In this issue we look at topical employment law developments and catch up on a round up of recent dismissal cases involving gross misconduct.

Gender Pay Reporting

Employers with 250 employees or more will be required to publish gender pay gap information if new regulations come into force.

Background

The Equality Act 2010 contains a power for the Secretary of State to make regulations requiring companies to report on gender pay differences. The then Labour Government included the provision as a reserve power to compel gender pay reporting if employers failed to do so on a voluntary basis.

The Conservatives have continually resisted implementing such a provision in favour of their 2011 voluntary disclosure initiative "Think, Act, Report," combined with an obligation for Tribunals to order employers to carry out an equal pay audit where they lose an equal pay or pay- related discrimination claim – that provision is now in force.

Although many companies signed up to the voluntary disclosure initiative, so far only five companies have actually published their gender pay gap information.

Recent developments

The Liberal Democrats have expressed their support for mandatory gender pay gap reporting and, having put pressure on the government, have recently secured an amendment to the Small Business, Enterprise and Employment Bill which will compel the Secretary of State to make regulations requiring companies with at least 250 employees to publish information on gender pay differences. The Secretary of State will have 12 months to do so once the Bill is passed.

The Secretary of State has broad powers to prescribe what information will need to be provided, in what form, and the manner and time of publication.

The penalty for an employer who fails to comply could be a criminal fine of up to £5,000 or civil enforcement measures. 

It is the government's intention to pass the Bill before Parliament is dissolved on 30 March 2015, and consequently before the General Election, but clearly it is unlikely that we will see any draft regulations until after the election. Final amendments were made to the Bill in the House of Lords and it has now been passed to the House of Commons for consideration.

It is of course possible that a new government could repeal this provision, but given the support for this issue expressed by both Labour and the Liberal Democrats, this is probably only likely if a Conservative (majority) government takes office.

If implemented, the unfortunate consequence for larger employers is that they will have both the new gender pay gap reporting obligations and the possibility of being ordered to carry out an equal pay audit in the event that they lose a relevant Tribunal claim.

Right to be accompanied: revised ACAS Code of Practice on Disciplinary and Grievance Procedures and non-statutory guidance

The new ACAS Code of Practice on Disciplinary and Grievance Procedures took effect from 11 March 2015.  It confirms that employers must agree to a worker's request to be accompanied to a disciplinary or grievance meeting by any chosen companion provided that the companion falls within one of the 3 statutory categories i.e. a fellow worker, a trade union representative or trade union official.

The old ACAS Code stated that an employer could challenge the choice of companion where the choice wasn't reasonable, and gave examples of a companion based at a remote geographical location where someone suitable and willing was available on site, or a companion whose presence would prejudice the hearing.

The Code now clarifies that the requirement for a worker to make a "reasonable" request to be accompanied applies only to the making of the request, not to the worker's choice of companion. What constitutes a reasonable request will depend on the circumstances of each individual case.

This reflects the decision of the EAT in Toal -v- GB UK Oils Ltd [2012]. A copy of our previous client alert on this case be found HERE..

ACAS has also updated its non-statutory guide to explain that employers can allow employees to be accompanied by companions outside of the specified statutory categories should they wish.

The standalone penalty for an employer refusing to comply with this right is two weeks' pay. However, if this is raised as part of an unfair dismissal claim or some other claim arising out of a dismissal or grievance to which the ACAS Code applies, the Tribunal could potentially uplift compensation by up to 25% if it deems there has been an unreasonable failure by the employer to comply with the Code. It remains to be seen in subsequent case law what approach the Tribunal will take.

Employers should update their disciplinary and grievance procedures to reflect this if they have not already done so.

A copy of the Code can be found HERE.

A copy of the non-statutory guidance can be found HERE.

Recent statistics on ACAS early conciliation / Employment Tribunal claims

Early Conciliation

ACAS has published its most recent set of statistics on early conciliation of Employment Tribunal claims.

Of most interest are the results that for cases notified to ACAS between April and September 2014:

  • only 23.2 percent  progressed to a Tribunal claim;
  • 16.3 percent resulted in a COT3 settlement; and
  • 60.5 percent of cases were taken no further.

