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© Bircham Dyson Bell LLP 2017 50 Broadway London SW1H 0BL | 51 Hills Road Cambridge CB2 1NT

Jesper Christensen (Partner)E [email protected] +44 (0)20 7783 3545

REFUSAL TO PAY ENHANCED SHARED PARENTAL PAY TO FATHER WAS DISCRIMINATIONIn Ali v Capita Customer Management Limited, an Employment Tribunal has ruled in favour of a father who claimed that paying enhanced maternity pay to female employees, but not enhanced shared parental pay to male employees, was direct sex discrimination.

Mr Ali took two weeks’ paid paternity leave immediately after the birth of his daughter. Whilst on paternity leave, he informed Capita that his wife was suffering from post-natal depression. Since his wife was medically advised to return to work to assist her recovery, Mr Ali requested further time off to care for his daughter. Capita informed him that he was eligible for shared parental leave (SPL), but that he would only receive statutory shared parental leave pay. Since Mr Ali’s female colleagues who took maternity leave were entitled to 14 weeks’ full pay, he brought a grievance alleging that he should receive the same entitlement as female employees. The grievance was rejected, and Mr Ali then brought various claims in the Employment Tribunal, including a claim for direct sex discrimination.

Under the Equality Act 2010, in determining whether a man

has suffered sex discrimination, no account can be taken of special treatment afforded to women in connection with pregnancy or childbirth, if that treatment is reasonably necessary to remove the disadvantage suffered by those women. It was accepted by both Mr Ali and Capita that the compulsory maternity leave period of two weeks amounted to special treatment afforded to women in connection with pregnancy or childbirth, since its aim is to help with recovery after childbirth. This meant that Mr Ali could not claim sex discrimination in respect of that two week period.

However, the Tribunal rejected Capita’s argument that the full 14 week maternity leave period was also connected with giving birth and therefore amounted to special treatment. It held that after the compulsory maternity leave period, Mr Ali could compare himself with a hypothetical female colleague on maternity leave because

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men and women are in the same position with respect to caring for babies. The Tribunal emphasised that looking after a baby is not a role exclusive to mothers, particularly as men are being encouraged to play a greater part in childcare, and mothers should not receive more pay because of a generalised assumption that they are best placed to undertake that role. In this case, Mr Ali was best placed to care for his baby, given his wife’s post-natal depression and her need to return to work. Since a female colleague would be entitled to full pay for 14 weeks, whilst Mr Ali was only entitled to statutory pay, the Tribunal concluded that this was direct sex discrimination.

This is only an Employment Tribunal decision, and is therefore not binding in other cases. It should also be noted that other Tribunals have reached contrasting decisions. Since both men and women can take SPL, there is a strong

argument that the correct comparator is a female colleague taking SPL. For example, in Hextall v Chief Constable of Leicestershire Police, a male police officer was unsuccessful in his claim that he should receive full pay for SPL because the Tribunal held that the correct comparator was a female officer on SPL rather than maternity leave. In Hextall, the Tribunal highlighted significant differences between maternity leave and SPL, and took the opposite view that maternity leave and maternity pay do amount to special treatment afforded to women in connection with pregnancy or childbirth, which is justifiable given the financial and work-related disadvantages suffered by new mothers. We understand that both the Hextall and Ali cases are being appealed, which should result in welcome clarification for employers on these issues.

...LOOKING AFTER A BABY IS NOT A ROLE EXCLUSIVE TO MOTHERS, PARTICULARLY AS MEN ARE BEING ENCOURAGED TO PLAY A GREATER PART IN CHILDCARE...

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Brian Gegg (Partner)E [email protected] T +44 (0)20 7783 3570

FUTURE PROMOTIONS CAN BE CONSIDERED WHEN DECIDING REASONABLENESS OF RESTRICTIVE COVENANTSIn Egon Zehnder Ltd v Mary Tillman, the High Court has ruled that although the reasonableness of restrictive covenants must be judged when they were entered into, the parties’ expectations of future promotions at that time may also be taken into account in exceptional cases.

In 2004 Mrs Tillman was recruited by Egon Zehnder, an executive search company, to work as a consultant in their financial services group. Her starting salary and guaranteed bonus were unusually high because she was seen as a ‘considerable prize’. This turned out to be true and she received several promotions unusually early. By 2012 Mrs Tillman was Co-Global Head of the Financial Services Practices Group. Since she had not signed any new contracts of employment with each promotion, she was still employed under the terms of her original 2004 contract.

