Employment Law Briefing July 2019

JULY CASELAW UPDATE

Tillman – v Egon Zehnder Limited (Supreme Court): new test for severance. Unreasonably broad non-compete could be rescued by the severance of the standing part (03.07.19)

The Supreme court has handed down its long-awaited decision in the appeal of Tillman v Egon Zehnder. The offending words in a post termination restriction which was too broad could be removed to render the remainder of the clause enforceable.

In the norm, restrictive covenants will only be valid if they go no further than reasonably necessary to protect the business interests of the employer. A court cannot rewrite a clause, it can sever an offending part of the clause if it does so without adding to or altering the remaining wording and the removal of the severed part must not affect the meaning of the part remaining.

Ms Tillman was engaged by Egon Zehnder Ltd (EZ) under an employment contract containing post-termination restrictions from 2004 in various roles. She became Global Head of Financial Services in 2012 and held this position until 2017 when she resigned to take up employment with a competitor firm. EZ argued that this would be in breach of the non-compete restriction in her contract. Tillman argued that the words “interested in” in the non-compete restriction prevented her from holding even a minority shareholding in a competitor and therefore the covenant was wider than necessary to protect EZ’s interests and void as an unreasonable restraint of trade.

The High Court granted an injunction in EZ’s favour.

This was set aside by the Court of Appeal which held that the word “interested” was impermissibly wide and severance could not be applied.

The Supreme court considered three issues and concluded as follows:

(1) The words “interested in” as prohibiting any shareholding in a competing business as part of the restraint on Tillman’s ability to work following termination of employment was impermissibly wide;
(2) was therefore deemed an unreasonable restraint of trade and,
(3) on the question of severance and whether the words “or interested” could be severed the Supreme Court agreed and concluded that even though the words “interested in” stretched the protection too far and wide, it should be severed such that the rest of the covenant should survive

In doing the above, the Supreme Court overruled existing case law and developed a new test for severance:

  1. the offending part can be severed as long as it is done so without adding to or modifying the remaining wording, and
  1. the removal of the severed part must not affect the meaning of the part the words remaining and should not generate any major change in the overall effect of the restraints.

A court cannot rewrite a clause.

Kocur v Angard Staffing Solutions Limited: Agency workers are not entitled to the same hours of work as those performed by a permanent employee (11.07.19)

The Agency Workers Regulations 2010 (“the Regulations”) entitle an agency worker to the same conditions of work as a permanent employee. This does not extend to an entitlement to be offered the same number of hours of work as those performed by a permanent employee.

The Court of Appeal has held that the purpose of these Regulations was to ensure the equal treatment of agency workers and permanent employees whilst at work and in respect of rights arising from their work. The Regulations did not regulate the amount of work which agency workers were entitled to be given. Therefore, the Court of Appeal held that an agency worker is not entitled to be offered the same number of hours of work as those performed by a permanent employee.

Mr Forbes v LHR Airports Limited (EAT): the sharing of a discriminatory image on Facebook was not an act done in the course of employment (16.07.2019)

Mr Forbes worked as a security officer for LHR Airport Limited. One of his colleagues shared a post on her private facebook when she was not at work, not using the employer’s computer or other device to share the post, the sharing of the image made no reference to LHR Airport Limited or to any of its employees nor was it directed at any employee. It was shared amongst a private group which did not include Mr. Forbes.

Mr Forbes raised a complaint about this posting and his colleague was given a written waning. Mr Forbes felt that he was being victimised and harassed because he had complained about the post on so raised claims for harassment, victimisation and discrimination on the grounds of race.

The Employment Tribunal (ET) dismissed Mr Forbes’s claims on the basis that the colleague was not acting “in the course of employment.” Mr Forbes appealed.

The Employment Appeal Tribunal (EAT) held that the question of whether an individual is acting “in the course of employment”, was a question of fact for the tribunal to determine, taking into account the wider picture and the ET had not erred in concluding that as the colleague had posted on her private Facebook page, that this was not in the course of employment. The EAT therefore dismissed Mr Forbes’s appeal.

Note: this case does not mean that social media posts will never be made ‘in the course of employment’; all cases will be determined on their own specific facts and circumstances.

