Restrictive Covenant in Engineer’s Contract Passes Reasonableness Test

Restrictive covenants in employment contracts involve the imposition of restraints on employees’ personal freedom and have to be reasonable to be enforceable. In one case, the High Court ruled that a clause in an engineer’s contract that prevented him from working for competitors for 12 months passed that test.

The engineer worked for a company that specialised in making high-tech consumer goods and was obsessed by maintaining the confidentiality of its research. He was put to work on a secret project to develop a new electric car shortly after he had received a conditional offer of employment from an electric car manufacturer. He did not inform his employer of that development.

His employment contract contained a restrictive covenant that, amongst other things, forbade him from working for any company that operated in a similar field to his employer for a 12-month period after leaving his job. After the car manufacturer’s offer was made final and the engineer announced his resignation, his employer launched proceedings to hold him to the terms of the covenant.

He argued that the covenant, which had a worldwide reach, was void in that it placed excessive restraints on his freedom to make a living. However, the Court found that the restrictions were no wider than was reasonably necessary to protect the employer’s commercial interest in preserving its trade secrets.

The Court acknowledged that the engineer and the car manufacturer had acted in good faith and that there was no reason to suspect that the engineer intended to divulge his employer’s confidential information to the car manufacturer. However, the purpose of the covenant was not merely to restrain deliberate disclosure of confidential information and there was a real risk of innocent breach.

Whilst expressing sympathy for the engineer, the Court noted that he was largely the author of his own misfortune in unwisely failing to tell his employer of the conditional offer he had received before embarking on the secret project. The Court issued an injunction restraining him from taking up his new post for 12 months from the date on which he left his job.

Near-Fatal Industrial Accident Triggers Health and Safety Appeal

Many people do dangerous jobs, but employers are required by law to do all in their power to minimise risks, and the consequences of failing to do so can be severe. In one case, an equipment maintenance company was served with an improvement notice under the Health and Safety at Work etc. Act 1974 after a near-fatal accident.

A worker suffered catastrophic injuries when he fell through the floor of the cab of a straddle carrier that was used to shift lorry containers and fell 14 metres to the ground. A panel had been removed from the floor during maintenance work and, although a sign had been put in place indicating that the straddle carrier was not in use, it did not prevent access and was inadequate and misleading.

Following an investigation by a health and safety officer, the man’s employer was served with the notice, which required various systemic and physical improvements to be made that were designed to eliminate the risk of a recurrence. The employer appealed against the notice to an Employment Tribunal (ET).

The employer’s staff worked in the same yard as others who were employed by another company and it was asserted that the latter was to blame for the creation of the hazard. The employer argued that it did have a system in place that would have prevented the accident victim from gaining access to the cab.

In dismissing the appeal, however, the ET noted that both companies’ employees had worked together in close proximity and the baton of responsibility for various tasks had been passed between them on an ad hoc basis. That had led to confusion and increased risk on the site and the employer’s assertion that it was not at fault was not supported by evidence. The officer had reasonably formed the view that the employer had contravened one or more health and safety rules and that such contravention was likely to continue or be repeated.

Equality Rights – EU Law Takes Priority over UK Legislation

In a ground-breaking decision that underlined the primacy of European law, the Supreme Court has opened the way for a police officer to appeal against her dismissal to an Employment Tribunal (ET) on disability discrimination grounds.

PoliceThe officer had suffered post-traumatic stress disorder after being assaulted whilst on duty. She was subsequently involved in an incident that led to her arrest and asserted that her behaviour on that occasion was related to her condition. However, following a disciplinary hearing before a Police Misconduct Panel (PMP), she was dismissed without notice.

She sought to appeal against her dismissal to an ET on the basis that the decision to sack her constituted disability discrimination and disability-related harassment. However, in a decision that was later upheld by the Employment Appeal Tribunal and the Court of Appeal, the ET struck out her claim on the basis that the PMP was a judicial body and that her claim was barred by the principle of judicial immunity.

