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Key Employment Law Developments: discrimination; vicarious liability; whistleblowing

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Summary: Our November update outlines key employment law developments over the last month. These include the high-profile Supreme Court ‘gay cake’ decision and cases on vicarious liability and individual liability in whistleblowing claims.

No direct discrimination in ‘gay cake’ case

In a widely-reported decision, the Supreme Court has held that there was no direct discrimination on the grounds of sexual orientation when a baker refused to bake a cake bearing a message supporting gay marriage.  The claimant, an LGBTQ activist, sought to order a cake with the wording ‘Support Gay Marriage’.  The bakery, whose owners are Christian, cancelled the order due to their religious beliefs.

The claimant brought claims under Northern Irish regulations which prohibit sexual orientation discrimination in the provision of goods and services.  The lower courts in Northern Ireland upheld the claim of direct discrimination, on the basis that there was an indissociable link between the group of people who would be advantaged by the message of support for gay marriage and a particular sexual orientation.

The Supreme Court allowed the bakery’s appeal.  The lower courts had found that the bakery would have served the claimant had the cake not borne a message supportive of gay marriage, and also would have refused to provide a cake with the same message to a heterosexual customer.  Therefore, the real reason for the less favourable treatment was the message on the cake, not any particular characteristic of the customer.  The real reason (‘the message’) was not a straightforward proxy for a protected characteristic of the messenger, so there was no direct discrimination.

Why this matters

Although this case relates to specific Northern Irish legislation, the relevant test is identical to that which applies to the rest of the UK under the Equality Act 2010, in relation to both the employment sphere and the provision of goods and services.  The Supreme Court’s decision provides some clarity on the correct application of the test, but some uncertainty remains as to the degree of proximity between ‘the message’ and ‘the messenger’ that is required for a finding of direct discrimination. 

Lee v Ashers Baking Company


Recent cases on an employer’s vicarious liability for the acts of its employees

Two recent cases have provided further guidance as to when there is a sufficiently close connection between an individual’s employment and his wrongful conduct to hold his employer vicariously liable.

In Bellman v Northampton Recruitment Ltd, the Court of Appeal held that an employer was liable for damage caused by its Managing Director (M) to one of its Sales Managers (B) at an ‘impromptu after-party’ at a hotel following the office Christmas party.  M had arranged taxis to the hotel and had continued to pay for drink at the company’s expense.  After a few hours, an argument broke out relating to a work matter, as a result of which M lectured the staff present about his authority to run the company.  B questioned M, and a fight broke out during which M punched B, causing brain damage. 

The Court of Appeal held that although the event at the hotel was not an extension of the official works party, the employer was nonetheless vicariously liable.  In doing so, the Court considered two key questions: (i) what are the functions and duties entrusted to the employee as part of his job, to be interpreted broadly; and (ii) is the connection between his job and the wrongful conduct sufficient to render the employer vicariously liable?  In this case, it was relevant that M had a very broad role and extensive autonomy, as the company’s sole owner and its most senior employee.  Further, the fight happened in a context in which he was enforcing his authority by giving a lecture to his staff. 

The second case, WM Morrison Supermarkets Plc v Various Claimants, concerns a group action brought by a supermarket’s employees for misuse of personal data and breach of confidentiality.  One of the employer’s IT auditors had published the employees’ personal data online and disclosed it to various newspapers, in furtherance of a personal grudge against his employer.  The Court of Appeal upheld the High Court’s decision that the employer was vicariously liable for damages to the claimants for the misuse of their personal data.  In doing so, it considered broadly the same questions as it did in the Bellman case and found that there was a sufficiently close connection between the wrongdoer’s conduct and his employment.

The Court did not agree with Morrison’s argument that the misconduct occurred outside the course of employment, finding that there was a ‘seamless and continuous’ chain between the actions with which the employee was entrusted and the disclosure of the data.  Significantly, the fact that imposing vicarious liability could be seen as furthering the employee’s aim of doing harm to Morrisons did not change the Court’s analysis. 

Why this matters

These cases illustrate the potentially broad scope of an employer’s vicarious liability for the acts of its employees, including incidents that occur in a social setting, as well as the misconduct of a rogue employee with nefarious motives.  Employers would be well-advised to bear this in mind when training their employees on the expected standard of behaviour.  The Morrisons case is notable also as the first group action for data misuse.  We can expect increasing activity in this area following the introduction of the General Data Protection Regulation earlier this year.  Morrisons has already indicated its intention to appeal.


Individuals can be personally liable for dismissing a whistleblower

The Court of Appeal has confirmed that individuals can be liable for the unlawful dismissal of a whistleblower, in addition to the employer.  The claimant CEO had made various protected disclosures relating to corporate governance matters.  Some months later, one of the company’s Non-Executive Directors (NEDs) emailed the other to tell him to dismiss the claimant from his role.  The second NED duly carried out that instruction.

Rejecting the NED’s appeal, the court agreed with the decision of the Employment Appeal Tribunal that there was nothing to prevent the NEDs from being personally liable to pay compensation for losses that flow from the unlawful detriment of dismissing the claimant.  This is in contrast to an ordinary claim for unfair dismissal, which can only be brought against an employer. 

Why this matters

This decision may encourage dismissed whistleblowers to bring claims for detriment against the dismissing manager(s), in addition to claims for unfair dismissal against their employer.  This may be deployed by claimants as a litigation tactic, in order to put pressure on the organisation to settle.  Detriment claims against managers will also mean that a successful claimant could potentially recover an additional injury to feelings award against the manager, an award which is not available in a whistleblowing dismissal claim.  The burden of proof for a detriment claim is also lower than it is for an unfair dismissal claim.

Timis and anor v Osipov


Government consultation on ethnicity pay reporting

In response to a study which found that only 11% of employers collect data on ethnicity pay, the government has determined that mandatory ethnicity pay reporting is necessary to tackle barriers to progression for minorities.  The government has launched a consultation to consider key questions including:

  • What ethnicity pay information should be reported?
  • What supporting or contextual information should be reported?
  • Should an employer that identifies disparities in ethnicity pay in their workforce be required to publish an action plan for addressing these disparities?
  • Which employers should report ethnicity pay information?

The consultation closes on 11 January 2019. 

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