In early 2017 Mrs Tillman resigned and informed Egon Zehnder that she was going to work for a competitor. Egon Zehnder applied for an injunction against her, alleging that she was in breach of the six-month non-compete clause contained in her 2004 contract. Mrs Tillman argued that the non-compete clause had been unenforceable when the parties entered into it at the start of her employment because it was wider than reasonably required to protect the company’s legitimate business interests given her relatively junior role at that time.

The High Court confirmed that the correct approach was to look at the employee’s status

at the time the covenant was entered into. In this case, the non-compete clause would have been too wide for a normal consultant role and therefore unenforceable. However, the High Court held that it was also appropriate to take into account the parties’ expectations of Mrs Tillman’s future prospects. It was in the contemplation of both parties in 2004 that Mrs Tillman would be rapidly promoted, and that she would therefore have a higher level of client engagement and involvement with strategic matters than would usually have been expected. Since these were protectable business interests, the High Court concluded that

...THIS CASE MAY ASSIST EMPLOYERS WHO CAN SHOW THAT THEY RECRUITED AN EMPLOYEE WITH THE CLEAR EXPECTATION OF RAPID PROMOTION TO A SENIOR ROLE...

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Caroline Yarrow (Partner)E [email protected] T +44 (0)20 7783 3538

EMPLOYMENT APPEAL TRIBUNAL RULES DISMISSAL WAS FAIR DESPITE FAILURE TO PROVIDE REASONS FOR REJECTING APPEALIn Elmore v The Governors of Darland High School and another, the EAT had to consider whether to uphold an Employment Tribunal’s decision that a dismissal was fair where no reasons were given for rejecting the employee’s appeal against dismissal, and where the employer had failed to call a member of the appeal panel to give evidence at the Tribunal hearing.

Mrs Elmore was employed as a maths teacher at Darland High School (DHS). In 2013, the school inspectorate reported that DHS’ performance in maths was consistently lower than other schools. In January 2014, Mrs Elmore’s class performed particularly badly in their exams and this resulted in DHS taking her through its capability procedure. After offering Mrs Elmore additional support and an opportunity to improve, DHS concluded that she had failed to meet the required standard and dismissed her on capability grounds. Mrs Elmore appealed. The appeal panel upheld her dismissal without providing her with reasons for their decision. She then brought a claim for unfair dismissal in the Employment Tribunal.

The Tribunal held that Mrs Elmore’s dismissal was both procedurally and substantively fair. It held that she had received suitable supervision

and encouragement, and that DHS had grounds for concluding that she had failed to reach the required standard. The Tribunal noted the appeal panel’s failure to provide specific reasons for upholding the decision to dismiss, and DHS did not call a member of the appeal panel to give evidence at the Tribunal. However, the Tribunal concluded that it could be gleaned from the appeal panel’s decision to uphold the

the non-compete provision was enforceable.

This case may assist employers who can show that they recruited an employee with the clear expectation of rapid promotion to a senior role. However, in order to minimise the costs and risks

involved in litigation, restrictive covenants should always be tailored to the individual employee at the time they are entered into, and employees should be required to enter into fresh restrictive covenants upon a promotion if the existing restrictions are no longer adequate.

...DHS CONCLUDED THAT SHE HAD FAILED TO MEET THE REQUIRED STANDARD AND DISMISSED HER ON CAPABILITY GROUNDS...

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dismissal that their reasons were the same as those of the original dismissal panel.

Mrs Elmore appealed to the EAT on the grounds that the Tribunal had erred in law by concluding that her dismissal was procedurally fair when there was insufficient evidence to conclude that there had been a fair appeal.

The EAT dismissed her appeal, ruling that the Tribunal had been entitled to conclude that Mrs Elmore’s dismissal was fair on the facts. The Head of Maths, who had conducted many observations of Mrs Elmore’s lessons, had given evidence in the Tribunal hearing. A member of the capability hearing panel had also given evidence on the reasons for the decision to dismiss. Minutes of the appeal hearing had been disclosed and considered by the Tribunal from which it was clear that the appeal panel had explored relevant issues and asked the appropriate questions, and that

no new evidence had been introduced by Mrs Elmore. In addition, although the appeal decision letter could be criticised for its lack of reasons, the letter did set out the capability panel’s reasons for dismissal. The EAT concluded that, in the context of what had happened before the appeal stage, the Tribunal had drawn a permissible inference that the appeal panel upheld Mrs Elmore’s dismissal for the same reasons as those identified in the original capability hearing.

