Latest UK Employment Law case updates - February 2017

Employee negligence may justify gross misconduct dismissal

Adesokan v Sainsbury's Supermarkets Ltd [2017] EWCA Civ 22

The Court of Appeal has held that an employee's act of gross negligence, through dereliction of duty, can justify an employer's decision to dismiss them for gross misconduct.

Mr Adesokan was employed by Sainsbury's as Regional Operations Manager and had worked for them for 26 years. He was in charge of 'Talkback Procedure', a key company policy which involved all members of staff giving information in confidence about their working environment and relationships with other colleagues. Mr Adesokan discovered that his HR partner had tried to manipulate the Talkback scores within his region by sending an email to five store managers telling them to seek feedback only from their most enthusiastic colleagues. Mr Adesokan asked the HR partner to "clarify what he meant with the store managers", but he did not check to ensure that he had done so.

A subsequent investigation into the matter led to Mr Adesokan's eventual summary dismissal for "gross negligence on [his] part which is tantamount to gross misconduct". Mr Adesokan brought a claim for breach of contract with regard to his notice period. The judge found that although he was not dishonest, his failure to take active steps to remedy the situation had damaged Sainsbury's trust and confidence in him, which was sufficient to warrant the sanction imposed.

Mr Adesokan appealed. The Court of Appeal held that the High Court was entitled to find that his actions amounted to a serious dereliction of his duty, given the seniority of his position, the significance placed by Sainsbury's on the Talkback Procedure, and the critical role it plays in the culture of the company.

This case demonstrates that an act of gross negligence can constitute gross misconduct in some circumstances, but that such a decision will turn on the particular facts of each case. Employers should ensure that disciplinary procedures contain a definition of gross misconduct, and include wording which addresses loss of trust and confidence.

Employee may be entitled to compensation for invention

Shanks v Unilever Plc & Ors [2017] EWCA Civ 2

The Court of Appeal has upheld a High Court decision that a subsidiary of Unilever did not owe compensation to its employee for his invention, because the patent had not been of outstanding benefit to the business.

It is common knowledge that rights to an employee's invention created in the course of his normal duties belong to the employer, and that the employee is not entitled to compensation for their invention unless it can be shown that the invention confers an "outstanding benefit" on the employer in terms of money or worth; and that it was just for the employee to be recompensed. In this case, Professor Shanks brought a claim for compensation against his former employer following his invention of an Electrochemical Capillary Fill Device, which created a financial benefit to the business of around £24.5 million.

The Hearing Officer at the Intellectual Property Office held that the benefit of the patents was not outstanding in the circumstances, despite their worth. The Claimant appealed on the basis that the Hearing Officer had based his findings on the proportion of the income of the patents in relation to Unilever's total income.

The appeal was dismissed at the Court of Appeal. The Court held that there was no statutory definition of "outstanding", so it must hold its ordinary meaning. On the facts, Professor Shanks' invention did not fulfil this criterion, as the sum was "simply dwarfed by the turnover and profits of the group as a whole".

Employers should be aware that, although in this case the patent was not held to be "of outstanding value", the courts may take a different approach to smaller companies, particularly start-ups, where the financial value of the patent constitutes a larger proportion of the company's overall income. If courts follow the Hearing Officer's guidance that a 5% share of the benefit would constitute fair remuneration, this could amount to a substantial sum for a company to pay.

Disabled employee entitled to reduction in workload

The Home Office (UK Visas & Immigration) v Kuranchie UKEAT/0202/16/BA

The Employment Appeal Tribunal (EAT) rejected an employer's appeal that it took sufficient steps to make reasonable adjustments by allowing a disabled employee to work compressed hours, but failing to decrease her volume of work. The EAT agreed that the Claimant remained at a substantial disadvantage after her hours had been altered.

Ms Kuranchie suffered from dyslexia. As a result of this disability, she requested a flexible working arrangement and her employer, the Respondent, allowed her to work longer hours over a four-day week. The Respondent continued to give Ms Kuranchie the same volume of work as her colleagues after her compressed hours had been agreed. Ms Kuranchie brought a claim in the Employment Tribunal, and it was held that the Respondent had failed to make reasonable adjustments for Ms Kuranchie's disability, such as reducing her workload in order to avoid her suffering any disadvantage.

This decision was upheld on appeal. The EAT concluded that the Respondent had not taken reasonable steps to avoid the substantial disadvantage to Ms Kuranchie, even though neither she, nor a report commissioned on her dyslexia, had suggested that her amount of work be reduced.

This decision is not particularly surprising, but serves to highlight the stringent obligation on employers to adopt a proactive approach to the question of reasonable adjustments and to consider carefully whether an adjustment actually has the effect of removing a disadvantage.

Spotlight on gig economy as plumber found to be worker

Pimlico Plumbers & Charlie Mullins v Gary Smith [2017] EWCA Civ 51

After the recent Uber drivers case, the gig economy remains in the headlines after the Court of Appeal upheld the EAT decision that a plumber was a "worker" for Pimlico Plumbers, and not a self-employed contractor.

Mr Smith was engaged by Pimlico Plumbers from 2005 to 2011, and his contract referred to him as a "self-employed operative". When Pimlico terminated Mr Smith's engagement, he brought several claims in the Employment Tribunal, including amongst others, for unfair dismissal, sick pay, holiday pay and disability discrimination. To succeed in the unfair dismissal and sick pay claims, Mr Smith had to demonstrate that he was an employee for the purposes of the Employment Rights Act (ERA) 1996. For the other claims to be successful, he needed to show that he was a "worker" employed under a contract personally to do work.

Agreeing with both the Employment Tribunal and EAT, the Court of Appeal held that he was a worker, meaning that his unfair dismissal claim failed, but he was entitled to pursue his discrimination and holiday pay complaints.

Distinguishing between a worker and an employee is a fact-sensitive exercise and not always straightforward. There were several aspects of Mr Smith's case that hinted at self-employment, such as his being required to provide his own tools and equipment, and deal with his own tax and national insurance. However, ultimately the degree of control Pimlico exerted over Mr Smith was too great for him to qualify as a self-employed contractor: the Court noted that Mr Smith was required to wear a Pimlico uniform; drive a company van leased from Pimlico which bore their logo; he had to provide work personally for a minimum number of hours per week or on days agreed; and did not have an unfettered right to substitute himself for another plumber. The fact he was also subject to a restrictive covenant which precluded him from working as a plumber in any part of Greater London for three months following the termination of the relationship was considered persuasive.

The decision follows a recent trend of courts conferring employment rights on individuals operating in the gig-economy – and whilst Pimlico is likely to appeal to the Supreme Court, there can be little doubt that this particular business model is under some threat.