HR Two Minute Monthly: disciplinary procedures; restrictive covenants; the Autumn Statement

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Not reasonable to give weight to “manifestly inappropriate” warning

In Bandara v British Broadcasting Corporation, the EAT agreed with the Tribunal’s decision that a final written warning given to an employee was “manifestly inappropriate” where the relevant misconduct – shouting at a manager and apologising the next day, and not prioritising a particular news story on the BBC’s Sinhala service – plainly did not amount to gross misconduct by reference to the employer’s disciplinary policy. The EAT found that if the employer had attached significant weight to the inappropriate warning when deciding to dismiss the employee for further misconduct at a later date, rather than merely treating it as background, the dismissal would be likely to fall outside the range of reasonable responses.

In light of this decision, it would be sensible for disciplinary hearers to satisfy themselves that an earlier warning is not inappropriate before relying on it, to decrease the risk of any dismissal being held to be unfair. If an employee is dismissed for a single act of gross misconduct, employers should make clear that no previous warning is being relied on.


Tribunal must consider overall fairness of an investigation with procedural defects

Tykocki v Royal Bournemouth and Christchurch Hospitals NHS Foundation Trust emphasises that an internal appeal may not be sufficient to remedy the procedural errors made by an employer at an earlier stage of the disciplinary process. The EAT decision, which overturned a Tribunal’s decision that a healthcare assistant had not been unfairly dismissed for gross misconduct, held that the Tribunal had not fully taken into account several procedural errors, such as the employer’s failure to show the Claimant statements taken as part of the investigation (although this was remedied at the appeal stage), or the failure to carry out further investigations into new allegations raised at appeal. Although the Tribunal had considered these issues in relation to the specific allegations against the Claimant, given the seriousness of the allegations it should also have considered whether the failings impacted on the broader fairness of the investigation.

Employers should consider carrying out a full re-hearing in place of an appeal if there is a risk that the appeal would not adequately consider the wider impact of procedural failings and take appropriate steps to ensure that all relevant evidence has been obtained.


NI Court of Appeal upholds decision that refusal to make ‘gay marriage’ cake was direct sexual orientation discrimination

The Court of Appeal in Northern Ireland has upheld the County Court’s decision in Lee v McArthur and Ashers Baking Company Ltd, in which a bakery refused to make a cake for a customer which contained an image and slogan in support of gay marriage. However, the Court of Appeal disagreed with the County Court’s view that same sex marriage is inextricably linked to sexual orientation, and instead held that the discrimination took place because of the Claimant’s association with the protected characteristic of sexual orientation. The Court of Appeal also held that the bakery owners’ rights of freedom of religion and expression under Articles 9 and 10 of the ECHR did not exempt them from complying with laws against direct discrimination.


High Court upholds restrictive covenants in share purchase agreement

The High Court’s judgment in Rush Hair Ltd v Gibson-Forbes and another highlights that non-compete and non-solicitation restrictions are more likely to be viewed as reasonable under a sale agreement than in the context of an agreement between an employer and employee.

The covenants given by the seller of a hairdressing business not to employ named individuals or compete with the buyer within a two mile radius for a period of two years from completion were found by the Court to be enforceable. It was accepted that the buyer had greater bargaining power, but equally the buyer was found to have a legitimate interest in protecting the goodwill that it was purchasing. The Court also held that the non-solicitation covenant applied to the seller’s company, even though she had entered into the covenant as an individual, as for the covenant only to apply to the seller as an individual would have been meaningless and the Court felt it necessary to give it a commercially sensible meaning.

In reaching its decision on the duration of the covenants, the Court considered previous hairdressing cases where shorter periods of restraint were used and stressed that a less strict approach applied to seller/purchaser agreements. Accordingly, employers should not rely on this case in considering what would be a reasonable duration for a restrictive covenant for an employee.


Autumn Statement

The 2016 Autumn Statement, delivered on 23 November 2016, included several changes relevant to employers. In particular:

  • fewer benefits in kind will attract relief from tax and national insurance contributions under salary sacrifice arrangements from April 2018;
  • where individuals provide services to public sector bodies via a personal service company, all payments from April 2017 will be treated as employment income subject to PAYE and NICs payable by the employer, agency or third party intermediary. This is part of the Government’s continued focus on employment status;
  • the National Minimum Wage (“NMW”) rates will increase from April 2017, including an increase to the National Living Wage from £7.20 to £7.50 per hour for individuals aged 25 and over. NMW enforcement will also be strengthened;
  • employee shareholder status will be abolished for arrangements entered into on, or after, 1 December 2016; and
  • following employer lobbying, the Government has simplified its position on proposed changes to the taxation of termination payments, confirming that income tax will only be applied to the equivalent of an employee's basic pay if notice is not worked (so bonus is ignored). It has also repeated its announcement that the exemption from income tax and NICs for termination payments up to the current threshold of £30,000 will be retained, and that employer NICs will be payable on payments above £30,000. Several aspects of the proposed changes remain uncertain, but the Government’s response to its recent consultation is expected, together with draft legislation, on 5 December 2016.