Employers will be interested to note the high percentage of cases raised at the early conciliation stage that progressed no further.

Details of the statistics can be found HERE.

Employment Tribunal

Employment Tribunal statistics have also recently been published, for the period October to December 2014. These indicate that although the number of claims remains low overall, there has been a small increase in the number of claims in the last quarter.

The number of single claims received by Employment Tribunals in the period October to December 2014 was 4,386, 12 percent fewer than in the same period of 2013, but a slight increase on the quarter July to September 2014.

Further details of these statistics can be found HERE.

Government response to consultation on zero hours contracts exclusivity ban

The government has published the results of its Banning Exclusivity Clauses: Tackling Avoidance consultation on the proposed ban of exclusivity clauses in zero hours contracts. As a result of the consultation, draft regulations have been issued containing anti-avoidance measures. These include the right for zero hours workers not to be subjected to a detriment should they work for other employers, and financial penalties for employers seeking to avoid the ban. The ban on exclusivity clauses is extended to low income workers as well as zero hours workers.

Unfair dismissal: employee potentially fairly dismissed for posting offensive but non-work related tweets on Twitter

The EAT has overturned a Tribunal decision that an employee was unfairly dismissed for posting offensive tweets on Twitter. The EAT highlighted the more public nature of Twitter when compared to other forms of social media, and held that the employee had not taken any steps to restrict his Twitter account to private use. Further, it was not necessary for the employer to show that any of its customers had actually been offended by the tweets, simply that there was the potential for offence and resulting damage to the company's reputation.

Game Retail Limited v Laws

Game Retail Limited ("Game") has over 300 stores in the UK.  Game uses social media tools including Twitter as part of its corporate marketing strategy. Each store has its own Twitter account,  managed by the store manager, and followed by a large number of customers.

Mr Laws was employed as a Risk and Loss Prevention Investigator and was responsible for about 100 stores.  He followed the stores using his personal Twitter account, with a view to monitoring their tweets for inappropriate activity e.g. offers of merchandise at reduced prices.  His Twitter profile made no reference to him being a Game employee or being associated in any way with Game.  However, out of the 100 stores he was following, some 65 stores followed his personal Twitter feed in return and potentially their customers.  Many of these stores had begun to do so when encouraged by a tweet from one of the store managers, which Mr Laws had then retweeted on his personal Twitter feed.     

Game was notified by a store manager about potentially offensive tweets that Mr Laws had posted.  The tweets included many expletives and were expressions of his opinions on various non-work related, personal issues, some of which Game felt were discriminatory on the grounds of race and disability. After a disciplinary process, Mr Laws was summarily dismissed for gross misconduct. He claimed unfair dismissal.

Employment Tribunal decision

The Employment Tribunal found that he had been unfairly dismissed. 

The Tribunal held that Game's decision to dismiss fell outside the band of reasonable responses. It held that Mr Laws' Twitter feed had been for private use, (partly on the basis that the posts had been made using his personal mobile phone and in his own time), and that Game had never established that any member of the public or any of its employees had access to or seen the offensive tweets, or had associated Mr Laws with Game.  Further, Game's disciplinary policy did not expressly state that offensive or inappropriate use of social media constituted gross misconduct. 

Game appealed.

EAT judgment

The EAT upheld the appeal and remitted the case to a new Tribunal.  Dealing with the Tribunal's specific findings:

Private use

The EAT held that the Tribunal had erred in finding that Mr Laws' use of Twitter had been limited to his own private use for the following reasons: 

  • His followers were not restricted to friends or social acquaintances;
  • He hadn't made any attempt to use the Twitter privacy restriction settings;
  • He hadn't set up different Twitter accounts, one for monitoring as part of his work and another for personal use; and
  • He was aware, (and indeed had encouraged via retweeting), that his tweets could be accessed by 65 stores and potentially their customers.

The EAT stated that a balance had to be drawn between an employer's desire to remove or reduce reputational risk from the use of social media by employees on the one hand, and an employee's right to freedom of expression on the other.  On the facts, Mr Laws' tweets could not be considered private. 

