Employment Law Newsletter – September 2020

Cases:

  • Breach of Contract: £1 damages for copyright infringement and breach of contract by former consultant
  • Unfair Dismissal: Teacher suspected of possession of indecent images of children but not prosecuted was unfairly dismissed
  • Unfair Dismissal: Lack of trust and confidence may be relevant to practicability of re-engagement
  • Unfair Dismissal: No procedure, no problem – where the working relationship has broken down
  • Disability Discrimination: Paranoid delusions not sufficient for definition of disability under Equality Act
  • Equal Pay: Material factor needs to explain but not justify pay disparity

Other news:

  • COVID-19: HMRC publishes updates to CJRS guidance and template for large employers
  • COVID-19: DHSC publishes new guidance for employers on COVID-19 testing
  • COVID-19: Amended guidance on working safely, including mandatory Test and Trace
  • COVID-19: New HMRC guidance on calculating furlough pay for employees who come off furlough partway through a claim period
  • COVID-19: Pandemic leads to backlog of 45,000 employment tribunal cases
  • ACAS: Updated ‘Guidance on Managing Staff Redundancies’ published
  • Data Protection: ICO launches accountability framework

Cases:

Breach of Contract: £1 damages for copyright infringement and breach of contract by former consultant

In DPA (London) Ltd v D’Aguanno and others [2020] EWHC 2374 (IPEC) the Intellectual Property Enterprise Court (IPEC) has ruled against the claimant in proceedings for copyright infringement and breach of contract in relation to all but one head of claim, which the defendant admitted. It awarded a nominal sum of £1 in damages.

The claim was brought by a firm of architects against three defendants: two individuals who had worked for it as self-employed contractors, and the company those individuals set up after they stopped working for the claimant. The judge found that the pair had worked for the claimant as consultants rather than employees under a verbal agreement containing certain implied terms.

The first defendant admitted that he had copied and stored three three-dimensional models from the claimant’s projects onto his laptop in order to use them in his portfolio to show the quality of work he had carried out for the claimant. His actions amounted to a breach of the claimant’s requirements to return all copies of the claimant’s works to it when he stopped working for the claimant, and not to remove documents from the claimant’s possession. However, as the models were specific to the sites and jobs done for the claimant, and at least two of the three were from completed projects, it was hard to see what other use the defendant could have made of them, and the judge accepted that he did not in fact put them to any use other than moving them from his laptop to a storage device (which he had since surrendered to the claimant). The evidence did not convince the judge that the defendants had infringed any other copyright works belonging to the claimant, nor was there any evidence that the other defendants had authorised the infringement relating to the models.

Due to the limited scope of the infringement, the judge considered that it would be disproportionate to have a full quantum trial, so he went on to assess damages. The defendant’s actions had not given rise to any need to re-create the models, and as he had not put the material to commercial use, his retention of the material had not caused the claimant any commercial loss either. Since no loss had been suffered, the judge awarded nominal damages of £1 for copyright infringement and breach of contract.

Unfair Dismissal: Teacher suspected of possession of indecent images of children but not prosecuted was unfairly dismissed

In K v L [2020] UKEAT 0014_18_2404 the EAT has held that a teacher was unfairly dismissed for misconduct after he was charged with possession of indecent images of children, but not prosecuted. The teacher admitted that a computer in his home was found to contain indecent images but denied that he was responsible for downloading them. The school found that there was insufficient evidence to conclude that the teacher was responsible for the images but decided that he should be dismissed in any event because allowing the teacher to return to his post would pose an unacceptable risk to children. In its dismissal letter, the school also referred to the “serious reputational damage” which would be caused if the teacher was subsequently found guilty of this kind of offence and the school had been aware of the allegations.

Allowing an appeal, the EAT held that the complaint as set out in the disciplinary invitation was based solely on misconduct and gave no notice that reputational damage was a potential ground of dismissal. In these circumstances, the employer was bound to make a decision on whether the misconduct had been established. Had it done so, it would have been bound to conclude that misconduct had not been established. The EAT could not accept that an employee could be dismissed on the basis of a matter that was only mentioned in an investigatory report, not in the actual complaint. Although reputational damage may be regarded as a separate ground of dismissal (that is, dismissal for ‘some other substantial reason’), it raises separate considerations to those in a misconduct dismissal, and this must be made clear from the outset. In this case, the teacher had not been given an opportunity to address the reputational issue in any detail at the disciplinary hearing.

Considering whether a fair dismissal would have been possible, had the school referred to reputational damage in the original complaint as set out in the disciplinary invitation, the EAT found that the scant evidence available meant that the teacher was dismissed in the absence of any information about the nature or seriousness of the images, or the reasons why no prosecution was brought. In the EAT’s view, the evidence was insufficient to support a dismissal based on reputational damage.

