Employment Law Top Ten of 2019

How will employers and HR professionals remember 2019? Brexit (again), the third prime minister in three years, and more Parliamentary challenges and votes than you can shake a big stick at? Parliament and politics aside, at the end of the year, we take a moment to look back at some of the most important Employment law cases and legislation from 2019.

This year, our Employment Law Top 10 countdown to number one is brought to you in the form of well-known films. Sit back, relax and grab some popcorn…

Mall Cop

In a victory for common sense, this year’s number ten[1] was one of our 2018 “Top Ten” rulings but was overturned this year by the Grand Chamber of the European Court of Human Rights (ECtHR). It ruled in favour of the Spanish supermarket employer, holding that no violation of the Article 8 of the European Convention on Human Rights right to respect for private and family life had occurred following the installation of covert video surveillance to detect theft in a store. Following high levels of theft, a few cameras were installed above tills for two weeks. The store did not tell employees they were being recorded to detect criminal activity. Footage soon showed several employees stealing or helping customers steal. Those dismissed claimed unfair dismissal and that the surveillance was unlawful. The Spanish High Court disagreed, holding it was justified by the legitimate aim of detecting theft, and was appropriate, necessary and proportionate.

However the ECtHR ruled that it breached the Article 8 right to a private life. In reversing that decision this year, the Grand Chamber ruled that the employer’s legitimate and necessary reasons were the suspicion of theft, the desire to prevent further thefts and to catch and punish those responsible. It was proportionate because there should not be a high expectation of privacy on a public shop floor; surveillance was for a short time and stopped when those responsible were identified; and only those people necessary saw the recordings. However, surveillance still requires great care, covert or not. Not all cases will involve criminal activity and employers must comply with data protection obligations such as Data Protection Impact Assessments and informing employees where appropriate. The ICO’s (now very old) Employment Practices Data Protection Code on Monitoring at Work should still be referred to (e.g. only being used for a specific investigation and ceasing once completed) until new guidance is produced.

Unforgiven 

At number nine, rules on criminal records disclosure may have to change following the Supreme Court’s decision[2] that certain elements breach Article 8: the right to respect for private and family life. This is where blanket rules require automatic disclosure of all convictions where a person has more than one, and that some childhood cautions be disclosed indefinitely. Four individuals challenged this. The first was convicted of driving and carrying children under 14 without a seatbelt in 1996 and 1998. In 2014 she was refused a position as an adult social carer following Disclosure and Barring Service (DBS) checks. The second was cautioned and given a conditional discharge in 1999 after the theft of a sandwich and a book worth 99p when she was 28 and homeless with severe mental health problems. The third, in 2006 aged 13, received two reprimands for sexually assaulting two younger boys. There was exceptional mitigation including indications of consent, “dares” and curiosity by all three boys. In 2011, working at a library, he was required to apply for DBS check. The police proposed to disclose the reprimands and the mitigation, so he withdrew his application and lost his job. The fourth was given a conditional discharge for assault (ABH) in 1982 when he was 16, after a minor fight between boys on the way home from school. Aged 47, with no further offences, he is qualified to work as a teaching assistant but unable to find work.

The individuals argued that the categories of discloseable conviction or caution were too broad, highly prescriptive, mandatory and not subject to individual review. Although holding that generally the pre-defined categories were not disproportionate, the Supreme Court ruled that: a) the requirement to disclose even minor multiple convictions was disproportionate, because it applied irrespective of the type of offence, their similarity, their number or time intervals between them; and b) there was no distinction between warnings and reprimands to young offenders given instead of prosecutions, which are meant to be instructive and are not convictions. The Court held in relation to the first three individuals that the current system was incompatible with Article 8. In relation to the fourth, however, ABH is a serious offence and is among the offences sufficiently serious to require disclosure.