In unanimously allowing her appeal, however, the Supreme Court noted that EU Council Directive 2000/78/EC confers on everyone, including police officers, a directly effective right to be treated equally in relation to employment and working conditions, including dismissals. The Directive took priority over domestic law and the UK was obliged to ensure that appropriate judicial and/or administrative procedures are available by which such rights can be enforced by effective, proportionate and dissuasive sanctions.

Allowing police officers to bring such claims before an ET would give them access to a wider range of remedies, including compensation, and the concept of judicial immunity should not be treated as a bar on complaints to ETs brought by police officers who claimed that they had been treated contrary to the Directive.

Reading additional words into Section 42(1) of the Equality Act 2010, so as to enable the officer to pursue her claim, was in line with the grain of the legislation and was warranted by the principle that domestic legislation should be interpreted in conformity with EU law. The officer’s case was remitted to the ET for full consideration of her complaints.

‘Worker’ Status of Uber Drivers Confirmed in Landmark Case

In a ground-breaking ruling, the Employment Appeal Tribunal (EAT) has confirmed that drivers for online cab giants Uber are ‘workers’, as defined by the Employment Rights Act 1996, and are thus entitled to a panoply of rights and benefits.taxis

In upholding complaints by a number of Uber drivers who plied their trade in London, an Employment Tribunal (ET) had found that, whenever they had the company’s app switched on and were willing to accept assignments, they qualified as workers and were, amongst other things, entitled to the protection of the Working Time Regulations 1998 and the National Minimum Wage Act 1998.

In challenging that ruling, Uber pointed out that the drivers had no written contract with the American parent company’s London-based subsidiary. Whilst they did sign written agreements with the parent company, their terms were inconsistent with the existence of any worker relationship. It was submitted that the agreements made clear that the drivers provided transportation services to those who hailed them and that Uber provided services to the drivers as their agents. The drivers were carrying on business on their own account and were not required to work for Uber.

In dismissing the appeal, however, the EAT found that the contractual documents did not reflect the true relationship between the drivers and the London subsidiary. The reality was that the drivers formed a central part of Uber’s business in providing transportation services. The level of control to which they were required to submit pointed away from a conclusion that they worked on their own account and that their direct contractual relationship was with their passengers. It could not be said that the London subsidiary merely acted as the drivers’ agent.

The obligations imposed upon the drivers to accept trips offered by Uber, and not to cancel trips once accepted – there being potential penalties for doing so – was another powerful indicator that the relationship was not one of agency. If they had the app switched on, the drivers were required to be willing and able to accept assignments and Uber described them as being ‘on duty’. There was nothing inconsistent or perverse about the ET’s conclusions.

Christmas and the Workplace

Christmas is a busy time for a lot of businesses, with many taking on temporary staff to cope with the extra workload. At the same time, many employees will want to take time off to spend with their family, go on holiday or attend religious services.

Employers are wise to plan ahead to cope with the varying demands placed on them at this time of year, and to this end the Advisory, Conciliation and Advisory Service has produced a guidance leaflet covering employees’ rights with regard to time off on bank holidays, annual leave and sickness absence over the Christmas period and Christmas parties.

Employers – Disciplinary Proceedings Require an Open Mind

Hard-edged opinions are all too easily formed in the heat of disciplinary proceedings, but employers must be careful to stand back and take a balanced approach. In one case in which that did not happen, a senior hospital radiologist won the right to substantial compensation following her unfair dismissal.

HospitalWhen facing a disciplinary hearing, the woman had compiled a defence pack of documents at home. It included extracts from patient records from which identifying information had only partially been redacted. Her employer, an NHS trust, took the view that that was a serious breach of its patient confidentiality policies and she was summarily dismissed for gross misconduct.

In upholding her unfair dismissal claim, an Employment Tribunal (ET) found that the decision to sack her had been taken with a closed mind. There had been no consideration as to whether she had acted wilfully or whether what she had done justified summary dismissal.