A Ltd v Z: Employer did not have constructive knowledge of employee’s disability (18.07.19)

The Claimant suffered from mental and psychiatric impairments but did not disclose these to her employer each time relying on other reasons for sickness absence. She had a very poor attendance record over 14 months of employment and was dismissed because of poor attendance and timekeeping issues. She brought a claim for Disability Discrimination. The ET found in her favour. The ET found that the employer did not have actual knowledge of disability but did have constructive knowledge. The employer knew nothing more than that the Claimant had experienced personal problems and had suffered stress as a result. The ET made a finding that the employer should have made further inquiries and had constructive knowledge off the stress.

The employer appealed. One of the grounds of appeal was that ET erred in its approach to the employer’s constructive knowledge of the Claimant's disability.

The EAT found that the ET had failed to apply the correct test: it did not ask what the employer might reasonably be expected to know of the Claimant’s disability. The appeal was allowed and the judgment in favour of the Claimant dismissed.

Phoenix House Limited v Mrs T Stockman (EAT): Making a secret covert recording of a HR Meeting was not in breach of the implied duty of trust and confidence and did not amount to gross misconduct (22.07.19)

Mrs Stockman worked for alcohol and drug addiction charity. The department she worked in underwent a restructure and she successfully secured an alternative suitable position and avoided redundancy. However, despite this she raised complaints that the restructure was biased against her, that she was being treated unfavourably by the Director of Finance and that she was supported by a colleague. The Head of Finance called Mrs Stockman’s colleague into a meeting to discuss the position. Mrs Stockman interrupted the meeting and refused to leave. As a result of this she was called by the Director of Resources to a meeting at which she was told she would be disciplined. Mrs Stockman secretly recorded this meeting.

A disciplinary hearing was held. She received a 12-month written warning. She appealed. Various hearings took place. At a meeting with HR on short notice she was told that the working relationship had broken down irretrievably. She was dismissed with immediate effect for some other potential reason. i.e. an irretrievable breakdown in the relationship between employer and employee.

Mrs Stockman brought a claim for unfair dismissal. The ET held that she had been unfairly dismissed from her employment as she had not been given enough notice of the hearing in which she was subsequently dismissed and not provided with enough information in relation to the conduct case her employer was bringing against her.

During the ET hearing, Mrs Stockman disclosed that she had recorded the meeting with the Director of Resources without informing her/ employer. Phoenix House Limited argued that the compensation awarded to her for unfair dismissal should be reduced on ‘just and equitable’ grounds on the basis that had they been aware of the steps she took to make a covert recording previously, she would have been dismissed for gross misconduct for that. Their policy provide this could be considered to be gross misconduct if it was used to deceive her employer. It specifically said that the purpose of the recording was relevant. The ET concluded she had not made the recording for purpose of deceiving Phoenix House Limited. The EAT agreed.

Note: It is important to have a correctly worded policy saying that hearings should not be recorded without consent. Employees should be reminded in advance of every hearing.

Acetrip Ltd v Dogra: Compensation Calculation (23.07.2019)

Mr Dogra (an Indian national) was employed for 6 months and then dismissed. The ET found that he was dismissed for making a protected disclosure, asserting a statutory right and that the employer had made an unlawful deduction of wages. He was awarded £124658.82 in respect of notice period, past loss to date, future loss of earnings and an ACAS uplift on compensatory award. He was not awarded a basic award as he had not achieved two years qualifying service.

Acetrip appealed on a number of grounds which included: awarding him compensation for loss of earnings by reference to his ordinary weekly gross pay (when he was, in fact, off sick and entitled only to statutory sick pay), and that the ET failed to consider and/or make a Polkey reduction on various grounds.

The EAT held there were a number of errors including the above and the matter has been remitted to the ET for reconsideration.

EON Control Solutions Limited v Caspall: Incorrect Early Conciliation Number on Claim Form (29.07.19)

Mr Caspall presented a claim to the ET alleging unfair dismissal and unauthorised deduction from wages. He however put an incorrect Early Conciliation (EC) number. The ET decided he could proceed with his claim by amending it as that would be in line with the overriding objective and the general principle of access to justice. He could therefore amend the claim form to include the correct EC number.

EON Control Solutions appealed. The EAT held that the ET was wrong to conclude that the Claimant's error as something that could be remedied by way of amendment. The proper course would have been to reject the Claim Form and return it to the Claimant (Mr Caspall).

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