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Employment Law Newsletter - June 2017


In this issue ...

  Let's see what happens then   It's alright to keep schtum (or stumm, or shtoom)  
  It's not what you do, but who you do it for   Looking beyond the horizon  
  Not so risky after all?   The austerity years  
  Just pretend it wasn't there  

Let's see what happens then

Well, the fond hope expressed in our May 2017 edition bore some fruit, even if it was slightly stunted and has withered further since – the general election turned into more of a contest than most forecast. But, in the weird world of 'first past the post', there was a 'winner' – just, and for now at least. Whether that translates to a full-blooded and prompt enactment of the Conservative pledges on employment law is anybody's guess, especially as the Queen's Speech overlooked many we mentioned, confining itself to changes in immigration and data protection law to address Brexit, 'looking forward' to the forthcoming report of the Taylor Review on modern employment practices (see February 2017 and April 2017) and getting the NLW to 60% of median earnings by 2020.

Mind you, given the need to address the horrendous events of the last month, the all-consuming preoccupation of Brexit negotiations and the fragility of the Parliamentary equation, it would be unsurprising if the Government, indeed any Government in its position, forgot the day job and by-passed some things. But let's hope not.


It's not what you do, but who you do it for

In Green v SIG, the EAT had to consider the thorny question of the application of UK employment protections to employees working overseas. Green, a UK national, was responsible for SIG's Saudi operations, commuting there from Lebanon, where he lived. While he spent minimal time in the UK, his contract said it was subject to English law and contained both mobility clauses and post-termination restraints extending to the UK and Ireland. He was paid in sterling and, although tax exempt, registered with HMRC.

The EAT held that an employment tribunal had been wrong to find Green was an expat and unable to claim unfair dismissal. The tribunal had over-focused on his immediate role and duties, thus failing to consider the strength of his connection with the UK through the entity for whom he worked, a UK registered company. The EAT acknowledged that the contract, even the clause about English law, could not conclude the question of jurisdiction on statutory rights but said that its terms were nevertheless relevant to the issue of the strength of his connection with the UK. In particular, it declined to give much weight to SIG's argument that the contractual clauses about applicable law should be disregarded because, it alleged, Green had been issued with its standard employment contract simply as a matter of administrative convenience. For the EAT, that would ignore the fact that the contract was agreed between the parties and, moreover, obscured the required objective assessment of all the circumstances.

Lessons (that's if you want to make someone an expat, without UK employment protections)? Ultimately, there is a limit to the 'engineering' that can be done – the ultimate question is the extent of objectively-assessed liaison and integration with the UK base. However, even if the (private) contractual agreement cannot determine statutory jurisdiction, there's no point starting off behind the black ball. So, certainly don't dish out to them your pro forma contract used for domestically-based staff - have bespoke terms drafted. Having an overseas-registered subsidiary as the direct employer does no harm either.


Not so risky after all?

An employee is off sick. To cater for the absence, you distribute the employee's duties amongst others in the section or department involved. Then you discover that things function as well (or even better) under this new arrangement. So, there is seemingly a redundancy situation. But what if the cause of the employee's absence was a disability – will making the employee redundant amount to disability-related discrimination?

In Charlesworth v Dransfields Engineering, the EAT found not. Charlesworth occupied a specific role (Branch Manager) and the evidence was that the employer had been looking for ways to reduce costs for some time. While there was a link between his having been off work through disability and his redundancy dismissal (after his return and following reasonable consultation), the former was not the effective cause of the latter. Rather, it was simply context – it 'threw into sharp relief' the potential for doing without the role, something that the employer might well have identified by other means in due course.

There are two caveats here. Charlesworth involved a single-person role. If the absentee is one of a group performing the same job, a selection process will normally be necessary to identify the employee to be made redundant. And the EAT does not opine on what is possible if the revelation about redundancy is not preceded by a demonstrable search for cost savings.


It's alright to keep schtum (or stumm, or shtoom)

In MPT Group v Peel, the High Court (HC) has come to the quite sensible conclusion that employees, senior but not senior enough to owe a fiduciary duty to their employer, are under no duty to disclose their intention to set up business in lawful competition.

The employees were going to strike out on their own only once they had resigned and their restrictive covenants had expired. While their resignation periods were running, their employer asked them directly about their intentions. They denied any plan to compete. Despite the general obligation not to be dishonest, the judge was reluctant to grant an injunction when the competition itself would not be in breach of contract and the employees' plans therefore were legitimately confidential.


Looking beyond the horizon

On restrictive covenants themselves, another ruling of the HC, in Eigon Zehnder v Tillman, is interesting. Here, the covenant was entered when the employee was first engaged in a junior role. The employer was now seeking to enforce it against her after her departure from the much more senior position, with involvement in business strategy and 'client engagement' (we thought everybody did a bit of that nowadays...), to which she had subsequently risen.

In contrast to cases reported in our October 2012 and April 2016 issues, where originally excessive restraint clauses were not 'saved' by the employee's subsequent promotion to a job more appropriate to their content, the HC decided this one was valid and enforceable. This was because, when the employee had first joined, there were 'high hopes' for her and it was in both parties' contemplation from the outset that she would enjoy a swift rise to the top. In assessing reasonableness, that factor was as important as the employee's initial status.


The austerity years

The latest statistics about employment tribunals suggest the system is stretched. The small percentage increase in claims received is numerically outstripped by the percentage increase in claims outstanding and the decrease in claims disposed of. Yet the number of days when tribunals were in session reduced by 15%. And salaried judges presided over 92% of those. The days of throwing money around on fee-paid judges (in 2013-2014, they handled one-third of the business) to keep pace are long gone.


Just pretend it wasn't there

In Elmore v Governors of Darland High School, the EAT gave a whole new meaning to the 'no difference' rule.

It decided that, where an employer did not give evidence to an employment tribunal about the basis of its decision (without reasons in the confirmatory letter) on an employee's appeal against dismissal for capability, it could be appropriate for the tribunal to presume that the reasoning behind the appeal decision was the same as that for the original dismissal decision. Evidence before the tribunal only became critical where new issues were raised on appeal, the appeal had to 'cure' defects in the original dismissal process or it was suggested that the appeal body was improperly constituted or biased. None of those considerations applied in Elmore, so, on the basis of the evidence given about the employer's original decision, the dismissal was fair.

This is a handy little decision. For employers who are confident (after taking advice) that everything was considered properly at the stage before appeal, it reduces the time and cost associated with a tribunal hearing. And for the tribunals themselves, it helps in a small way to curtail hearings and so reduce the backlog mentioned in the previous item.


Just a quick reminder that Collinson Grant does a lot more than advise clients in all sorts of organisations about the complexities, constraints and opportunities presented by employment law. Our consultants also provide support regularly on: employee relations, reward, restructuring, recruitment, leadership and HR strategy. And we have well-honed skills in operations: managing and reducing costs, organisational design, process improvement, procurement and managerial controls. Do ask if you would like to know more.


If you would like to discuss this or any other issue facing your organisation please speak to your usual contact at Collinson Grant or Peter Howarth on 0161 703 5600

Although care has been taken in the preparation of this Newsletter, Collinson Grant cannot accept responsibility for errors, omissions or advice given. Readers should note that only Acts of Parliament and Statutory Instruments have the force of law and only the courts can authoritatively interpret the law.