Unfair Dismissal: Lack of trust and confidence may be relevant to practicability of re-engagement

In Kelly v PGA European Tour [2020] UKEAT 0285_18_2608 the EAT has held that a tribunal erred in ordering re-engagement to a position for which an employee did not meet an essential requirement of the role and had impermissibly reached its own view on whether concerns about the employee’s capability and integrity had undermined trust and confidence.

Mr Kelly began employment with PGA in 1989 as Marketing Director, eventually becoming Group Marketing Director. A new Chief Executive was appointed in 2015. Within two months, he decided to dismiss Mr Kelly over concerns about his performance and willingness to “buy in” to his ideas. Exit terms could not be agreed. Mr Kelly was dismissed, subsequently bringing an unfair dismissal claim (among other claims). PGA conceded that the dismissal was unfair as a fair procedure had not been followed. When considering remedy, the tribunal decided that Mr Kelly should be re-engaged to the role of Commercial Director, China PGA European Tour. It considered that, while speaking Mandarin was an essential requirement of the role, Mr Kelly’s willingness to learn Mandarin and his proficiency in languages meant that re-engagement was practicable. Moreover, any trust and confidence issues arising from doubts about Mr Kelly’s capability and integrity (he had covertly recorded several meetings) were not so significant as to make re-engagement impracticable.

PGA appealed, arguing that the tribunal had impermissibly considered for itself whether trust and confidence had been damaged instead of asking whether PGA had a rational basis for believing that it had. The EAT allowed the appeal. The question for the tribunal was whether it was practicable to order PGA to re-engage Mr Kelly. It is the employer’s view of trust and confidence, tested by the tribunal as to its genuineness and rational foundation, that matters. The tribunal had therefore erred in reaching its own view. The EAT rejected the argument that trust and confidence is only relevant to practicability where dismissal is based on an employee’s conduct, not capability. The EAT also held that the tribunal had erred in substituting its own view on whether the ability to speak Mandarin was an essential requirement of the role. Requiring PGA to engage someone in a role for which they did not meet one of the essential requirements (genuinely and cogently determined by them and accepted by the tribunal) overstepped the mark and failed to give weight to the employer’s commercial judgment.

Unfair Dismissal: No procedure, no problem – where the working relationship has broken down

In Gallacher v Abellio Scotrail Limited [2020] UKEATS/0027/19/SS the ETA has upheld a decision of a tribunal that, in rather unusual circumstances, an employee can be fairly dismissed without any procedure (including an appeal), after a breakdown in working relations.

The Claimant was a senior manager in the Respondent’s business. Her relationship with her line manager deteriorated at a critical juncture for the business of the Respondent. The Claimant’s manager decided, after consulting with HR, to dismiss her at an appraisal meeting with no procedure, forewarning or right of appeal as the reason for her dismissal was “some other substantial reason” (namely a breakdown of working relations between the two of them). The tribunal found the dismissal was not unfair and also that the Respondent did not know (and could not reasonably have been expected to have known) of her disability (symptoms related to the menopause and depression). The Claimant appealed.

The EAT dismissed the appeal, holding that although any contention by an employer that following a procedure would be futile would be approached with caution, this was one of those rare cases where it was open to the tribunal to conclude that dismissal without any procedure was within the band of reasonable responses. The Claimant was a senior manager whose continued good working relationship with her manager was critical during a difficult period for the Respondent’s business. Moreover, the evidence was that the Claimant recognised the breakdown in relations herself and was not inclined to retrieve the situation. The tribunal found that any procedures at this time would not only have served no purpose but would in fact have worsened the situation.

Disability Discrimination: Paranoid delusions not sufficient for definition of disability under Equality Act

In Sullivan v Bury Street Capital Limited [2020] UKEAT 0317_19_0909 the EAT has upheld a tribunal decision that the Claimant’s disability of paranoid delusions was not sufficiently within the ‘long-term’ definition of disability under the Equality Act 2010 as it was not likely to recur, and therefore his claim for disability discrimination failed.

The Claimant was a sales executive with a small finance company.  From about July 2013, following a split with a Ukrainian girlfriend, the Claimant suffered paranoid delusions that he was being followed and stalked by a Russian gang.  These delusions affected his timekeeping, attendance and record-keeping (which were already a matter of concern even before 2013). However, things improved after September 2013.  Whilst there were sporadic references to the Claimant’s poor attitude in that period, it was not until April 2017 that there was a worsening of the effect of the paranoid delusions on his day-to-day activities.  The Claimant’s employment was terminated on 8 September 2017, ostensibly for reasons to do with capability and attitude.  The Claimant lodged a claim complaining of unfair dismissal, disability discrimination and deduction of wages (amongst others).  The tribunal held that he did not have a disability within the meaning of the Equality Act 2010. However, his claim of unfair dismissal was upheld.

