Employment update - November 2014

16 minute read
06 November 2014

Wragge Lawrence Graham & Co's Employment team brings you the latest cases and issues affecting the Employment sector.

This month's update covers:

Garden leave and employers' obligations

In an interesting Judgment (Rogers v Sunrise Brokers LLP), the Court of Appeal has recently considered the obligations of employer and employee in circumstances in which an individual wishes to leave to join a competitor.

The Court has found that where an employee makes clear that he does not intend to be bound by the provisions of his contract in relation to the service of notice, the employer will be entitled to restrain the individual from taking up employment with a competitor during his contractual notice period, but will not be obliged to make payments of the salary which would have been due had the employee been placed on garden leave.

The Facts

Mr Rodgers gave notice of his intention to leave Sunrise, stating that he wished to leave "now" despite his contract providing for a fixed term until September 2014 and requiring a period of 12 months' notice thereafter to terminate it.

Sunrise considered that notice had not properly been given, and therefore Mr Rodgers remained bound by the contract and so obliged to attend work. Notably, Sunrise did not exercise its power to place the individual on garden leave since its position was that no valid notice had been given. The employee failed to return to work and his employer sought a declaration that he remained an employee and that he should be prohibited from working for a competitor both up to the date on which notice would have expired, and for a six-month period reflecting the post-termination restrictions contained in the contract.

On the basis that it had not placed the employee on garden leave, and that he had failed to attend for work, the employer did not make any payment to the individual.

The court took the opportunity to review a number of arguments which arise in relation to injunctions and restrictions on employees restraining them from working for a competitor, as well as the extent to which an employer is free to refuse to accept the employee's breach and to affirm the continuance of the contract instead.

There is a principle that courts will not enforce a contract for personal services if the effect of an injunction would be to compel the individual to work for a particular employer. However, on the facts, the court was happy to conclude that granting an injunction would not have the effect of the individual being forced to work for his new employer as the only alternative to starving or being idle. They noted in particular his high level of earnings in this regard.

The court further held that the employer was entitled to the injunction without any obligation to offer to pay salary for the period. This was simply because Mr Rodgers had clearly indicated that he was not prepared to work during his notice period and therefore he was not entitled to be paid.

Practical Points

The case raises some interesting issues about the nature of the obligations of employer and employee once a decision on the part of the employee to leave employment has been made.

The employer was entitled not to accept that the contract had been terminated, since the employee had not provided contractual notice and so had not validly served notice or otherwise brought the contract to an end. Departing employees should take note of this and ensure that any notice given complies with contractual requirements.

Ordinarily, an employer would be concerned to find itself in breach of contract by withholding salary, because an employer which is in breach of contract cannot enforce contractual provisions, including garden leave and post-contract restrictions.

On these facts, however, the employer was not in breach in withholding salary because of the employee's conduct. There will be few cases in which a right to restrain an employee from working without having to pay for the period will arise (and no doubt even fewer as a result of this Judgment) but the case serves as a useful reminder that the courts can and will conduct an analysis of the proper obligations of the parties, and that employers can feel confident that employees acting flagrantly in breach of their obligations will be restrained from so doing.

Employers can redeploy permanent employees in agency workers' posts

The Agency Workers Regulations 2010 (AWR) provide that from the first day of their assignment, agency workers are entitled to information about vacancies in the hirer's organisation to give them the same opportunity as other workers to find permanent employment. This can be done by way of a general announcement posted in a suitable place at the workplace.

What is the scope of this obligation? Recently an employment tribunal in Coles v Ministry of Defence (MoD) had to consider whether the right is to receive information only or to be given the same opportunity as permanent staff in terms of being eligible for vacancies.

In 2013, the MoD carried out a substantial restructuring exercise with over 500 permanent staff put in a redeployment pool. By that time Mr Coles had been working in a post at the MoD for eight years. Civil Service recruitment has four stages, with the first three stages giving priority to internal applicants and jobs being opened up to external applicants only under stage four.

Jobs are advertised on the Civil Service Jobs website to which agency workers had access. Mr Coles discovered that the post he was fulfilling as an agency worker was being advertised on the Civil Service Jobs website. However, Mr Coles would not be able to apply for the job unless it was advertised externally under stage four of the Civil Service recruitment scheme. The post was given to an internal applicant who had been put in the redeployment pool and had applied under stage one. Mr Coles' assignment was therefore terminated. Mr Coles issued a claim for breach of the AWR.

Rejecting the claim, the employment tribunal held that, while the AWR requires employers to provide agency workers with information about relevant vacancies, they do not require equality of opportunity during the selection process with internal applicants who are permanent members of staff.

Mr Coles had access to the Civil Service Jobs website, which was found to be an appropriate way of informing staff of vacant posts given the size of the MoD. Furthermore, the AWR does not prevent an employer from giving priority to permanent staff who have been placed in a redeployment pool during a restructuring. Indeed, a fundamentally good working practice is to allow employers to protect permanent employees' positions in any restructuring exercise.

Lessons for hirers:

As this is a tribunal decision, it is of course not binding on other tribunals (and it is being appealed), but it nevertheless provides an insight into how tribunals may approach this question. The requirement under the AWR for employers to inform agency workers who are working for it about vacancies is not onerous. The requirement can be satisfied by placing the information somewhere that an agency worker can see it, typically on the employer's intranet or on a noticeboard.

The AWR does not prescribe what should happen during the recruitment selection process after the information on vacancies has been provided. An employer is entitled to favour a potentially redundant permanent employee with the required qualifications over an agency worker already working in the post for the employer, even if that means the end of the agency worker's assignment.

