Newsletter October 2018


Not one but two legal decisions with great bearing on employment law have received widespread news coverage and comment this month.

First, there was the ‘gay cake’ case, pitting discrimination on grounds of sexual orientation against the right of freedom of expression of bakers, driven by their own protected characteristic of religious belief. Ahead of issuing this Newsletter I drafted an unusually long and forthright criticism of the decision both in terms of its legal analysis and its policy implications. On the latter, I promoted the view that the decision will permit, for example, a printing company to refuse to print brochures supporting a particular religious grouping, for example for a Muslim or Jewish group, perhaps on the grounds of an objection to the treatment of women’s rights, or because those views are simply not shared politically by the printers or clash with their religious beliefs. Is that really tolerable, I asked?

However, the full rationale of my analysis has to be omitted because I have even stronger views on the recent disclosure that Sir Philip Green was the subject of the news story the Telegraph was unable to publish due to a Court of Appeal injunction. There is only so much ranting I expect my readers to have to take.

I will not dwell on the actions taken by Lord Hain to disclose Sir Philip Green’s name under parliamentary privilege. Like, I suspect, most lawyers and many others, I think what he did was unacceptable. Of more interested here, though, is the clamour around the inclusion in agreements which settle sexual harassment claims of ‘NDAs’ (non-disclosure agreements) and the calls to ban them because they allow badly behaved powerful businessmen like Sir Philip to buy the silence of the employees and presumably continue their unlawful conduct.

I entirely understand the superficial and populist attractiveness of this position, which is clearly why many politicians rush to sign up to it. However, I would suggest that before they do that they should think through the consequences fully.

I will repeat a few basics, which I suspect all my readers know already. First, an ‘NDA’ in this context is usually in fact just a confidentiality clause in the settlement agreement. The term ‘NDA’ is in my experience more accurately applied to the undertaking of several pages which, for example, a potential buyer of a business signs to gain access to confidential information about that business in order to consider whether to buy it. Calling a confidentiality clause an ‘NDA’ inflates its length and burden for dramatic effect. Secondly, just about every settlement agreement contains a confidentiality clause – quite probably including ones used by politicians, Parliament and other public sector bodies when resolving disputes with their staff. They are not the preserve of harassment situations involving notorious businessmen.

Thirdly, the employee does not have to sign the settlement agreement (and usually only does so in return for cash compensation). An employee suffering discrimination is not denied access to justice - they can decide not to settle their claims. Fourthly, even if they do sign, certain disclosures remain permissible – criminal acts, the right to make protected disclosures (whistleblowing). Indeed, the stories surrounding Sir Philip Green might lead us to believe he has committed appalling acts on the Harvey Weinstein scale – in fact, we do not know the details (and may never know them because the claims were settled and the facts cannot be disclosed because of confidentiality provisions which are the subject of an injunction!).

Why do employers want confidentiality? Clearly they (and employees in some cases) prefer to avoid the reputational damage of having these matters aired in public. Claims of discrimination are often settled with allegations unresolved, of course. If it became known that not only was an allegation made but that money was paid to settle it, that would be read as an admission of liability, thus branding the employer and probably one or more of its staff as discriminators. The employer also might well not want other employees to find out about a settlement. If one employee is ‘paid off’, the argument may run, others will be encouraged to ‘have a go’.

It seems to me, then, that if you outlaw confidentiality provisions in settlement agreements (or some of them, although where you draw a line strikes me as problematic) you are significantly discouraging the settlement of some employment claims, especially ones likely to draw publicity. Employers will feel they have to litigate to protect their reputations and discourage other claimants. Is the employment tribunal system ready for this? Does/will it have the funding?

And what about the victim of discrimination who has been wronged, has a valid claim deserving of financial compensation but who is daunted by the prospect (and cost) of a legal claim and would prefer to settle. Settlement may not, in fact, be on offer. The employee may on balance decide not to proceed. Rather than permitting access to justice, making confidentiality clauses unlawful could deny it.

I entirely see the argument that in the long-term bad workplace practices are more likely to be reduced if they cannot be covered up. Maybe banning confidentiality restrictions is the preferred approach to achieve that outcome. However, there may be the consequences I outline above. Perhaps there is another path - some form of general disclosure by employers of numbers of complaints and how they were resolved is a way forward. But policy should be made with thought and debate, not knee-jerk reaction to one case concerning an already vilified businessman.

Darryl Evans
T: +44 (0)7771 725341

No discrimination in Northern Ireland ‘gay cake’ case

Rant over. Let me return to the ‘gay cake’ case and focus on the legal decision.

The Supreme Court has overturned a series of decisions by the lower courts in relation to the refusal of Ashers Baking Company Ltd to bake a cake decorated with a message supporting gay marriage in Northern Ireland.