Offence

The EAT held that the Tribunal had also erred by focussing on whether Mr Laws' tweets had actually offended someone.

The question that it should have asked was whether Game had been entitled to reach the conclusion that the tweets, which were accessible by 65 of its stores and potentially their customers, might have caused offence.

Content

Finally, the EAT held that the Tribunal had wrongly considered that it was relevant that Mr Laws had not posted anything derogatory about Game or anything that might reveal he was their employee.  Given that he was following 100 stores, and 65 stores were in turn following him, there was clearly some connection with the company which the Tribunal had failed to address.

Comment

This is the first reported EAT decision looking at misuse of Twitter in the context of an unfair dismissal claim and the EAT's findings are helpful to employers. However, the EAT stressed that each case must turn on its specific facts and declined to provide general guidance for dealing with such cases.

The EAT did say that the following "obvious" factors will usually be relevant when considering the fairness of a dismissal based on misuse of social media:

whether the employer has an IT/social media policy;

 the nature and seriousness of any alleged misuse;

whether there have been any previous warnings for similar misconduct in the past; and

any actual or potential damage to customer relationships.

It is clear from the EAT's judgment however that whether or not the social media tool in question has been used privately is an important factor.  In Smith v Trafford Housing Trust [2012], the High Court held that Facebook posts had not acquired a sufficiently work-related context partly because the employee had restricted access to his profile to "friends of friends".  In Laws, the EAT contrasted the more public nature of Twitter and the fact that Mr Laws had not restricted his settings at all. 

Finally, and unsurprisingly, the EAT's judgment emphasises that employers should clearly set out what conduct is acceptable and what is not in their  IT/social media policies.

Unfair dismissal: employer does not need to investigate "every line of defence" in a misconduct investigation

The Court of Appeal has upheld a decision of the EAT that an employee was fairly dismissed for gross misconduct.  The employer had carried out a reasonable investigation and there was no need for it to investigate each "line of defence" put forward by the employee.

Shrestha v Genesis Housing Association Ltd.

Mr. Shrestha used his own car to travel to see clients and was entitled to claim expenses for the mileage travelled. His employer conducted an audit of his mileage claims which revealed unusually high mileage, in some cases nearly twice as far as the distances calculated by the AA/RAC route-finder.

The employer initiated a disciplinary investigation which compared the mileage claimed by Mr. Shresha over the relevant period not just against the recommended AA/RAC figures but also against the same journeys carried out by him in the previous year. The distances claimed had significantly increased. 

At the disciplinary hearing Mr. Shrestha gave several explanations for the mileage discrepancies: difficulties in parking, one-way road systems and road works causing closures or diversions. He was questioned on two of the journeys he had claimed for but not in respect of every journey. The disciplinary manager considered Mr. Shrestha's explanations but concluded that they could not provide a plausible explanation for the high mileage on every journey and found that Mr. Shrestha was guilty of gross misconduct.

Following an unsuccessful appeal, he claimed unfair and wrongful dismissal. He argued that Genesis had had not carried out a reasonable investigation. It should have carried out further enquiries such as contacting the local authority to check the parking situation and attempting to recreate each journey in order to validate his claims that road works and parking problems had increased his mileage. The Tribunal and EAT rejected his claims.

Mr. Shrestha submitted that the Tribunal should have considered the reasonableness of what the employer had failed to do, as well as the reasonableness of what it had done and an employer was obliged to investigate "each possible line of defence" raised by an employee.

Court of Appeal

The Court of Appeal dismissed Mr Shrestha's appeal.

It determined that the investigation should be looked at as a whole when assessing the question of "reasonableness."  Whilst an employer should consider any explanations for the misconduct put forward by an employee, the extent to which it should investigate them will depend on the circumstances of the case. However, it was wrong to suggest that an investigation could not be reasonable unless every line of enquiry was pursued.

The Tribunal had been entitled to conclude that a reasonable investigation had been carried out.

Comment

Although an unsurprising result, this is a helpful decision for employers. It is a reminder that an employer only has to carry out a reasonable investigation to satisfy the Burchell test, and this should be assessed holistically.