Not a Penny More, Not a Penny Less

6 April 2019 saw the introduction of number eight, just about the only noteworthy piece of new Employment law legislation to take effect in 2019[3]. This was the requirement for itemised payslips to be given to “workers” as well as employees, and to state the hours worked where pay varies depending on the amount of time worked. The number of hours must be given either as a single aggregate figure or as separate figures for different types of work or rates of pay. It is designed to make it easier for hourly paid staff to ensure that they are being paid correctly. Failure to provide one, or provide one with the correct information, may entitle the individual to complain to an Employment Tribunal (ET) and even have unnotified deductions reimbursed including where the employer was entitled to make the deduction. Employers who have previously not had to consider whether staff might be “workers” rather than self-employed contractors should have used this as an opportunity to ensure they are clear on the employment status of all staff. This will become even more important in April 2020 when “workers” will be entitled to a statement of employment particulars from day one of their engagement – more on this to follow in January’s “Looking Ahead to 2020” article.

Raiders of the Lost Ark (of the covenant!)

At number seven is the case of Ms Tillman[4] who, after leaving a headhunting business, wanted to start working for a competitor. Ms Tillman’s previous contract of employment contained restrictive covenants including restricting her from being directly or indirectly engaged or concerned “or interested in” any business carried on in competition with her previous employer for 6 months after leaving. Ms Tillman considered that she was able to work for the competitor because this wording was enough to include holding shares in a competitor and was therefore unreasonably wide. She argued that the whole covenant was unenforceable. After initially losing in the lower courts, the Court of Appeal agreed with Ms Tillman, but she lost in the Supreme Court. The Supreme Court agreed that the clause, and specifically the words “interested in”, did cover a shareholding, even if this was minor, and so was an unreasonably wide and unenforceable restraint of trade.

However, it also ruled that in certain circumstances, it was possible for words to be deleted from covenants, so long as it was not necessary to add to or modify the remaining wording, and the deleted words did not change the sort of contract the parties had initially entered into. Here, removing the words “or interested in” from the clause did not generate any major change in the overall effect of the restrictive covenants. The Court was able to remove the words and therefore the clause was enforceable, preventing Ms Tillman from working for the competitor for those 6 months. Whilst helpful for employers, it does not give employers free rein to change restrictive covenants after the event to make them enforceable – only, in certain circumstances, to remove words which do not result in a major change to the nature of the covenant. Employers should revisit restrictive covenants which could, as here, be interpreted to include minority shareholdings and render the covenant unenforceable.

Last Christmas

Last December’s judgment in this case narrowly missed our 2018 “Top Ten” mailing, but deserves attention this year at number six, a landmark ruling[5] on the meaning of unfavourable treatment concerning “discrimination arising from disability” under the Equality Act 2010. Mr. Williams had a disability and originally worked full-time. When he later applied for his ill-health retirement pension (aged 38) he was working part-time following reasonable adjustments. The enhanced element of his pension was calculated on his actual (i.e. part-time) salary at his retirement date. Mr. Williams argued that basing it on his part-time salary was “unfavourable treatment”. After initially winning in the Employment Tribunal, Mr Williams lost in all other courts including the Supreme Court. The Supreme Court identified two simple questions. What was the relevant treatment; and was it unfavourable to Mr. Williams? The treatment was the award of a pension which was payable immediately. This was not unfavourable.

In fact, it was favourable, because if Mr. Williams had been able to work full-time (i.e. if he had not been disabled), he would not have had an entitlement to a pension at all until age 67. As well as providing a common-sense approach in circumstances where the employer had correctly already made reasonable adjustments by reducing his hours, the Supreme Court’s decision is a welcome clarification of the legal position and provides reassurance for employers whose pension schemes or insurance contracts offer certain benefits in cases of disability, because it makes it less likely that the structure of such benefits will be regarded as giving rise to unfavourable treatment, requiring to be justified. Blake Morgan acted for the Pension Scheme Trustees and Swansea University in this case.