In dismissing the appeal, the EAT held that the tribunal did not err in concluding that the long-term requirement in the definition of disability was not met.  It found that the tribunal was entitled to conclude on the evidence that, although there was a substantial adverse effect in 2013 and again in 2017, in neither case was it likely that the adverse effect would last for 12 months or that it would recur.  The tribunal had correctly applied “likely” as if it meant “could well happen”, and had approached the question of the likelihood of recurrence correctly.  The tribunal also did not err in deciding that the Respondent did not know and could not reasonably be expected to know of the disability.

Equal Pay: Material factor needs to explain but not justify pay disparity

In Walker v Co-Operative Group and another [2020] EWCA Civ 1075 the Court of Appeal has held that an employment tribunal adopted the wrong test when deciding whether an employer could establish a material factor defence to a pay differential between a female HR executive and other male executives. In this case, the tribunal had found that explanations for the differential were no longer material when a job evaluation study was carried out 12 months after their pay had been set and which determined that, at some point during that period, the value of the HR executive’s work had become equal to that of her comparators. This lack of materiality, in the tribunal’s view, led it to conclude that the pay differential could no longer be justified and that the employer could not establish a material factor defence.

However, the test is not whether the employer can prove that the pay disparity is justified, but whether the reason for the difference is causative and whether it is material. The court said that the tribunal’s conclusion overlooked the fact that in respect of each of the comparators there was at least one material factor which remained causative of or which explained the difference in pay at the end of the period in question. Whether the factor justified the difference was not a question for the tribunal.

The court also criticised the tribunal’s decision to leave the exact point at which the claimant’s work became equal to that of her comparators to be determined at the remedy hearing. This was unsatisfactory since it left the starting point of the claim unresolved. The tribunal should either have made a finding as to the date as from which the claimant was doing equal work or found that she had failed to prove this at any stage before February 2015.

Other news:

Government guidance is being updated frequently and so we would strongly recommend that you check the current guidance at the point when you are making decisions on such guidance.

COVID-19: HMRC publishes updates to CJRS guidance and template for large employers

HM Revenue and Customs has further updated its guidance, Claim for wages through the Coronavirus Job Retention Scheme, and the accompanying claims form template for employers claiming through the Coronavirus Job Retention Scheme (CJRS) for 100 or more employees. The guidance and the “Details” section of the template now require employers to state whether an employee has returned from statutory leave before being put on furlough.

COVID-19: DHSC publishes new guidance for employers on COVID-19 testing

On 10 September 2020, the Department of Health and Social Care (DHSC) published Guidance for employers and third-party healthcare providers on COVID-19 testing and contact tracing. The guidance advises employers wanting to test non-symptomatic staff against using NHS Test and Trace, and to consider private alternatives. However, there is no obligation on employers to run testing programmes.

The guidance provides information about the types of testing available, as well as summarising relevant legal obligations (including when using apps) in Annex A. The following sections will be of particular interest to employers:

  • Before deciding to test staff. Employers are advised, among other things, to consider the scope of any testing programme (for example, whether contractors will be tested), the frequency of testing, arrangements for individuals who refuse to be tested and how test results will be used.
  • Communicating the intention to test staff. Employers are advised that any communications should be transparent and outline how any testing programme will operate in practice. Employers are “strongly advised” to consult with staff associations or unions before implementing any policy. They are also reminded of the need to comply with the GDPR and the Data Protection Act 2018, by ensuring that all data is processed lawfully, fairly and transparently and that staff are aware of how their personal data will be used, shared and kept.
  • Contact tracing staff. The guidance anticipates that, although not compulsory, employers may want to introduce internal tracing systems alongside testing programmes. It states that any individual who has been identified as a contact by an internal tracing system, but not by NHS Test and Trace, will not qualify for Statutory Sick Pay (SSP). Provision should be made for them to work from home where possible. If this is not possible, the guidance advises that the individual may remain entitled to full pay unless their employment contract provides otherwise. Individuals do not have to self-isolate unless they are contacted by NHS Test and Trace but are advised to avoid contact with those at “high increased risk” of severe illness resulting from COVID-19.

