We are pleased to provide you with the Herrington Carmichael employment law update for November 2019.

This is a key note summary of some of the main developments in employment law in the last month.

1. Inventor of diabetes testing device awarded £2m in compensation.

In the case of Shanks v Unilever, the Supreme Court awarded £2m in compensation to Mr Shanks for an invention he created during his employment in 1982. The invention, a device for measuring glucose levels in relation to diabetes, provided Unilever with a net benefit of around £24.3m.

The Patents Act states that where an employer receives an “outstanding benefit” from something an employee has invented, the employee is entitled to a “fair share”. It is not possible to contract out of this obligation.

Mr Shanks started proceedings in 2006 and brought a claim for compensation. Whilst his claim was unsuccessful in the High Court, and subsequently the Court of Appeal, the decision was overturned in the Supreme Court. The Supreme Court ruled that Unilever had made “substantial and significant” earnings from Mr Shanks’ invention and that Mr Shanks therefore was entitled to his fair share. An award was made to Mr Shanks for £2m.

Previous case law around this topic had suggested that the bar for an invention to be considered an “outstanding benefit” was very high. This case shows that employers should now consider carefully any claims for statutory compensation where an employee is not suitably remunerated for an invention made in the course of their employment. Employers should have in place a clear procedure for assessing whether any employees may qualify for compensation, in particular where employees are involved with creating and developing new and innovative products or technologies.

2. Can hypothetical statements about recruitment amount to discrimination?

The Advocate General ruled in the case of NH v Associazione Avvocatura per i diritti LGBTI that a comments made by a senior solicitor about not hiring LGBT people were unlawful. An association for LGBT lawyers in Italy brought proceedings against the individual solicitor, alleging discrimination. The claim was successful, with an award for damages made of 10,000 Euros. What is significant in this case is that there was no direct victim, nor was there any active recruitment. The case was referred to the Italian Supreme Court, who subsequently referred the issue to the Court of Justice of the European Union (CJEU) to consider whether such a hypothetical statement fell within the Equal Treatment Directive.

The CJEU confirmed that the comments were unlawful, as such statements “may discourage persons belonging to the protected group from applying for employment with that employer”. The CJEU concluded that when statements are not made in the context of a current recruitment procedure, it is for the national court to assess whether the link with access to employment is not hypothetical. Where an association has a legitimate interest in bringing proceedings, it may ask for discriminatory conduct to be sanctioned, which may include the awarding of damages.

Whilst it should be obvious to most people not to make public statements which could be discriminatory, this case clearly highlights the potential consequences of doing so even where there is no obvious or specific victim. In any event, and as a matter of good practice, employers should have a suitable equality and diversity policy in place, and provide training to ensure the policy is understood and followed by all employees.

3.When is legal advice not privileged?

In the case of Curless v Shell, The Court of Appeal has found that advice given in an email from an in-house solicitor was not a ‘cloak for a dismissal on discriminatory grounds’, and therefore was protect by privilege. Whilst the general rule is that legal advice from a lawyer to their client is not disclosable, there is an exception being where advice is given for the purpose of ‘affecting iniquity’. Therefore, where people attempt to cover correspondence under the protection of legal advice privilege solely to cover up discrimination, the protection will not apply.

The facts of this case were that Mr Curless had sought to rely on email correspondence between Shell’s in-house lawyers marked “Legally Privileged and Confidential” arguing that the email contained advice on how to commit discrimination by using a redundancy process to justify his dismissal. This argument was accepted by the Employment Appeal Tribunal. The Court of Appeal, however, held that the advice given was “the sort of advice which employment lawyers give “day in, day out” in cases where an employer wishes to consider for redundancy an employee who (rightly or wrongly) is regarded by the employer as underperforming”. The emails were therefore not disclosable and were protected by legal advice privilege.

This case highlights the respect that courts and tribunals have for legally privileged advice. However it also serves as a reminder that this protection cannot be used to cover discriminatory actions. Great care should therefore be taken when emailing requests for legal advice to legal advisers. Legal advice should also be appropriately labelled in order to avoid accidental disclosure to the wrong people.