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Employment Law Case Update – April 2023
The devil is in the detail. This month’s case updates include recusing an EAT member for apparent bias to ensure impartiality, upholding a procedural system so that mass litigants could not be removed from an equal pay case, and taking a look at the detail of restrictive covenants, to reduce the effect where it was too fantastical to be valid.
- Tribunals: EAT lay member recused due to appearance of bias
- Equal Pay: 700 Sainsbury’s staff to remain in equal pay claim
- Restrictive Covenants: Is a restrictive covenant still valid if it unintentionally covers “fantastical” areas which were not contemplated, as well as what it set out to do?
Tribunals: EAT lay member recused due to appearance of bias
In Higgs v Farmor’s School and the Archbishops’ Council of the Church of England [2023] EAT 45, the EAT allowed the appellant’s application for the recusal of a lay member from hearing the instant appeal against the respondent. The appellant had filed for an application for the recusal of the lay member, AM, from the hearing of the appeal based on apparent bias. It was alleged that AM’s former position as Assistant General Secretary of the National Education Union (NEU), when that entity was campaigning on matters of educational policy, had publicly expressed clear views, on the opposite side of a heated debate to the position of the appellant. The respondent did not consent to the application for recusal.
The court held, among other things, that a reasonable and well-informed observer would not see AM as an impartial judge for the appeal. Accordingly, applying the test of the fair-minded and informed observer (Porter v Magill), there was an appearance of bias such that the lay member should be recused from hearing the appeal.
Equal Pay: 700 Sainsbury’s staff to remain in equal pay claim
In Sainsbury’s Supermarkets Ltd v Clark [2023] EWCA Civ 386 the Court of Appeal, Civil Division, dismissed the appeal brought by the appellant, a supermarket company, from a decision which had allowed the respondents’ appeal and reinstated their claims. In 2015 and 2016 a large number of employees working in supermarkets brought equal pay claims against their employers, who included the appellant and other well-known retailers. The case involves two separate but related equal pay claims against Sainsbury’s Supermarkets Ltd and Lloyds. One was brought by women seeking equal pay to male staff and another that would ensure men’s pay does not fall below the women’s if the first claim succeeds.
The claims had generally been brought on a multiple claim form, a type of document expressly permitted by rule 9 of the Employment Tribunals Rules of Procedure. The appellant alleged that the judge had erred in law in interpreting rules 10 and 12 of the Employment Tribunals Rules of Procedure 2013. It added that the employment tribunal should have rejected large numbers of those claims on the grounds that the claim forms did not contain the reference number of a certificate issued by the Advisory, Conciliation, and Arbitration Service relating to early conciliation (EC) of their claims.
The court held, among other things, that the judge’s construction of rule 10 was the correct one. A panel of three judges in the Court of Appeal unanimously ruled that the attempt by Sainsbury’s to remove the majority of claimants in the 865-person lawsuit because their names were not listed in early-stage paperwork was “highly technical” and lacked “any substantive merit”. While a claim form should contain the name and address of each claimant and each respondent, it was sufficient for it to contain the number of an EC certificate on which the name of one of the prospective claimants appeared. There was no suggestion the 700 workers had failed to follow the correct procedure, Lord Justice Bean held.
“It has been repeatedly stated that employment tribunals should do their best not to place artificial barriers in the way of genuine claim”’, Lord Justice Bean wrote. “The complaint is no more and no less than that the employment tribunal claim form did not give the appropriate certificate number”.
Tribunal rules requiring claimants to provide this information are a “preliminary filter” rather than an opportunity to strike out a claim, he added. “I do not accept…that the existence of the certificate should be checked before proceedings can be issued, still less to lay down that if the certificate number was incorrectly entered or omitted the claim is doomed from the star”’, Lord Justice Bean ruled.
Accordingly, the Court upheld the EAT’s decision in the respondents’ favour for a more fundamental reason relating to the structure and wording of the Rules of Procedure.
Restrictive Covenants: Is a restrictive covenant still valid if it unintentionally covers “fantastical” areas which were not contemplated, as well as what it set out to do?
The Court of Appeal in Boydell v (1) NZP Limited and (2) AI ICE (Luxembourg) Midco S.A.R.L. [2023] EWCA Civ 373, was tasked with considering whether a restrictive covenant that covered what it needed to and what had been contemplated by the parties, but also unintentionally covered other areas (described as “fantastical”) and which had not been contemplated, can it still be valid?