In rejecting the trust’s challenge to that ruling, the Employment Appeal Tribunal found that the relevant manager had taken an unreasonably constrained approach, which failed to allow for the possibility of lesser sanctions and ignored mitigating factors. The trust’s appeal against findings that her dismissal was also wrongful, and that she had not been guilty of any contributory fault, succeeded and those issues were remitted to the same ET for reconsideration.

Government Takes Action to Boost Minimum Wage Compliance in Care Sector

The position of ‘live-in’ workers as regards employment status and rights has long been a bone of contention in the care industry in particular, leading the Government to create a new compliance scheme for social care employers.Care Home

Amid concern that ‘sleep-in’ shift workers may have been incorrectly paid less than the National Minimum Wage, the new Social Care Compliance Scheme will give employers who opt to join up to a year to identify any payments due to workers and, where arrears of pay are identified, three months to make them good.

Any social care employers that are currently the subject of a complaint will be contacted by HM Revenue and Customs (HMRC) to encourage them to sign up for the scheme. Where an employer chooses not to participate in the scheme they will be ‘subject to HMRC’s normal enforcement approach’.

The thin margins operating in the care sector have led to a general waiver of any PAYE penalties for such employers relating to underpayments arising prior to 26 July 2017, and enforcement action in respect of payments for sleep-in shifts was temporarily suspended then and recommenced only on 1 November 2017.

The updated guidance on sleep-in shifts can be seen here: National minimum wage law: enforcement

Employer Not Liable for Office Worker’s Chair Prank

If a negligent worker causes injury in the course of his job, compensation is generally payable by his or her employer under the principle of vicarious liability. However, as one case concerning an office prank showed, that does not apply where the worker concerned is on a frolic of his own.

A woman suffered a serious injury to her lower back when a colleague pulled her chair away just as she was about to sit on it. Lawyers on her behalf sued the local authority for which both of them worked and damages were agreed at £58,000, subject to the employer being found liable.

In dismissing her claim, a judge noted that the colleague got on well with the woman and normally behaved professionally. There was no culture of pranks in the office and he had not acted maliciously. With little more than a flick of his hand, he had moved the chair as a joke on the spur of the moment. His act of pure folly was carried out in an entirely private capacity and was unconnected to his work.

High Court Bans Proposed Royal Mail Strike as a Breach of Contract

postbox1Trade unions have a statutory right to call their members out on strike so long as the correct procedures are followed. However, as one case concerning proposed industrial action by more than 100,000 Royal Mail workers showed, that right can be cut down by agreement.

The Communication Workers Union was in dispute with Royal Mail Group Ltd. in respect of a number of matters, including pensions, pay and working hours. A ballot of the union’s members yielded a 73.7 per cent turnout and 89.1 per cent of those who voted cast their ballots in favour of a three-day strike. There was no dispute that the union had complied with the procedural requirements of the Trade Union and Labour Relations (Consolidation) Act 1992.

However, the union and the company had reached a collective agreement in 2014 which contained detailed provisions as to what was to happen in the event of a dispute. Amongst other things, the agreement – which was expressed to be a legally enforceable contract – provided that disputes were to be referred to external mediators, appointed by Acas, and that industrial action could not be taken before such resolution measures had been exhausted.

In ruling the proposed strike unlawful and granting an injunction to restrain it, the High Court rejected the union’s arguments that the company’s reliance on the agreement was opportunistic and not in good faith. It had been entitled to refer the dispute to external mediation at the time it did and the union was bound not to call a strike until that process had been completed.

The Court noted that, from the company’s point of view, damages would not be an adequate remedy were the strike permitted to go ahead. The proposed stoppage would have a very damaging impact on both the company and its customers, would result in the loss of millions of pounds in revenue and would harm the company’s reputation for reliability in a highly competitive market.