Newsletter November/December 2012


I am sure all my Newsletter readers are sufficiently interested in the content to read the final items with the same gusto as they read the first ones. Just in case there are exceptions, let me encourage you to get all the way to the bottom this month where I address some developments on the issue of social media usage by employees.

In particular, I have featured a piece by my former colleague Olivia Whitcroft (, who is now running her own specialist commercial law firm, in which she considers how employers can protect their client lists and contacts where employees use tools such as LinkedIn and Facebook to develop business, sometimes with the encouragement of the employer.

I start, though, with the now familiar update on the latest on the Government's proposals for employment law reform.

Darryl Evans
T: +44 (0)7771 725341

Consultation on Modern Workplaces - flexible working and parental leave

The right to request flexible working will become available to all employees (i.e. not just those with children) from 2014, provided they have 26 weeks' continuous service. Note that this is a right to request, not an absolute right, although the employer will be expected to act reasonably in its response. A statutory code will give guidance to what that means.

The new system of statutory parental rights will be introduced in 2015. Both parents will be able to share the one year's statutory leave and pay that is currently only available to mothers. This flexible parental leave can either be taken by each parent consecutively, or by both parents concurrently, as long as the combined amount of leave does not exceed the statutory one year period. Similar principles will apply to statutory flexible parental pay, which will be available as an alternative to statutory maternity pay. Additional paternity leave and additional paternity pay will be abolished and there will be no extension to the current statutory paternity rights.

The entitlement to the current right to 13 weeks of unpaid parental leave will be extended to 18 weeks for each child from March 2013, and from 2015 each parent will be able to exercise this right for children up to the age of 18.

The specific dates of introduction of the above new laws are still to be confirmed.

Government response to employee ownership consultation

The Government has responded to its consultation on employee ownership, under which employees can agree to give up some employment rights, such as unfair dismissal, in return for shares.

Despite the fact that 92% of the consultation respondents viewed the employee ownership plans in a negative or mixed way, the Government still plans to go ahead with the scheme.

If an employer wishes to use the scheme, all it will need to do is demonstrate that it has issued £2,000 worth of shares to the employee. A difficulty for smaller companies will be establishing how much the shares are worth.

The fact that the scheme will be voluntary and the negative response to it so far beg questions over how much take-up there will be if the scheme does find its way to the statute books.

Justifying a compulsory retirement age

I will make merely a passing reference to the decision of the European Court of Justice (ECJ) in EC v Hungary EU (Case c-286/12) because the detail is complex, but outcome is nonetheless worth noting.

The ECJ concluded that reducing the compulsory retirement age for judges from 70 to 62 could not be justified. In particular, the argument that the lower age promoted a more balanced age structure of judges was not appropriate because the short term effects of numerous posts being vacated and then filled by young lawyers could not be said to achieve a truly balanced age structure in the medium and long term.

Can a redundancy dismissal be fair without consultation?

In Ashby v JJB Sports plc (UKEAT/0114/12) the Employment Appeals Tribunal (EAT) looked at the old chestnut of whether a redundancy dismissal can be fair where there has been a failure to consult. It concluded that if consultation would have been futile, then it is not a necessary component of a redundancy exercise.

Mr Ashby was a director of his employer who found himself restructured out of the business without any consultation when a new CEO arrived and needed to make quick changes to try and turn the company round. The EAT concluded that, due to the highly sensitive nature of the restructuring, it was reasonable not to consult with Mr Ashby.

This case should not lead you to feel that you can now push ahead with consultation-free redundancies. The EAT said that this was a very unusual case, although it is not clear why, and therefore how the lack of consultation fitted into the "futile" category.

Does failing to investigate a complaint of discrimination amount to

Only if the reason for the failure is itself discriminatory, said the EAT in The Learning Trust & Ors v Marshall (UKEAT/0107/11). It all depends on why the employer failed to investigate.

Ms Marshall had numerous absences and also raised a number of grievances, including alleging racial discrimination. She was eventually was dismissed for making "vexatious and malicious" claims against her Head Teacher.

The Employment Tribunal found that the employer's failure to deal with her grievance amounted to an act of race discrimination in itself. However, the EAT very clearly stated that it will only be an act of discrimination if the employer failed to investigate because of the employee's race.

Dismissals involving accumulated warnings

Wincanton Group v Stone (UKEAT/0011/12) is a useful decision when it comes to dismissing an employee for a final act of misconduct after accumulated warnings.

Mr Stone had been given a final written warning for misconduct and he was then dismissed when he committed a further act of misconduct. The Employment Tribunal found the dismissal unfair because it considered the final written warning to be unjustified. So it looked into the historic warnings, not just the process and decision at the point of the final piece of misconduct.

The EAT disapproved of the Tribunal's approach. It should not, in this situation, have looked behind the final written warning. It should of course have taken into account the fact of an earlier warning and any proceedings that might have affected the validity of that warning (such as an internal appeal). It should also have considered what weight the employer gave to any challenge before dismissing. The factual circumstances giving rise to the warning might be looked at. However, Tribunals should avoid going behind an earlier warning and considering its validity, unless satisfied that to do so was appropriate, such as if there was evidence the warning was issued in bad faith.