Employers’ duty to afford rest breaks

Under the Working Time Regulations, workers are entitled to a 20 minute rest break if their daily working time is over six hours. However, there has been conflicting case law on a national and EU level regarding whether the right to a rest break only applies when it has been requested by the employee.

The EAT has clarified this point in Grange v Abellio London Ltd, referring to EU case law and confirming that employees have an “entitlement” to rest breaks and employers should proactively ensure that their working arrangements allow for employees to take them. The Tribunal had been wrong, at first instance, to hold that a rest break must first be requested, and only then would the employer be obliged not to refuse it. In Grange, the employee was given an instruction to work without a break, but merely giving the employee such a highly pressurised or constant flow of work that a break is not practicable may also be an effective refusal. Many employees choose not to take their breaks, but employers should note that this will not be a defence if they have not made appropriate arrangements to allow for such breaks to be taken.


Costs awarded to Respondent where litigant in person failed to properly particularise claim

Costs awards are very rarely awarded against litigants in person. Further, litigants in person are not expected to provide pleadings of an equivalent standard to those drafted by lawyers, and the Tribunal will often allow them several attempts at particularising their claims. However, in a surprising judgment in Liddington v 2gether NHS Foundation Trust, the EAT agreed with the Tribunal’s decision to make a costs award in favour of the Respondent where the Claimant, a litigant in person, had failed to articulate her complaints in lay person’s terms. The Claimant’s lack of preparation, resulting in her failure to provide the necessary information despite being given several opportunities to do so, was found to amount to “unreasonable” conduct, which the EAT found to be deserving of a costs award under the Employment Tribunal Rules of Procedure.

This decision will be welcomed by employers, who may seek to rely on it when faced with poorly pleaded claims from litigants in person, but each case will be determined on its facts. It was also helpful in this case that a number of preliminary hearings were heard by the same Tribunal judge who considered the costs award.


“Perfunctory and insensitive” redundancy consultation not fair

The EAT has overturned what it called a “troubling” first-instance decision in which a redundancy consultation conducted in a “perfunctory and insensitive” manner was found to have been fair. In Thomas v BNP Paribas Real Estate, although the Tribunal was critical of the employer on a number of factual issues – the employee was put on paid leave and told not to contact clients or colleagues immediately after being told he was at risk of redundancy, and was addressed by an incorrect first name in redundancy correspondence – it considered that the redundancy consultation fell within the reasonable range of responses and therefore that the dismissal was fair. The EAT noted the Tribunal’s failure to address these issues in concluding that the dismissal was reasonable, and remitted the case to another Tribunal.

The EAT’s decision is a useful reminder to employers of the importance of treating employees fairly during a redundancy consultation process. The danger of taking steps like a forced removal from the workplace is that it makes the consultation look like a foregone conclusion which in turn goes to the fairness of the dismissal. Any such steps should therefore be taken with caution and only where necessary.


Age discrimination: age limit lawful for police applicants carrying out state security role

The ECJ’s judgment in Gorka Salaberria Sorondo v Academia Vasca de Policia y Emergencias is an example of the high threshold that must be satisfied in order to justify an upper age limit in recruitment under the EU Equal Treatment Framework Directive. Setting an age limit of 35 for applicants to a police academy was found to be a genuine and determining occupational requirement because of the nature of the duties required by the role. Ensuring the proper functioning of the state police service was found to be a legitimate objective, and the upper age limit of 35 was found not to go beyond what is necessary to meet that objective.

The role in question may seem an obvious example of where an upper age limit could be justified, so it is interesting that the ECJ’s decision regarding proportionality relied on evidence submitted by the academy that operational performance declined from the age of 40, that officers would only be able to give a certain number of years’ service after being recruited, and that due to the average age of the current workforce there was a need to recruit younger officers. The ECJ also made the decision subject to the referring court satisfying itself of the accuracy of such information. It therefore shows the importance of gathering and presenting proper evidence if an employer seeks to defend a direct age discrimination claim.


Government proposes reform of relationship between health and work

The Department for Work and Pensions and the Department for Health have jointly published a Green Paper which seeks views on how to encourage individuals with disabilities or long-term health conditions to remain in work, and how to deal with health issues in the workplace. The Green Paper, “Improving Lives”, sets out several proposals relevant for employers, including reform of statutory sick pay to take account of phased returns, and a review of the current system of issuing “fit notes”. The consultation closes on 17 February 2017.


Data protection

The Secretary of State for Culture, Media and Sport, Karen Bradley, has confirmed that the UK will be implementing the EU-derived General Data Protection Regulation, which comes into force from May 2018, despite the Government’s intention to leave the EU. Data protection continued to attract attention this month, for example with the prosecution of an employee at Manchester Magistrates’ Court for unlawfully obtaining and selling personal data from his former employer’s computer system. The employee was fined £500 and ordered to pay prosecution costs and a victim surcharge under the current legislation.

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