For Your Eyes Only

Can an employee covertly record a meeting without committing misconduct? Potentially, if the recording is not necessarily to entrap or gain a dishonest advantage, according to the Employment Appeal Tribunal (EAT)[6] at this year’s number five. Ms Stockman’s working relationship with a director became strained. She had a meeting with HR and covertly recorded it. Ms Stockman raised a grievance including alleged protected disclosures, her behaviour led to disciplinary proceedings, and mediation with the director failed. The employer concluded the working relationship had irretrievably broken down and dismissed Ms Stockman. The dismissal was found to be unfair, but the employer alleged that compensation should be nil as it would have dismissed her for gross misconduct for making the covert recording. It also alleged breach of the implied term of trust and confidence.

The EAT ruled that in some circumstances a covert recording (now not uncommon) will not necessarily be misconduct undermining trust and confidence. It may be to keep a record, protect the employee from misrepresentation or enable them to obtain advice. As for gross misconduct, blameworthiness was key. Did the meeting include confidential business or personal information? Had the employee lied about it or been told not to make a recording? Were they inexperienced or distressed? Ms Stockman had recorded a single meeting about her own position, involving no confidential information and no other people and the ET found there was no intention of entrapment. Furthermore, covert recordings were not covered in the employer’s disciplinary policy. The EAT did say, however, that employees and employers should say if there is any intention to record a meeting.  Except in the most pressing circumstances, it will generally (but not necessarily) amount to misconduct not to say so. Employers should consider dealing with covert recordings in policies and contracts, acting consistently, and consider intellectual property rights to protect from further dissemination e.g. online.

Homeward Bound

In a useful case for employers in the minefield of employee suspension, at number four the Court of Appeal held[7] that there is no breach of the implied term of trust and confidence where there is reasonable and proper cause to suspend an employee. There is no test of “necessity”. Ms Agoreyo had taught for 15 years and began teaching a class of 5 and 6 year-olds. Two of them had behavioural and other difficulties. Previous teachers had struggled and managed their behaviour by calling in another adult to ask the child to leave. Ms Agoreyo did not do this but within a day asked the headmistress for help. Over the following weeks, although the headmistress was setting up support, three times Ms Agoreyo used force to remove the children. After five weeks she was suspended, despite the headmistress already having investigated two incidents and finding the force reasonable. Having less than two years’ service, Ms Agoreyo claimed breach of contract, namely that her suspension breached the implied term of trust and confidence. The Court accepted that, in some cases, suspension will not be reasonable and may be a breach of contract depending on the fact and manner of suspension, previous events and a potential “knee-jerk” reaction.

Here, however, the allegations were serious involving safeguarding very young children, and the response of suspension was a reasonable and proper one to allow for necessary investigation. Employers should always remind themselves of the ACAS Code of Practice on Disciplinary and Grievance Procedures and the accompanying Guidance, as well as separate ACAS Guidance on Suspension. These publications contain important principles of suspension, many useful examples and alternatives. Although this case concerned breach of contract, it will also be relevant to constructive dismissal claims where a fundamental breach of contract must be established.

Daddy Day Care

At number three are the two Shared Parental Pay cases[8] which featured in both 2017 & 2018’s “Top Ten”, and this year reached the Court of Appeal. It ultimately sided with the employers in both cases. Mr Ali argued that when he took Shared Parental Leave (SPL) he should receive the same pay as enhanced maternity pay (apart from the first two weeks) because both SPL and maternity leave were for the care of the child. The Court disagreed, confirming that maternity leave is for “the health and wellbeing of the pregnant and birth mother” whereas SPL is for “the care of the child“. Mr Ali was paid the same as a woman on SPL, so there was no direct sex discrimination and he was not comparable to a woman on maternity leave. Mr Hextall claimed indirect discrimination, arguing that paying only the statutory rate for those taking SPL placed men at a disadvantage compared to women, and men were less likely to take it. The Court rejected this, holding that his was, in fact, an equal pay claim, and the implied “sex equality clause” does not apply to special treatment in connection with pregnancy or childbirth. The Court considered that an indirect discrimination claim would also have failed on the same basis as Mr Ali, but highlighted the real issue: men are disadvantaged compared to women not through SPL, but because men cannot bear children. Will this case make it into our “Top Ten” four years in a row? Permission has been granted to appeal to the Supreme Court so watch this space in 2020, as well as a potential legislative shakeup of family leave under the Conservative Government.