Although the failure to provide reasons for rejecting the employee’s appeal did not affect the outcome in this case, it is good practice to provide written reasons for dismissing or upholding an appeal. This case may have been decided differently if the appeal had involved any fresh evidence or new arguments. It should also be noted that DHS was able to demonstrate that its capability procedure had been robust and

fair, and that the appeal panel had reached its decision in an objective, impartial and balanced way.

...IT IS GOOD PRACTICE TO PROVIDE WRITTEN REASONS FOR DISMISSING OR UPHOLDING AN APPEAL...

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Tim Hayes (Associate)E [email protected] +44 (0)20 7783 3790

EMPLOYMENT APPEAL TRIBUNAL CONSIDERS STATUTORY EMPLOYMENT RIGHTS OF UK EXPATSSince the Employment Rights Act 1996 is silent as to its territorial scope, it has been left to the courts to provide guidance on whether employees working overseas have statutory employment rights in the UK.

In Green v SIG Trading Limited, the Employment Appeal Tribunal (EAT) considered whether a British citizen who was employed by a British company to work in Saudi Arabia could bring an unfair dismissal claim.

Mr Green is married to a Lebanese national, has lived in the Middle East for over 15 years, and has no home in the UK. He was recruited by SIG, a UK registered company, to work as the Managing Director of its business in Saudi Arabia. Mr Green continued to live in Lebanon and commuted to Saudi Arabia for two to four days each week. He reported to a manager based in the UK, and other staff and support services were located in the UK.

Although he was paid in sterling, he was exempt from UK tax and national insurance. Mr Green was given SIG’s standard UK contract which was stated to be governed by English law and referred to UK employment legislation.

Due to poor financial performance, SIG decided to close its business in Saudi Arabia, and Mr Green was made redundant. An Employment Tribunal ruled that it did not have jurisdiction to hear Mr Green’s claim of unfair dismissal because there was not a sufficiently strong connection between his employment and the UK. The Tribunal accepted SIG’s evidence that it had used its standard-form UK contract only for convenience and that in reality he was an expatriate employee with stronger connections to Saudi Arabia and the Middle East. The Tribunal also held that the fact that his dismissal was handled by the UK business was done simply for pragmatic reasons.

However, the EAT upheld Mr Green’s appeal. It ruled that the Tribunal had been wrong to automatically accept SIG’s explanations, such as using their standard UK contract ‘for convenience’. The assessment of whether Mr Green’s employment had a stronger

...THE TRIBUNAL SHOULD NOT THEREFORE HAVE IGNORED THE FACT THAT HIS CONTRACT STATED THAT IT WAS GOVERNED BY ENGLISH LAW...

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connection with the UK or Saudi Arabia had to be viewed objectively, taking into account all relevant circumstances. The Tribunal should not therefore have ignored the fact that his contract stated that it

was governed by English law and referred to UK employment law. The case was remitted to the Employment Tribunal for reconsideration.

This case highlights the risks for employers in using standard UK employment contracts for employees working overseas. It is vital that contracts are tailored to the individual circumstances of each employee. In particular, careful thought should be given to the choice of law which will govern the contract of employment since this will be relevant to determining contractual disputes and the extent to which the employee has UK statutory employment protections, such as the right to claim unfair dismissal and discrimination.

...THIS CASE HIGHLIGHTS THE RISKS FOR EMPLOYERS IN USING STANDARD UK EMPLOYMENT CONTRACTS FOR EMPLOYEES WORKING OVERSEAS...

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Aisleen Pugh (Associate)E [email protected] +44 (0)20 7783 3788

UK WORKER COULD BE ENTITLED TO TERMINATION PAYMENT FOR UNPAID ANNUAL LEAVEThe Advocate General has issued his opinion in the case of King v The Sash Window Workshop Ltd (SWW) that a salesman who was wrongly classified as self-employed rather than a worker throughout his 13 year engagement was entitled to payment in lieu of unpaid statutory holiday when he left the company.

