FGazette July 2014

AZETTELawyers for today’s employers

JULY 2014

the quarterly newsletter of FG Solicitors

IN THIS ISSUE //

WHISTLEBLOWING

FLEXIBLE WORKING

WHERE TO DRAW THE LINE?

LEARN ABOUT THE NEW EXTENDED RIGHTS

CHAIRMAN'S VIEWin later months, which could be a deterrent to taking holiday in the first place. The decision is now to go back to the tribunal to decide how his holiday should be calculated.

This is not a task I envy the tribunal, given that the ECJ has not suggested how this should be done, other than by focussing on the average commission earned “over a reference period which is considered to be representative”. This appears to be another complication to the tricky matter of calculating appropriate holiday pay, which may also include overtime (even if voluntary, depending on the outcome of two cases to be heard by the Employment Appeal Tribunal at the end of July). We will keep you updated on this and other developments by our updates on our website and this newsletter.

Hello FGazette readers and happy Summer to you. It has been a busy few months since our last newsletter in terms of changes to employment law and there are more on the horizon. As well as early ACAS conciliation now being in full swing, flexible working requests for all employees (with 26 weeks’ service) are due to come into effect on 30 June 2014. You will see more on this subject within this edition of the newsletter, which focuses on updates in terms of case law and legislation.

A recent case which caught my eye was another on the matter of holiday pay. This time the European Court of Justice has held that commission (not just basic pay) must be taken into account when calculating holiday pay. The catch with this particular case is that the employee was actually paid commission during his annual leave (relating to commission earned prior to his annual leave). However, the employee succeeded in arguing that he should be entitled to further pay because he was unable to earn commission whilst on holiday, which would have an impact on his pay

Hello again FGazette readers!

2 Deanery CourtGrange Farm

Preston DeaneryNorthants NN7 2DT

Email: [email protected]: +44 (0)808 172 93 22

www.fgsolicitors.co.uk

IN THIS ISSUE //

page 3 //fg news

page 4 //WHISTLEBLOWING

page 6 //EXTENDING FLEXIBLE WORKING

PAGE 8 //PROTECTING YOUR BUSINESS

page 10 //EARLY CONCILIATION

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S O L I C I T O R SLawyers for today’s employers

BREAKFAST SEMINAR

BEING A GOOD NEIGHBOUR

In celebration of being admitted as a Solicitor in the Senior Courts of England & Wales, Joanne Duck, who works at our Deanery Court offices, recently attended the Law Society Admissions Ceremony for newly qualified solicitors. The ceremony was held at the historic Law Society Hall on Chancery Lane, London, where the Law Society has been located for over 150 years.The prestigious ceremony is an Joanne Duck receiving her practising

certificate

opportunity for newly qualified solicitors to be presented with their Practice Certificates and it is also a chance for them to thank their family and friends for the support they have been given on the road to qualification.

We would like to take this opportunity to congratulate Joanne for her achievements and wish her well as she develops and succeeds in the future!

On 5th June 2014, we hosted a breakfast seminar entitled ‘Employment Law Update – An Employer Focused Update’.

We would like to thank everyone who attended and as well as the team who worked hard to organise the event. If you were unable to attend but would like a copy of the seminar slides, please email: [email protected]

We are always keen to support our local community and are often involved with raising money for charity. If you know of any great causes that we can support, please let us know by emailing: [email protected]

SEE WHAT WE’VE BEEN UP TO AT FG SOLICITORS H.Q.FG

NEWs

Law Society Admission Ceremony

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WHISTLEBLOWINGTHE LINE BETWEEN

A QUICK TOOT & A VUVUZELA

STYLE BLASTUK workers who blow the whistle are protected from employers dismissing them or subjecting them to a detriment on the grounds that they have made a protected disclosure.

A protected disclosure is the disclosure of information which, in the reasonable belief of the worker making the disclosure, is made in the public interest and tends to show the existence of one of six particular states of affairs (eg. failure to comply with a legal obligation).

Although not the subject of this article, following a recent Supreme Court decision, an LLP member is considered as a worker and so has whistleblowing protection.

But what happens if a worker blows the whistle and will not stop?

Will they remain protected or could the continual noise be separated from the initial blast?

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UK workers who blow the whistle are protected from employers dismissing them or subjecting them to a detriment on the grounds that they have made a protected disclosure.

CONCLUSIONThis is an area where employers should tread carefully and seek advice if they think that an employee has blown the whistle but may subsequently be behaving unreasonably. An initial investigation into the whistleblowing allegations should always be carried out.

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Mr P was a police officer who made protected disclosures relating to officers’ treatment of victims. Although an investigation largely upheld his concerns, he continued to campaign to right the wrongs he had identified and which he thought had not been rectified. This campaign made Mr P increasingly difficult and time-consuming to manage and, after long term sickness absence, he was eventually dismissed.

