief Executive of the company which made the system, Status Today, admitted there was a risk the system could be misused. The most vital ingredient in an employment relationship is trust. AI monitoring can benefit a business if it is used in a positive way, and with employee buy-in. Any management tool which is used only as a weapon is likely to do more harm than good.