This judgment may well be helpful to employers in those cases where employees seek to delay or frustrate a disciplinary or dismissal process with numerous and/or spurious "lines of defence" and/or requests for further investigations.

Wrongful dismissal: Sending a pornographic email from a work account justified summary dismissal for gross misconduct despite employer discovering it years after it was sent

The High Court has held that an employer was entitled to dismiss a senior employee without notice or notice pay after it discovered he had sent a pornographic email from his work account both externally and to a junior female employee. This was the case even though i) the employer had already given the employee notice of redundancy (prior to discovering the email) ii) the email had been sent 5 years prior to it's discovery and iii) the email came to light because the employer was looking for something to justify dismissal. 

Williams v Leeds United Football Club

Leeds United Football Club (the club) employed Mr Williams as a director.  The club decided to restructure and in June 2013 instructed forensic investigations to look for evidence which would justify dismissing Mr Williams and other senior managers for gross misconduct. The club gave notice of redundancy to him on 23 July 2013.  The following day it discovered evidence that 5½ years earlier he had forwarded an obscene and pornographic email from his work email account to a friend at another football club. 

Following a disciplinary process, the club dismissed Mr Williams  for gross misconduct without notice or pay in lieu of notice.

Mr Williams issued a claim for damages for his 12 month notice period in the High Court claiming wrongful dismissal.  The club subsequently discovered that Mr Williams had also forwarded the email in question to a junior female employee at the club and another friend of his outside the club.  It argued that it could rely on these acts as well as the initial email which led to the dismissal to justify the dismissal.

High Court decision

The Court dismissed Mr Williams' claim. It held that by his conduct he had breached the implied term of mutual trust and confidence such that he was in repudiatory breach of contract entitling the club to dismiss him immediately without notice.

It held that, following Boston Deep Sea Fishing and Ice Company v Ansell [1888], the club was entitled to rely on conduct discovered after the dismissal to justify its decision to dismiss.

In assessing whether the breach of contract by Mr Williams was serious enough to be a repudiation of the contract, the Court confirmed that it was necessary to look at all the circumstances of the case including the nature of the contract, the relationship it creates between the parties and the consequences of the breach. In an employment context, the relevant circumstances include the nature of the employer's business and the position held by the employee.

In this case, Mr Williams' conduct was a breach of the implied term of mutual trust and confidence and sufficiently serious to amount to a repudiation, given that:

  • Mr Williams held a very senior management post at the club.
  • The images in the email were obscene and pornographic.
  • Sending the images to a junior, female, employee by a senior manager who had significant influence over her career might well have caused offence and left the club vulnerable to a harassment claim.
  • The club's reputation was important when securing and retaining supporters and sponsors. The images were sent from an email address containing the name of the club and would have been of interest to the media, so could easily have damaged the club's reputation.

In relation to various arguments made by Mr Williams, the Court also made the following findings:

  • The fact that Mr Williams had not been provided with a copy of the club's email and internet policy was not important. It should have been obvious to him, as someone so senior, that the club's email system should not be used to send pornographic images.
  • It was not relevant that Mr Williams had continued to work for the club for some five and a half years after he forwarded the emails.  The relevant issue was whether Mr Williams' conduct was sufficiently serious to amount to a repudiatory breach when it was discovered by the club.
  • The fact that the club was looking for evidence to justify dismissal and was motivated by its own commercial and financial interests, did not prevent it relying on the repudiatory breach to dismiss.

Comment

It comes as no great surprise that the High Court found that forwarding pornographic material from a work email account amounted to a serious breach of contract entitling the employer to dismiss a senior employee without notice. Previous cases have held that all breaches of the duty of trust and confidence are "repudiatory" and it is not necessary to go on and consider the seriousness of the breach

Equally, it is well-established that for a breach of contract claim, an employer can rely on conduct coming to light after dismissal. Employers should note that the same is not true of unfair dismissal claims although subsequently discovered conduct can be used to reduce compensation.

There are generally more cases reported where employees claim their employer has breached the implied duty of trust and confidence so it is interesting to see one where the employer relies on this term.