The way in which Mr P continued to blow the whistle in this case was not acceptable to the employer and it meant that the continual noise was separated from the initial toot drawing the employer’s attention to a matter of concern. However, this is a fact specific case and it will be rare that an employee’s subsequent actions will be capable of being separated from the initial disclosure (in that they are “in no sense whatsoever connected with the public interest disclosures”, as the employment tribunal had found in this case). In this case, events occurred over a number of years and the employment tribunal commented, “the actions of the claimant were sufficient to try and to exhaust the patience of any organisation”.

Employers should also bear in mind that police officers do not have a statutory right not to be unfairly dismissed and it may well have been that the dismissal of another employee in these circumstances would have been unfair, even if it was not by reason of the employee making protected disclosures.

An employment tribunal (with the EAT upholding its reasoning) held that Mr P’s disclosures were not the reason for his dismissal (or other detrimental treatment). Rather than the disclosures themselves, it was the way in which the employee pursued his disclosures (i.e. his campaign and his employer’s increasing frustration) which lead to the employer treating him in the manner that it did. Although these events were related to the disclosures, they were distinct from the disclosures.

FACTS

What this means for employers

decision

This situation was considered in Panayiotou v Kernaghan by the Employment Appeal Tribunal (EAT).

EXTENDING FLEXIBLE WORKING - A FREE FOR ALL

Until 29 June 2014, only parents of children under 17, or 18 in the case of parents of disabled children, and those caring for an adult can apply to work flexibly under the statutory flexible working regime.

The Children and Families Act 2014As from 30 June 2014, the Children and Families Act 2014 has extended the right to request flexible working to all employees who have 26 weeks’ continuous service. This means that all employees who satisfy the continuous service requirement will have a statutory right to ask their employer for a change to their terms and conditions of employment to work flexibly. This could for example include homeworking, part time working, flexi time, job sharing or shift work.

A new duty to deal with requests in a "reasonable" mannerThose employers who have managed flexible working requests before will be aware that there has been a

prescriptive statutory procedure with defined deadlines, which has to be followed. This procedure has been replaced with a duty to deal with requests in a “reasonable” manner.

To support employers in ensuring that requests are dealt with reasonably, a new ACAS Code of Practice (Handling in a reasonable manner requests to work flexibly) and guidance have been introduced. In summary, the Code and guidance suggests as follows:

● An employer should arrange to meet with the employee to discuss their request once received unless it is happy to accept the proposal.

● Consideration should be given to allowing the employee to be accompanied by a trade union representative or a work colleague.

● Employers should weigh up the benefits of the request against any adverse impact on the business. Possible outcomes could be:

� request accepted; � compromise agreed; or � request rejected, on one of the eight specified “business reasons”.

● If the request is rejected employees should be advised of the “business reason” for this:

1. the burden of additional costs;2. an inability to reorganise work

amongst existing staff;3. an inability to recruit additional

staff;4. a detrimental impact on

performance;5. a detrimental impact on quality;6. a detrimental effect on ability to

meet customer demand;7. insufficient work for the period

the employee proposes to work; and

8. a planned structural change to the business.

(Notably, these are the eight business reasons previously provided for.)

● Employees should be advised of the decision in writing together with any right of appeal.

● The consideration process including the right of appeal must be completed within 3 months. If it is going to take longer any extension should be agreed with the employee.

● Employers must ensure that in coming to their decision they do not inadvertently discriminate against an employee. High risk areas are sex, disability and religious discrimination.

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Employees can only make the request once in a 12 month period.

Possibility of a trial periodUsefully the ACAS guidance suggests that where an employer is unsure about the arrangement requested, instead of rejecting the application, it could agree a temporary arrangement or a trial period. So that there is certainty, this must be communicated in writing. Competing requestsEmployers will be required to consider each application on its own merits. One area of concern is that there is no guidance on how employers will deal with competing applications and accusations of unlawful discrimination when an application is rejected. There is also no provision for prioritisation for those who have caring responsibilities.

Next step for employersThe new changes provide a useful opportunity for employers to refresh their knowledge and reflect on how they will respond to future flexible working applications. A good place to start is to introduce a flexible working policy or carry out a review of an existing policy. Clear current guidance for both employees and managers is important to manage the risk of a legal challenge. Broader operational issues should also not be overlooked. For example, if home working is introduced there should be a health and safety risk assessment and consideration needs to be given to the issue of data security.

The prospect of more employees seeking a different way of working may appear daunting, particularly for smaller organisations. The grounds for refusal are however not particularly restrictive. Following the correct process may allow both parties to reach some common ground. Employers when deciding how to respond should however not overlook the benefits of allowing staff a better work life balance, which can have a significant and positive effect on attendance, productivity and retention.

