Latest Employment Law case updates - Edition 7 2019

1. Supreme Court takes pro-employer stance on severing restrictive covenants

Tillman v Egon Zehnder Limited (Supreme Court)

The Supreme Court has handed down a landmark judgment on the interpretation of post-termination restrictive covenants. This was the first judgment on this issue by the highest UK court for a century and has been nervously awaited by HR professionals, concerned about its impact on their ability to enforce covenants against departing employees. The decision provides a broad overview of the legal principles governing this contentious topic and a number of helpful lessons for employers who may be seeking to draft or enforce post-termination restrictions against their employees.

In particular, its decision largely restores the orthodox position on severance, by confirming that courts are able to delete – or "sever" – unreasonable elements of restrictive covenants and enforce the remaining provisions, provided that the employer can show that removing the offending wording would not generate any major change in the overall legal effect of the all the post-termination restraints in the relevant contract.

For our full analysis, see here.

2. Employer not liable for employee's offensive Facebook posts

Forbes v LHR Airports Limited (EAT)

The EAT has held that an employee who posted racially offensive imagery on Facebook, but did not reference her employer and did not direct the content at her colleagues, had not made the post "within the course of her employment". Her employer was therefore not vicariously liable for her actions, which a co-worker alleged amounted to harassment under the Equality Act 2010.

The Claimant was a security officer at LHR Airport Ltd ("LHRA"). One of his colleagues shared an image of a golliwog on her personal Facebook page, accompanied by a message which acknowledged its potentially racist connotations. The Claimant was shown the post by another colleague whilst at work and submitted a grievance, which was upheld. Although the individual who made the post apologised and received a final written warning following a disciplinary process, the Claimant went off sick after subsequently being posted to work alongside her. He brought an Employment Tribunal claim of harassment against LHRA, arguing that his employer should be vicariously liable for his colleague's unlawful act of discrimination.

The ET dismissed the Claimant's claim on the basis that the offending Facebook post was not published "in the course of employment" and vicarious liability could therefore not be imposed. On appeal, the EAT agreed. It confirmed that whether an act takes place in the course of employment is a broad question of fact; in this case, it considered that the average person would not deem the content, which was posted on a private, non-work Facebook page, with an immediate audience of largely non-professional "connections", as an image which had been posted in the context of her employment. Whilst the Claimant's viewing of the content at work could meet the factual requirements for vicarious liability, the focus should be on the act of the alleged "harasser" as opposed to the subsequent dissemination of the content.

Whilst the EAT decided in favour of the employer in this case, the judgment reiterates that the test for imposing vicarious liability is highly flexible and fact-sensitive. The use of social media presents particular risks in this regard; employers should be proactive in establishing clear guidelines and rules regarding employee use of social media, which include reference to potential disciplinary consequences in the event that these are breached. The link between the offender's social media account and the relevant employer and/or its staff is likely to be a critical feature of any assessment of vicarious liability.

3. Direct offer to employees did not unlawfully bypass collective bargaining

Kostal UK Ltd v Dunkley (Court of Appeal)

The Court of Appeal has confirmed that a one-off, direct approach to employees regarding pay arrangements was not an "unlawful inducement" for the purposes of bypassing established collective bargaining arrangements. It stated that the prohibition on unlawful inducements is intended to catch employer actions which seek to take terms outside of the agreed or imposed scope of collective bargaining on a permanent basis and does not cover isolated offers which aim to break a specific impasse.

Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 ("TULRCA") prohibits employers from making offers to workers who are members of a trade union which is recognised or seeking recognition, if acceptance of that offer would bypass the collective bargaining process; known colloquially as "unlawful inducements". In this case, Kostal recognised Unite for collective bargaining on pay in 2014. When the 2015 pay negotiations reached an impasse, the Company wrote directly to each employee, advising them that failure to sign and return a letter agreeing to the proposed deal would result in them losing their Christmas bonus and annual pay increase. It followed up with those who did not reply, stating that if no agreement could be reached it may be forced to serve them with notice of termination.

Whilst a collective resolution was eventually reached, a large group of affected employees brought employment tribunal claims on the basis that the direct correspondenceinfringed their right not to be subject to "unlawful inducements" under s.145B TULRCA. Whilst the Tribunal and EAT found in their favour, the Court of Appealoverturned these decisions on the basis that these actions did not fall within the scope of the prohibition.

In the CA's opinion, the definition of "unlawful inducements" covered two types of case only:

1. Where a TU is seeking to be recognised and the employer makes an offer whose sole or main purpose is to achieve the result that the workers' terms of employment will not be determined by a collective agreement. This covers inducements intended to prevent or inhibit union recognition itself.

2. Where a TU is already recognised, the relevant workers' terms are already determined by collective agreement, and the employer makes anoffer whose sole or main purpose is to achieve a result whereby some or all of their terms will no longer be determined on a collective basis. This requires the inducement to be made for the purpose of taking terms outside of the scope of collective bargaining on a permanent basis, as opposed toisolated offers designed to break an annual impasse.

In this case, there was no suggestion that the Company intended to inhibit the collective arrangements with any degree of permanence and the CA concluded that such "one off" offers made directly to employees should not be caught by the provision. In its view, this would give unions an effective right of veto over any direct offer made to individual employees, major or minor, on any given occasion. This decision gives employers subject to collective arrangements more flexibility and leverage in seeking to negotiate difficult collective issues and confirms the limits of the statutory collective bargaining process in the UK.

4. Covert recordings by employees not necessarily gross misconduct

Phoenix House Limited v Mrs Tatiana Stockman (EAT)

The EAT has confirmed that whilst the covert recording of HR meetings by employees will generally constitute misconduct, it does not necessarily meet the threshold of gross misconduct justifying summary dismissal. The severity of such misconduct will depend on all the circumstances, including the employee's motive, the subject matter of any recording and the employer's communicated position (including through policy documentation) on covert recording.

In this case, the Claimant covertly recorded a meeting with HR at which she was told that she would be disciplined for interrupting and refusing to leave a meeting between her managers, who had been discussing a complaint she had previously made. After her submission of a formal grievance led to an unsuccessful mediation, the Company considered that the relationship between the Claimant and her managers had irretrievably broken down and dismissed her without notice. Her claim for unfair dismissal was upheld by the Employment Tribunal and EAT.

During the Employment Tribunal proceedings, it emerged that the Claimant had covertly recorded the HR meeting and the judge reduced her compensatory award by 10% to reflect this conduct. Her employer appealed on the basis that, had it known about the recording, it would have dismissed the Claimant for gross misconduct and that her compensation should be reduced to nil. The EAT was, however, satisfied that the 10% reduction was reasonable on the basis that the conduct did not constitute gross misconduct and the Employment Tribunal had legitimately considered all the facts before reducing the compensation.

The decision offers a number of helpful lessons for employers. In particular, it states that whilst covert recordings will generally constitute misconduct, they will not necessarily amount to gross misconduct justifying summary dismissal. This will depend on all the facts, including the motive for any recording, the sensitivity of the relevant information and the extent to which an employer has communicated a clear policy on this topic. Employers would therefore be well advised to review disciplinary processes to ensure that covert recording is expressly referenced as an example of potential gross misconduct and that this is addressed at the start of any meetings.