The Christian owners of the baking company decided they could not bake the cake in question because of their religious beliefs and as a result Mr Lee, the claimant, brought a direct discrimination claim on grounds of both sexual orientation and political belief.

In essence, the Court decided that Ashers’ refusal was its objection to the message itself, not because of Mr Lee’s sexual orientation. It would have refused to bake the cake even if he was not gay. To use a footballing analogy, they were playing the ball, not the man. The court also decided that this was not a case of associative direct discrimination, because if such a claim was to succeed there needed to be an association between Mr Lee and a particular person or people, which was not the case here.

As for political belief, the court relied on Articles 9 and 10 of the European Convention on Human Rights, under which the court held that Ashers were entitled not to have to express a political opinion in which they did not believe.

The distinction drawn by the Court is one which may be very relevant in some employment situations. (Lee v Ashers Baking Company Ltd 2018 UKSC 49).

Disability discrimination - ’something arising in consequence of disability’

Under section 15 of the Equality Act an employer discriminates against an employee if it treats the employee unfavourably because of ‘something arising in consequence of’ the employee’s disability. In Sheikholeslami v University of Edinburgh (UKEATS/0014/17), the Scottish EAT was asked to decide how closely connected the ’something’ had to be to the treatment by the employer.

Ms Sheikholeslami was dismissed because she refused to return to work in her role as a Professor of Engineering at Edinburgh University. She suffered from work-related stress and depression which caused her to remain absent until she was dismissed.

As a result of her complaints, the University carried out a review which established that there were “cultural problems” within her Department. She suggested that she be moved to a different department, but the University refused and dismissed her, ostensibly on the basis that her work permit had expired.

Ms Sheikholeslami claimed that her dismissal was an act of disability discrimination under section 15, in that her dismissal arose from her disability-related absence. However, the Employment Tribunal found the reason for her dismissal to be because she was not prepared to return to her old job, which led to the University believing that her work permit would not be extended.

The Employment Appeals Tribunal (EAT) allowed her appeal, stating that ‘in consequence of’ did not require the same direct level of causal connection as ‘because of’, which is the requirement in, for example, direct discrimination cases. A looser causal connection can be applied in section 15 cases. There was a chain of causation starting with her disability-related absence and ending with her dismissal.

As is very often the case with appeals to the EAT, the story does not end there, as the case has to be remitted to an Employment Tribunal so that they can reconsider the evidence in the light of the guidance given by the EAT. In addition, in section 15 cases the employer has the opportunity to argue that even if it has treated the individual unfavourably because of something arising in consequence of their disability, that treatment can be justified if it is a proportionate means of achieving a legitimate aim. Nonetheless, the ability to rely on a causal chain in this type of discrimination claim will assist disabled employees.

More about section 15

I have not one case this month concerning section 15 of the Equality Act 201, but two. That second case is South Warwickshire NHS Foundation Trust v Lee (UKEAT/0287/17), in which the EAT considered that a prospective employer's decision to withdraw a job offer made to a disabled candidate was discriminatory.

Ms Lee was a nurse who had worked for around five years for a different NHS trust (Staffordshire and Stoke). She suffered from arthritis and as a result was disabled under the Equality Act and was often absent from work. She left the trust and went to work for a private health service provider known as Ark, where she carried out a more managerial role.

However, after a month she wanted to return to the NHS and applied for a role at South Warwickshire. The Trust sought references from both Staffordshire and Stoke and from Ark. However, the reference from Staffordshire and Stoke referred to her absences, and was held to be a discriminatory reference. The reference from Ark stated that she was not able to cope with complex community cases and lacked managerial skills.

As a result of these references the job offer was withdrawn, so Ms Lee started a claim of disability discrimination, which the Employment Tribunal upheld on the basis that the unfavourable treatment, being the withdrawal of the job offer, arose in consequence of the discriminatory reference. The refusal did not amount to a proportionate means of achieving a legitimate aim, as the prospective employer should have made further enquiries of the referees before making a decision about whether or not to withdraw the offer of employment.

Acceptable banter

In Evans v Xactly (UKEATPA/0128/18) Mr Evans was dismissed for poor performance as a sales representative, but as he had been employed for less than two years he was not in a position to make an unfair dismissal claim. He had, however, been the victim of (according to his allegations) a barrage of different epithets by colleagues, including ‘dwarf’, ‘salad dodger’ and “fat ginger pikey”. He claimed that the last of these amounted to racial harassment under the Equality Act.

Mr Evans was, apparently, sensitive about his weight and was diabetic (which can amount to a disability). The evidence indicated, however, that his colleagues did not consider him fat.

He had strong links to the traveller community, so the comment was potentially discriminatory on those grounds as that community can be held to be a distinct racial group. However, the EAT held that as the office culture involved good-natured banter, and at the time he did not make any complaint about the remark, the remark did not meet the harassment threshold, in that it did not have the effect claimed by the claimant.