Striking out claims without hearing

The Employment Appeal Tribunal (EAT) has recently considered the circumstances in which employment tribunals may strike-out a claim without hearing evidence from the claimant.

Tribunals are fixed with an overriding objective under their Rules of Procedure to deal with cases fairly and justly, and the Rules state expressly that saving expense and dealing with cases in ways which are proportionate to the complexity and importance of the issues form part of the fair and just analysis.

If an Employment Judge considers that a case has no reasonable prospect of success, he is entitled to order that the claim be dismissed, and this is what happened in the case of Romanowska v Aspirations Care Limited. The Claimant had been dismissed for what was alleged to be mishandling of a patient in a care home. During the disciplinary procedure, she raised concerns about the use made by her employer of agency staff, a matter which was capable of amounting to a Public Interest Disclosure (whistleblowing), since she stated that she was concerned about risks arising from the possible lack of training and familiarity with residents of such staff.

Following her dismissal, she claimed that the decision to dismiss her was the consequence of the disclosures she had made, both to her employer and subsequently to the Care Quality Commission, rather than the alleged misconduct.

At a preliminary stage, the Tribunal Judge was asked to review minutes of a meeting in which the Claimant agreed that she had used force on a resident. The Judge, in light of this evidence, dismissed the unfair dismissal claim and the whistleblower claim on the basis that she would not succeed. The EAT found, however, that there was a real dispute of facts, in terms of understanding what was in the mind of the employer at the time it made the dismissal and the extent to which the disclosures made by the individual were the principle reason for her having been dismissed.

In order to know what was in the mind of the employer, it was necessary for the Tribunal to hear and evaluate evidence of both parties and it was not, therefore, appropriate to strike out without hearing this.

Employers are often keen, understandably, for cases to be dismissed at an early stage. This Judgment serves as a reminder that where there is a real dispute of fact, it is unlikely to be appropriate to determine a matter other than after a full hearing of evidence.

Failure to participate in early conciliation prior to presenting a claim can be remedied

Since 6 May 2014, the Advisory, Conciliation and Arbitration Service (ACAS) early conciliation procedure must be followed before a claim can be presented to an Employment Tribunal. There are very limited exceptions to this rule.

The employment tribunal in Thomas v Nationwide Building Society considered the effect of a failure on the part of a claimant to comply with the process due to a mistaken belief that the claim in question was not subject to early conciliation.

The claimant's claim for whistleblowing was presented to the tribunal on 8 August 2014. Ms Thomas' solicitors ticked the relevant box on the claim form to confirm that she did not have an early conciliation certificate number and then ticked the box to confirm that she was exempt from the early conciliation procedure on the basis that ACAS was not empowered to conciliate on some or all of her claims.

After being served with the claim, Nationwide raised an objection. Ms Thomas then contacted ACAS, completed the conciliation period in just three days and obtained a reference number which rectified the earlier defect. Nationwide argued that this amounted to a post-claim conciliation rather than early conciliation as required. To be anything else, in the words of the Nationwide's representative, was to "drive a coach and horses through the new procedure".

The tribunal's view was that this was not "post-claim" conciliation because the claim had never been validly presented. The effect of the tribunal's rejection of the claim was to treat the claim as if it had never been made. It therefore followed that Ms Thomas's action still amounted to pre-claim conciliation. Preventing a claimant from rectifying a defect in this way would, in the view of the tribunal, impede the claimant's access to justice.

The tribunal went on to find that once the defect had been rectified, the claim should be treated as having been presented on the date of rectification. This delay could of course impact on whether or not the claim was or was not in time, in which case the tribunal would have to apply its usual test as to whether it was reasonably practicable to have presented a claim in time or, in cases such as discrimination, whether it would have been equitable to extend time

Errors of this kind by a claimant may present an opportunity for respondents to challenge a tribunal's jurisdiction to hear a claim.

This is a decision of the employment tribunal and may be subject to appeal, but it suggests that tribunals will take a pragmatic approach to the application of the procedural rules.

Employment law reform update

Employment law reform featured heavily in the Coalition Government's legislative programme. We have already seen changes in relation to unfair dismissal claims and compensation, collective redundancy consultation, whistleblowing protection, TUPE, flexible working requests and tribunal reform, including the introduction of tribunal fees.

Further changes are coming. We are on the eve of the new shared parental leave regulations and the Government has announced plans to tackle misuse of zero hour contracts. Further changes anticipated are set out below.

Autumn 2014

1 October

  • Right for fathers to attend antenatal appointments
  • National minimum wage rises to £6.50 per hour
  • Tribunals' power to order equal pay audits

October (staged implementation begins)

  • Sickness absence: new independent assessment service

1 December

  • Shared parental leave in force for babies due on or after 5 April 2015

Spring 2015

5 April

  • Shared parental leave fully in force and abolition of Additional Paternity Leave
  • Right for those proposing to adopt to attend 'adoption appointments'
  • Removal of a six-month qualifying period for adoption leave
  • Revision of Statutory Adoption Pay to mirror Statutory Maternity Pay
  • Extension of adoption leave and pay to surrogacy and 'foster to adopt' arrangements

Autumn 2015

  • 'Caste' to be a specific aspect of race discrimination
  • Employer-supported childcare voucher schemes closed to new participants

Sometime in 2015

  • Regulation of zero-hour contracts including exclusivity clauses become unenforceabe
  • Whistleblowing: annual reporting by 'prescribed persons
  • Limited tribunal reform and penalties for non-payment of tribunal awards
  • Increased penalty for underpayment of national minimum wage
  • Repayment of public sector exit payments by those quickly re-employed
  • Repeal power to make recommendations for the wider workforce in discrimination cases
  • Apprenticeship simplification

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