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PROTECTING YOUR BUSINESSMost businesses have in place some restrictive covenants/confidentiality clauses in employees' contracts in an attempt to protect their business should key staff leave. However, it is often less clear whether such clauses are enforceable and what can be done about them if the key staff member attempts to breach them.

We consider two (of many) recent cases concerning restrictive covenants/confidentiality, both where the employer has sought an injunction (i.e. a court order prohibiting a person from taking a particular action or requiring them to take a particular action). The first case deals with their enforceability if the covenants have been badly drafted. The second case explores whether an injunction to search employees’ computers can be granted.

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RESTRICTIVE COVENANT AND CONFIDENTIALITY UPDATE

Mr H was employed as a UK sales manager by Prophet for less than 2 years. Prophet is a software

developer and supplier for the fresh produce industry. Mr H resigned because he was offered a position in sales on a substantially higher salary with K3, which is also a software developer.

Mr H’s contract of employment contained a 12-month non-compete restriction that prevented him from working with a competitor in any area, in connection with any products with which he had been involved during his employment. If the restriction was read literally, this meant that the restriction was pointless because Prophet would be provided with no protection because no competitor would ever be selling Prophet products, which were the only products in or on which Mr H would realistically ever have been involved. The court identified this as a drafting error.

The court decided to amend the restriction so that it provided Prophet

with some protection, by correcting the drafting error. It did this by adding the words “or similar thereto” at the end of the covenant. This meant that the non-compete restriction would also apply to products that were similar to Prophet’s products.

The court also held that the 12 month time period of the covenant was not too long, even though Mr H’s superiors at board level were subject to covenants of the same length.

This case does not mean that the court will correct any drafting errors in covenants if an employer gets it wrong; this decision related to a specific set of circumstances, involving a minor change and the court could have been influenced by its view of Mr H as “a thoroughly unreliable witness”. Employers should also, however, take into account the possibility of a court changing the wording of a covenant when they are considering covenants in a prospective employee’s contract with their previous employer. The position may not be as it appears from a first look at the contract.

The former employees were accused of having copied and/or disclosed a customer database to a competitor during their employment.

There was evidence (which arose as a result of employment tribunal proceedings brought by one of the employees against the employer) that suggested that the employees were attempting to sell information from the database.

Their contracts of employment contained a confidentiality clause preventing them from using or disclosing confidential information during and after employment. The employer had taken years and used significant resources to create the confidential information in question.

The employees argued that the application (for the injunction) had been made to seek privileged information and harass one of the employees during her unfair dismissal proceedings against the employer.

The court granted the interim injunction sought by the employer. In this case, there were no restrictions (other than

confidentiality) on the employees, so the employees would not be prevented from working in their chosen field.

The court dismissed the idea that there was any meaningful connection between the application for an interim injunction and the employment tribunal proceedings.

The employer had stated that it was content to provide safeguards in respect of any client confidential or third party data on the relevant computers.

Employers who are concerned that former employees have breached covenants/confidentiality clauses in their employment contracts should seek advice on obtaining an injunction. Although an order permitting copying and viewing of former employees’ personal computers was granted in the current proceedings, this will not always be the case as it depends very much on the particular circumstances. In this case, there may have been a perceived lack of integrity in relation to the employees and there was also evidence of disclosure of confidential information.

Covenants may be difficult to enforce in some circumstances, but they are worthwhile putting in contracts of employment. In recent cases, courts appear to be more focussed on finding ways to protect businesses’ interests.

Enforceability and drafting In the case of Prophet Plc v Huggett, the court considered whether to grant an injunction to enforce a 12-month non-compete restrictive covenant.

Searching Computers

In the case of Warm Zones v Sophie Thurley, the court considered whether to grant an interim injunction compelling former employees to allow viewing and copying of their personal computers.

FACTS FACTS

WHAT THIS MEANS FOR THE EMPLOYER

WHAT THIS MEANS FOR THE EMPLOYER

decisiondecision

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CASE STUDYEarly Conciliation – A new Era

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Early conciliation (EC) is a new process and is intended to give parties the opportunity of settling disputes through ACAS to avoid tribunal claims. EC for most types of claim became mandatory from 6 May 2014. It covers, for example, the following types of claim: unfair dismissal, breach of contract, discrimination and equal pay, protection from a detriment and in the situation you describe, unlawful deduction of wages.

How will we know if conciliation has started?There are five stages to the EC process:

STAGE 1The claimant must contact ACAS to provide notification of their intention to bring a claim and will provide your details.

STAGE 2The ACAS EC officer (CO) will contact the claimant to clarify the complaint.

STAGE 3The CO will then contact you to see if you would like to participate in conciliation.

STAGE 4If both parties are willing to discuss settlement there will be a period of conciliation for up to a period of one month. This period can be extended for up to 14 days with both parties’ agreement, where there is a prospect of settlement occurring. The CO will explore the options for resolution without the need for a tribunal hearing. This could include the claimant withdrawing the claim or conversely, you paying compensation or in dismissal cases, considering reinstatement or re-engagement. ACAS cannot make any judgment or provide you with legal advice.