This is not a permission to depart from fair process and decision making in any situations falling short of dismissal and the circumstances of prior warnings will come under Tribunal review. But a warning given following proper process and in good faith may be accepted on face value and not scrutinised in detail.

Dismissing an employee who is long-term sick

Falling into the 'that's a turn up for the books' category is the EAT's decision in Lloyd v BCQ Ltd (UKEAT/0148/12; UKEAT/0239/12).

No implied term existed, and thus had been breached, when the employer terminated the employment contract of an employee who was in receipt of permanent health insurance benefits, that is continuing salary during long-term sickness absence, where the employer recovers that salary under insurance.

The leading case of Aspden v Webbs Poultry and Meat, which has held back employers from dismissing employees on PHI for many years, was decided according to the specific contract terms in that case. If the contract is right, dismissal is possible.

TUPE - exclusions from service provision change rules

And so to this month's TUPE update.

The application of TUPE to 'service provision changes' (outsourcings and the like) include where what is entered into is a contract for a 'single specific event or task of short term duration'. What is the scope of that exclusion?

Liddell's had a contract to provide transport for schoolchildren during a limited period when they were 'decanted' from their school - just for a year. Contracts of this nature were normally awarded for periods of at least three and up to five years.

The Employment Tribunal concluded that this was of short term duration and TUPE did not apply. The EAT agreed and also pointed out that the exclusion applied to either a single specific event or a task of short-term duration. The BIS guidance that both parts of the exclusion had to be met was
misleading. (Liddell's Coaches v Cook and others UKEATS/0025/12.)

EAT rules out double recovery

In Optimum Group Services plc v Muir (UKEATS/0036/12) Mr Muir won his TUPE related unfair dismissal claim against Optimum having settled his claim against the other party to the TUPE transfer before the hearing.

The EAT reduced the compensatory award he was made by the Tribunal to take into account that settlement. The compensatory award for unfair dismissal is not intended to operate as a penalty, so the claimant should not profit through double recovery.

Facebook comments on gay marriage did not justify demotion

Mr Smith was demoted for making comments on Facebook expressing his personal views on gay marriage ("an equality too far" he said).

The High Court held that the use of Facebook in this way was not sufficiently work-related to attract a disciplinary sanction and that what he said did not bring the employer into disrepute. This was despite the fact that 45 of Mr Smith's Facebook friends were work colleagues, at least one of whom was offended by the remarks.

However, whilst his demotion amounted to a dismissal, he then started working under a new contract of employment, albeit at a reduced salary, so he could only recover any loss that arose during his 12 week notice period - a princely sum of £98. He did not bring an unfair dismissal claim in an Employment Tribunal which might have secured him additional compensation.

Social media cases such as these depend very much on a combination of the facts applicable to the case, the employer's policies on social media use, and the effect of the employee's social media comments on the workforce. (Smith v Trafford Housing Trust 2012 EWHC 3221.)

Maintaining control of social media contacts

Over the past few years, there has been a rapid increase in the use of social media tools (such as LinkedIn, Twitter and Facebook) as marketing and media channels for businesses. Accounts are often set up in the name of individual employees, creating a cross-over between personal and business use. One consideration for an employer is whether it can maintain control of the lists of contacts (or "followers", or "connections") for such accounts when an employee leaves, and prevent such lists being taken over to a competitor organisation.

With traditional customer and marketing lists, employers can claim ownership of database rights, and also restrict further use by a former employee through confidentiality and data protection requirements. However, in relation to social media, there are complexities in determining who owns such rights (e.g. the individual, the employer or the social media provider) and it is more difficult to claim confidentiality when contact lists are often publicly available.

An employer may therefore need to look to separate practical and contractual controls to protect its interests; for example:

  • having a policy describing the extent to which employees are permitted to use and manage social media and associated contacts for business purposes;
  • setting up a company social media account which the employee uses whilst employed; and/or
  • imposing post-termination obligations and restrictions on the employee in relation to social media accounts and/or lists of contacts.

Even then, these actions may be limited by the terms and practicalities of the social media provider (which may, for example, only permit personal accounts) and limits on enforceability of contractual restrictions (particularly as individual business networks become more commonplace). The risks and potential solutions will therefore need to be assessed in context when formulating marketing and social media strategies.

Olivia Whitcroft, solicitor and principal of OBEP

The information and any commentary contained in this newsletter are for general information purposes only and do not constitute legal or any other type of professional advice. Darryl Evans and Evans Employment Law Limited do not accept any and, to the extent permitted by law, exclude all, liability to any person for any loss which may arise from relying upon or otherwise using the information contained in this newsletter. If you have a particular query or issue you are strongly advised to obtain specific, personal advice and not to rely on the information or comments in this newsletter.

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