Private Lives

Test yourself on this year’s number two: can you use “consent” as a lawful basis for processing employee (or job applicant) personal data? Answer: No (except possibly in the most trivial of circumstances). Were you right? Congratulations, you may have just saved your employer a €150,000+ fine! It is now well established that consent, which has to be freely given, is all but impossible for employers to rely on due to the imbalance in the nature of the employer/employee relationship, conditions around how “consent” is interpreted under the GDPR and the ease with which individuals must be able to withdraw it. This is what PriceWaterhouseCoopers[9] in Greece found out to its cost when it used consent as its lawful basis. This was found by the Greek data protection authority to be inappropriate, as the processing of personal data was intended to carry out acts directly linked to the performance of employment contracts, compliance with legal obligations to which the employer is subject, and the smooth and effective operation of the company as its legitimate interest.

Giving employees the false impression that it was using consent as its basis, whilst in reality using a different one without informing them breached the principle of transparency and the various obligations to provide specified information to individuals under the GDPR. Now for the bonus question: how should this information be conveyed? Answer: through carefully drafted staff and applicant Privacy Notices, and, under the Data Protection Act 2018, an “appropriate policy document” for criminal offence information or “special category” data which includes for example, personal data revealing racial or ethnic origin or data concerning health or a person’s sexual orientation.

The Whistleblower

And so to this year’s number one, which shows there’s no hiding the real reason for dismissal, as was established just recently by the Supreme Court[10]. Ms Jhuti had made protected disclosures (whistleblowing) but was persuaded by her manager to retract them as a misunderstanding. She was then subjected to an unreasonable performance review process which included bullying and harassment and a pretence that her performance was inadequate. Another manager, unaware of the protected disclosures, was appointed to decide whether or not to dismiss Ms Jhuti during her absence for stress, anxiety and depression. She was dismissed.

However, the Supreme Court ruled that, while the protected disclosures had played no part in the dismissing manager’s thought process (she thought she was dealing purely with performance issues), the real or principal reason for dismissal by Ms Jhuti’s original manager (the protected disclosures) should be taken into account by the ET – here resulting in an automatically unfair dismissal. Whilst obscuring the real reason for dismissal behind a fictitious reason may be rare, and normally there is no need to look beyond the reason of the decision-maker, employers should ensure decision-makers know all the facts, because the ruling will apply to ‘ordinary’ as well as ‘automatically’ unfair dismissal.

Season’s Greetings and wishing you a very Happy New Year from the Employment, Pensions, Benefits and Immigration law team at Blake Morgan.

[1] López Ribalda and Others v. Spain, European Court of Human Rights Grand Chamber, 17 October 2019

[2] (R (on the application of P, G and W) (Respondents) v Secretary of State for the Home Department and another (Appellants), Supreme Court, 30 January 2019

[3] The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 and Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No. 2) Order 2018

[4] Tillman v Egon Zehnder Ltd, Supreme Court, 3 July 2019

[5] Williams v The Trustees of Swansea University Pension & Assurance Scheme and another, Supreme Court, 17 December 2018

[6] Phoenix House Limited v Stockman, Employment Appeal Tribunal, 5 July 2019

[7] The Mayor & Burgesses of the London Borough of Lambeth v Agoreyo, Court of Appeal, 5 March 2019

[8] Ali v Capita Customer Management Ltd and Chief Constable of Leicestershire Police v Hextall, Court of Appeal, 24 May 2019

[9] Hellenic Data Protection Authority Decision No 29/2019, 31 July 2019

[10] Royal Mail Group Ltd (Respondent) v Jhuti (Appellant), Supreme Court, 27 November 2019