Readers may think I have included this case only because my name is Evans and I have two children with varying shades of red hair and am therefore sensitive to (some of) the slurs used. Maybe so, but irrespective of that it is pretty surprising that the employer escaped unpunished. If I may finish where I began, on an opinionated note, one must wonder whether the result would have been different in the present environment if the slurs had been sex, gender or religion related, or perhaps directed at a different racial grou

Directors personally liable to whistle-blower

The Court of Appeal has held two non-executive directors liable for their part in dismissing a whistle-blower (one instructed the other to dismiss the employee and the other duly did so).

These actions constituted unlawful detriment on the ground that the employee had made protected disclosures and the directors could be personally liable for post-dismissal losses, as well as the employer, which had been found to have unfairly dismissed the employee by reason of whistleblowing.

Workplace training to highlight to managers, employees and other workers this risk of personal liability has become all the more important. (Timis and another v Osipov 2018 EWCA Civ 2321.)

Employer’s liability for rogue employee’s data abuse

In another month this case in which the supermarket Morrisons was liable for the misuse of customer data by one of its staff would receive top billing. It is a serious and important decision.

‘Vicarious liability’ occurs where an employer is held responsible for breaches of law by an employee. The question is such cases invariably is: was the employee acting in the course of his duties when committing the breach?

Mr Skelton was a senior IT internal auditor at Morrisons who was asked to send to external auditors certain personal data about employees for the annual audit. In fact, he shared that data online and with three national newspapers, in pursuit of a personal grudge against Morrisons. He was convicted of data privacy offences. However, subject to its pending appeal to the Supreme Court, Morrisons has been held liable to pay compensation to the over 5,000 co-claimants whose data rights were infringed.

The Court of Appeal saw no grounds not to apply normal vicarious liability principles in misuse of data cases and decided that Mr Skelton’s actions at work and the disclosure on the internet was a seamless and continuous sequence of events. There was a sufficiently close connection between Mr Skelton's employment and his wrongful conduct. His motive was irrelevant. The solution, said the Court, is "to insure against such catastrophes" (although query whether this will be an effective tool in practice, as it depends on what cover insurers are willing to offer).

There is a clear whiff of policy in this decision. What use are the rights of 5,000 claimants when it comes to getting financial redress from one modestly paid staff member except if there are the deep pockets of a large employer also available? (Wm Morrison Supermarkets Plc v Various Claimants 2018 EWCA Civ 2339.)

Vicarious liability for a punch in the head

Continuing this month’s Noah’s Ark theme, once again we have two cases on the same issue in one month, although the decision of the Court of Appeal in Bellman v Northampton Recruitment Ltd (2018 EWCA Civ 2214) is a return to a Christmas party favourite featured previously in these pages.

The Christmas party in question took place at one venue and then continued at a hotel, with significant amounts of alcohol being consumed, mainly at the expense of the employer.

While at the hotel an argument arose about between a manager, Mr Major, and his new employee, Mr Bellman, over employment terms, which provoked Mr Major into a long diatribe regarding his authority as Managing Director. When Mr Bellman challenged Mr Major, he was rewarded with a punch in the head, so severe as to cause him brain damage.

The question for the Court was whether the company was vicariously liable for the damage caused by Mr Major. It held, overturning the lowers court’s decision, that it was liable. Two key matters needed to be considered. The first was the nature of Mr Major’s job, and secondly whether there was sufficient connection between the job and his violent conduct.

As Mr Major owned the company, had full control over the company, was attending a company event and paid for taxis and drinks, it is clear that there was a sufficient connection.

Territorial jurisdiction

Long-standing readers will know that I like the cases which address what factors should play a role in determining whether overseas employees can claim UK statutory protection.

The Court of Appeal has held that an express choice of law clause in a contract of employment could be a relevant factor in determining the strength of connection of the employment to Great Britain. In particular, it would be reasonable, the Court said, for an employment tribunal to give greater weight to a specifically negotiated choice of law provision than the inclusion of such a provision in an employer's standard off-the-shelf contract. (The British Council v Jeffery and Green v SIG Trading Ltd 2018 EWCA Civ 2253.)

Ethnicity pay reporting

In the wake of the introduction of gender pay reporting, the Government has published a consultation document on ethnicity pay reporting.

The objective of the consultation is to “enable government and employers to move forward in a consistent and transparent way”, and to inform future Government policy on ethnicity pay reporting.

The consultation document suggests various options, and gives the following alternatives to consider:

  • one pay gap figure comparing average hourly earnings of ethnic minority employees as a percentage of white employees
  • several pay gap figures comparing average hourly earnings of different groups of ethnic minority employees as a percentage of white employees
  • ethnicity pay information by pay band or quartile, showing the proportion of employees from different ethnic groups by £20,000 pay bands or by pay quartiles

Watch this space.

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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