STAGE 5The CO will end the EC process and issue a certificate where at any time it appears that there is no reasonable prospect of achieving settlement. If settlement is reached the CO will prepare a COT3 setting out the terms of the settlement.

Do we get a choice?Yes. Each party can choose whether or not to participate. If either party refuses to enter into conciliation an EC certificate will be issued to confirm this is the case. You can also withdraw from the process at any time. A claimant is not prevented from bringing a claim if they choose not to participate in the EC process so long as they initially contact ACAS.

Question: We think we have underpaid ten of our employees. Someone mentioned early conciliation - what's that all about?

Do we have to pay for the service?No. It’s free.

Will there be ten separate EC periods in this case?Not necessarily. If one of the employees in the group of ten has already complied with the EC requirements in relation to the same dispute and the claims are similar, the others will not need to comply with this obligation.

When can the employee bring the claim?The claim cannot be brought until the CO has provided a unique EC reference number. The EC period can give the claimant a longer time period in which to bring a claim of up to one extra month, with a possibility of a two-week extension.

As we have lots of minor tribunal claims each year, do you have any tips for managing early conciliation?We would recommend that you have one point of contact in your HR Department or at a senior management level for dealing with ACAS. This should be publicised as it is possible employees may give their line manager’s details to ACAS.

You can of course nominate your legal representatives to deal with the CO. This may be advisable where the claim is likely to be complex or the amount of money involved is high. In any event, legal advice may assist at any stage of the EC process to help you understand the merits of the potential claim and decide whether settlement is the right way to proceed bearing in mind ACAS cannot advise you. Not all cases will be suitable for settlement but where they are, EC provides an early cost free mechanism for doing so on a confidential basis.

legislation timetable

Mandatory Pre-Claim ACAS Conciliation A duty on the parties and ACAS to attempt pre-claim conciliation involving a

five-stage procedure for early conciliation, which must be attempted before a claim

can be pursued.

Flexible Working The right to request flexible working will be extended to all employees. A statutory

code has been issued to give guidance as to how this will work in practice and is

supported by an ACAS good practice guide - Handling requests in a reasonable

manner to work flexibly: an ACAS guide.

TUPE - MICRO-BUSINESSES? Businesses with fewer than 10 staff will be allowed to inform and consult affected

employees directly when there is no recognised independent union, nor any existing

appropriate representatives.

Equal Pay The Government are set to introduce regulations giving employment tribunals the

power to order an employer to carry out an equal pay audit where it is found to have

breached equal pay law.

Health and Safety at WorkA review of the current health and safety legislation has been carried out at the

Government’s request. The Government has confirmed it will implement the key

recommendations to include a consolidation of health and safety legislation and

the deregulation of most self-employed people.

Zero Hours ContractsA Private Member’s Bill that aims to prohibit the use of zero hours employment

contracts has been presented to Parliament. The Bill was due to have its second

reading after 6 June 2014. Business secretary Vince Cable has announced plans to

ban exclusivity clauses in zero hours contracts.

Caste DiscriminationThe government is to be required to make an order to outlaw caste discrimination.

Pensions Act 2008: auto-enrolmentEmployers are required to automatically enrol “jobholders” into a pension scheme

by their “staging date”. These pension arrangements will need to meet minimum

standards and employers will be required to make contributions in respect of eligible

workers.

6 MAY 2014

30 June 2014

31 july 2014

1 october 2014

end of 2014

2014

SUMMER 2015

1 october 2012 to 2017

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To arrange a visiT or for more informaTion, please conTacT us on [email protected] or 0808 172 93 22visiT us online: www.fgsolicitors.co.uk

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S O L I C I T O R SLawyers for today’s employers

As an employer, do any of these issues sound familiar?

PP “Employment laws are all geared against the employers!”

PP “It isn’t worth employing people anymore!”

PP “Our employees know the Law more than we do!”

PP “The minute we say anything to them they go sick and we can’t touch them!”

PP “Doctors seem to sign them off for anything these days!”

PP “It’s one Law after another. Being in business isn’t about product anymore it’s all about preventing our company from being taken to Tribunal by our employees.”

PP “It doesn’t matter how bad they are you can’t touch them!”

PP “It has got to the point where we are afraid to run our Business!”

PP “My lawyers always start by telling me what I can’t do!”

PP “My lawyers tell me what the law says, I’m not interested that’s what I pay them for!”

If so, there is a solution! FG Solicitors offer a proactive, practical and jargon free approach providing employers with confidence when it comes to employment law. To find out what you CAN do please contact us to arrange a meeting.

WELCOME TO A MORE CONFIDENT FUTURE!