Dr Boydell worked for NZP Ltd, a specialist pharmaceutical business covering a niche area of the pharmaceutical industry described in summary as the development, production and sale of bile acid derivatives for sale to pharmaceutical companies for use by them in their products and is part of the ICE Pharma Group of companies (the second defendant being the ultimate holding company). His contract of employment included a non-competition covenant preventing him from working in any capacity for any competing businesses of either NZP or any of its group companies.
NZP and ICE sought to enforce two sets of restrictive covenants. One set, contained in a variation to the Appellant’s employment contract, ran for one year from the termination of his employment. The other set, contained in a shareholder’s agreement ran for two years. The judge granted an interim injunction enforcing the one year covenants in the employment contract until the trial, with some modifications but refused to enforce the two year restrictions in the shareholder’s agreement (which the companies did not seek to appeal). In doing so, the Judge severed certain parts of the clause, including removing the reference to other group companies. This decision was appealed by NZP who argued that the Judge could not use severance to significantly change the effect of the restraints.The Court of Appeal disagreed and held that if a clause covers what it needs to and what was contemplated but also unintentionally covers areas which are “fantastical” (Home Counties Dairies Ltd v Skilton) then it may still be valid. If there are two realistic constructions then the court should rely on the one which would result in a valid clause. This meant that, by severing the references to group companies (which were “fantastical”), the Judge had not significantly changed the overall effect of the clause.
Lord Justice Bean (at para.30) said, “The whole burden of the clause is directed to the specialist activities of NZP, which it lists at some length. The judge was entitled, at least at the interim injunction stage, to sever the words from the clause and grant an injunction on a more limited basis. There is a serious question to be tried as to whether other group companies have significant areas of business which are wholly distinct from the activities carried out by NZP. I would, however, refuse Ms Stone’s application for permission to cross-appeal against the judge’s decision to sever the relevant words from clause 3.1.”
Further Information:
If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on: hello@dixcartuk.com
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Employment Law Case Update – March 2023
A round-up of the most significant employment law cases to be published over the last month regarding unfair dismissal and determining the date the contract was terminated, considering how an employee’s disabilities may have affected his conduct, respecting privacy through restricted reporting at tribunals and a look at how the ICO and Easylife settled a monetary penalty for unlawful data processing.
- Unfair Dismissal: Determining the effective date of termination of the contract
- Disability Discrimination: Determining whether an employee’s disabilities had had an effect on his conduct
- Restricted Reporting: Anonymity in hearing cases in the tribunals
- Data Protection: ICO and Easylife reach agreement regarding monetary penalty
Unfair Dismissal: Determining the effective date of termination of the contract
In Meaker v Cyxtera Technology UK Ltd [2023] EAT 17 the Employment Appeal Tribunal (the EAT) dismissed the employee’s appeal, concerning the correct approach, in law, to the calculation of the effective date of termination of employment (EDT), pursuant to s.97 of the Employment Rights Act 1996 and for the purposes of a complaint of unfair dismissal. The employee appealed after his unfair dismissal claim was struck out as being out of time. The employer argued that the determination of the EDT was not governed by contractual principles and that, where an employee was dismissed in breach of contract, the EDT was the date on which the dismissal was communicated, regardless of whether he accepted it.
The EAT ruled that the employment tribunal (the ET) had not erred in holding that a letter, which the employer had sent to the employee in February 2020, was a termination letter; and that the effective date of termination, for the purposes of the unfair dismissal claim, was the date of receipt of that letter, even if it had been a repudiatory breach that had not been accepted by the claimant at common law. The EAT held that it was not bound to conclude that the meaning of the letter was rendered ambiguous by the fact that the opening paragraph of the relevant settlement agreement had referred to termination being effected by mutual agreement; and that the ET had been entitled to take the view that, even where there had been no mutual agreement, the termination (by the letter) had been clear.
The EAT ruled that there was no sign in the authorities that it was considered that the EDT would only be the date of a repudiatory breach if the contract had, in fact, been brought to an end by the employee accepting that breach. Further, the EAT held that the ET had not erred in holding that the employee had not shown that it had not been reasonably practicable for him to have presented his unfair dismissal complaint in time.