The guidance also provides information on how to communicate test results and with whom, and what employers can and cannot do with the results. It encourages employers to keep staff informed about potential or confirmed COVID-19 cases but advises that individuals should not be named. The guidance applies to England only, but it states that “equivalent guidance” will be published for Scotland, Wales and Northern Ireland.

COVID-19: Amended Government guidance on working safely, including mandatory Test and Trace

The government has recently made several updates to its guidance on ‘Working safely during corona virus (COVID-19)’ for different types of workplace. The guidance applies to businesses in England.

The key changes address the following:

  • The rule of six. New regulations restricting indoor or outdoor gatherings of more than six people (with some exceptions, including where the gathering is “reasonably necessary” for work or education) came into force on Monday 14 September.
  • Test and Trace. The guidance on NHS Test and Trace has been strengthened. Whereas it previously advised that employers “should” keep records of staff working patterns for a period of 21 days, it now mandates that employers “must” do so. Some employers whose customers attend their premises, such as restaurants, hair salons, sports clubs and heritage locations (but not shops or banks), must now ask at least one member of each customer party visiting the site to provide contact details, “to ensure that businesses are able to remain open“.
  • Priority actions. Each guidance document now starts with a list of “priority actions” and further key points to be aware of. Priority actions cover such things as risk assessments, cleaning, face coverings, social distancing, ventilation, Test and Trace records, and turning away anyone with symptoms of COVID-19.

Importantly, the guidance refers to “new regulations” on Test and Trace, with financial penalties for non-compliance, which came into force on 18 September 2020, as set out in a Press release on 10 September.

COVID-19: New HMRC guidance on calculating furlough pay for employees who come off furlough partway through a claim period

On 11 September 2020, HMRC amended its guidance on how employers should calculate the amount of a claim under the Coronavirus Job Retention Scheme (CJRS) to include a new method of calculation for employees whose furlough or flexible furlough ceases partway through a claim period.

To calculate how many furloughed hours they can claim for in respect of each employee, an employer must work out the employee’s usual working hours in the claim period as well as the number of these hours that the employee has worked and has not worked.

The guidance now states that, when claiming in respect of an employee who comes off furlough or flexible furlough partway through a claim period, an employer should:

  • Only calculate the employee’s usual hours up to the last day of furlough, instead of to the end of the claim period.
  • Not include any working hours after the last day of furlough.

This applies even if the claim period includes days after the employee’s last day of furlough (for example, because the employer is claiming for multiple employees and some of them stay on furlough).

The amended calculation should be used from 14 September 2020 but employers do not need to amend claims submitted prior to this date.

HMRC’s worked example of how to calculate 80% of wages for a fixed-rate employee who returns to working their usual hours during the claim period (set out in a document containing multiple worked examples based on different scenarios) has been updated to reflect the new method of calculation.

COVID-19: Pandemic leads to backlog of 45,000 employment tribunal cases

According to the Law Society Gazette, Ministry of Justice data shows a backlog of cases waiting to be heard at employment tribunal level that reached 45,000 in August 2020. This represents a 26% increase from the start of March. The Office for National Statistics revealed that the UK’s unemployment rate also rose during this period from 3.9% to 4.1% from April to July 2020. The growing tribunal backlog may be due in part to the increase in redundancies, and in part due to listing difficulties during the COVID-19 pandemic.

ACAS: Updated ‘Guidance on Managing Staff Redundancies’ published

ACAS has updated its ‘Guidance on Managing Staff Redundancies’. It covers matter such as how to make a redundancy plan, avoiding compulsory redundancies, carrying out consultations, how to select employees for redundancy and given them notice, and working out redundancy pay. It also includes a section on supporting your staff and planning for the future.

Data Protection: ICO launches accountability framework

On 10 September 2020 the Information Commissioner’s Office (ICO) published its accountability framework, designed as a practical tool to help organisations of every size understand what good accountability looks like. It has been launched in beta with the ICO keen to hear feedback on the tool.

The framework includes expectations and examples of how to demonstrate accountability. It also includes an accountability self-assessment tool. It is divided into ten categories which cover topics such as leadership and oversight, policies and procedures, training and awareness, individuals’ rights, transparency, record keeping, contracts and data sharing, risk assessments, record management and security, and breach response and monitoring.

The ICO notes that embedding accountability in an organisation will help to enhance its reputation as a business that can be trusted with personal data.

Further Information:

If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on: hello@dixcartuk.com

The data contained within this document is for general information only. No responsibility can be accepted for inaccuracies. Readers are also advised that the law and practice may change from time to time. This document is provided for information purposes only and does not constitute accounting, legal or tax advice. Professional advice should be obtained before taking or refraining from any action as a result of the contents of this document.