Disability Discrimination: Determining whether an employee’s disabilities had had an effect on his conduct
In McQueen v General Optical Council [2023] EAT 36, the Employment Appeal Tribunal (the EAT) dismissed the employee’s appeal against the employment tribunal’s (the ET’s) decision, dismissing his claim which alleged unfavourable treatment by the respondent employer because of something arising in consequence of a disability, pursuant to s.15 of the Equality Act 2010 (EqA 2010). The employee had dyslexia, some symptoms of Asperger’s Syndrome, neurodiversity and left sided hearing loss, which had caused some difficulties with his interactions in the workplace. The employer, which was the statutory regulator of optometrists and opticians practising in the UK, had employed the employee as a registration officer. The employee had had ‘meltdowns’ at work, which had led to disciplinary proceedings. Subsequently, he had left that employment.
The employee contended that: (i) the ET had misapplied the broad test of causation required where a claim under s.15 was being considered, in that its reasoning had been contrary to the psychiatric and psychological evidence; (ii) the disability did not, necessarily, need to be the sole or even main reason for the ‘something’ that arose in consequence of it; (iii) the employer had, itself, linked the employee’s behaviour to his disabilities; and (iv) in considering whether there had been discrimination of the kind where ‘A treats B unfavourably because of something arising in consequence of B’s disability’ (EqA 2010 s 15(1)(a)), the ET had failed to appreciate that the words ‘in consequence of’ were, at least, as broad as the ‘because of’ test.
The EAT held that, although it had reservations about the structure and quality of the ET’s decision and reasoning, the ET had not erred in law or principle in the application of s.15 to the facts; and that it had not adopted too strict a test of causation when considering the effects of the employee’s disabilities. The correct reading of the decision was that the ET had found that those effects had not played any part in the conduct that had led to the unfavourable treatment complained of. The EAT held that, once the ET had determined that the employee’s disabilities had not had any effect on his conduct on the occasions in question, the further question whether any unfavourable treatment had been ‘because of’ that conduct had not arisen.
Restricted Reporting: Anonymity in hearing cases in the tribunals
In A v Choice Support (Formerly MCCH Ltd) [2023] EAT 18, the Employment Appeal Tribunal (the EAT) ruled on the respondent’s application, pursuant to r.19 of the Employment Appeal Tribunal Rules 1993, SI 1993/2854, to make permanent a temporary restricted reporting order which had been made at the EAT level, pursuant to r.23 of the 1993 Rules, and arising out of s.11 of the Employment Tribunal’s Act 1996 (the Act), and in line with an order made by the employment tribunal (the ET) pursuant to r.50 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations, SI 2013/1237 (r.50) and s.11 of the Act. The application arose in circumstances where the respondent provided support to vulnerable adults, and the employee alleged that an individual (EA), with whom she had worked at the same property, had raped her.
The EAT held that: (i) r.50 set out a much broader discretion beyond s.11 of the Act; (ii) the orders should make specific reference to which elements of s.11 and/or r.50 the relevant decision was applying; (iii) the distinction between anonymity orders and restrictions on reporting should clearly be separate parts of any such order, setting out whether they were made pursuant to the section or on broader grounds; (iv) if there was concern about jigsaw identification, any order should be made in terms which clearly prohibited publication of any particular detail of the case facts which it was thought might lead to identification; and (v) a restricted reporting order should only be made (and made permanent) when a less restrictive order would not suffice.
The EAT held that the employee should remain anonymised, that EA’s rights under art 8 of the European Convention on Human Rights had been engaged and that, as ‘a person affected’, he should be anonymised and that, because of the risk of jigsaw identification, EA’s parents should remain anonymised. Further, the EAT ruled that the anonymisation should be made the subject of a permanent order.
Data Protection: ICO and Easylife reach agreement regarding monetary penalty
The Information Commissioner’s Office (ICO) has reached an agreement with Easylife Ltd (Easylife) to reduce the monetary penalty notice to £250,000 for breaching the UK General Data Protection Regulation, Retained Regulation (EU) 2016/679 (UK GDPR). Easylife has accepted the ICO’s findings as set out in the monetary penalty notice and has agreed to pay the reduced fine. This follows the ICO’s fine to Easylife on 4 October 2022, where an investigation found that Easylife was making assumptions about customers’ medical conditions, based on their purchase history, to sell further health related products. This was deemed to involve processing of a special category data without a lawful basis, where Easylife has since stopped the unlawful processing of special category data.
Further Information:
If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on: hello@dixcartuk.com.