Mr King worked as a self-employed, commission-only salesman for SWW from June 1999 until 2012. Despite being offered an employment contract by the company in 2008, which would have given him the right to paid annual leave, Mr King chose to remain self-employed under a contract which made no provision for paid holiday. He took varying amounts of unpaid holiday each year. Throughout his engagement, Mr King was never provided with any opportunity to take paid annual leave, nor did he request it.

In October 2012, SWW terminated Mr King’s contract. Mr King claimed that he should have been treated as a worker, not self-employed, and sought compensation for pay in lieu of accrued but untaken annual leave for his entire engagement with SWW. He alleged that he had not taken his full leave entitlement each year because it would have been unpaid. The Employment Tribunal held that both parties had genuinely mistaken Mr King’s status and agreed that he had been a worker, not a self-employed consultant. This meant that he was entitled to payment in lieu of accrued but untaken holiday for the whole of his 13 year engagement. However, the Employment Appeal Tribunal (EAT) upheld SWW’s appeal, ruling that since Mr King had worked during the periods when he might have taken the

annual leave, he had not lost out financially. Mr King’s case eventually reached the Court of Appeal, which sought guidance from the ECJ on whether Mr King should be paid in lieu for all his untaken annual leave even though he had never requested to take it.

The Advocate General’s opinion notes that the EU Working Time Directive requires employers to provide ‘adequate facilities’ to allow workers to exercise their right to paid annual leave. An ‘adequate facility’ will usually be specific contractual terms giving workers the right to take paid leave. A worker who has not taken some or all of their annual leave entitlement because their employer refuses to pay them during that leave is entitled to claim that they have been prevented from exercising their right to paid leave under the Directive. In these

... THIS MEANT THAT HE WAS ENTITLED TO PAYMENT IN LIEU OF ACCRUED BUT UNTAKEN HOLIDAY FOR THE WHOLE OF HIS 13 YEAR ENGAGEMENT...

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circumstances, the right carries over until the worker has the opportunity to exercise that right. The Advocate General’s opinion also confirms that if no adequate facility for the exercise of the right to paid leave has been provided, the holiday pay due on termination should cover the full period of employment, with no restriction on the length of the carry over period.

As Mr King’s contract was silent on the issue of paid annual leave, the Advocate General stated that this necessarily meant that no ‘adequate facility’ was provided by SWW for Mr King to exercise this right. If SWW’s offer to Mr King of an employment contract in 2008 amounted to provision of an adequate

facility, then a payment in lieu of all untaken annual leave would be payable from the commencement of Mr King’s employment in June 1999 to the date on which the offer was made. However, if the offer did not provide an adequate facility, then payment in lieu would have to cover the full 13 year period of his employment.

It is clear from recent cases that there are potentially large numbers of individuals working in the gig economy who have been treated by their employers as self-employed when in fact they are workers or employees. If the ECJ’s ruling follows the Advocate General’s opinion, this could therefore have significant financial and administrative consequences for these

employers. Mr King’s holiday claim, for example, amounts to around £27,000. However, his claim will still then have to return to the Court of Appeal to decide whether it should succeed on its facts. It should also be noted that this claim only deals with the situation where workers have not taken annual leave because they have been led to believe it will not be paid. Workers who have taken leave but not been paid for it must bring a deduction from wages claim, which must be brought within three months of the deduction or the last in a series of deductions.

...THERE ARE POTENTIALLY LARGE NUMBERS OF INDIVIDUALS WORKING IN THE GIG ECONOMY WHO HAVE BEEN TREATED BY THEIR EMPLOYERS AS SELF-EMPLOYED WHEN IN FACT THEY ARE WORKERS OR EMPLOYEES...

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AND FINALLY...The Information Commissioner’s Office (ICO) has updated its code of practice on subject access requests (SARs) to reflect two important Court of Appeal judgments published earlier this year: Dawson-Damer and others v Taylor Wessing LLP and Ittihadieh v 5-11 Cheyne Gardens RTM Company Ltd and others. The revised code provides useful guidance on how the ICO expects to see SARs dealt with in light of these cases, for example, by clarifying the scope of the disproportionate effort exception and the factors a court can take into account when deciding whether or not to order an organisation to comply with a request. The code also confirms that the motives behind a SAR are not relevant. Employers should consider whether changes to their procedures on SARs are necessary to reflect these changes.

The Office for National Statistics and the Department for Business, Energy and Industrial Strategy have published the 2016 statistics on trade union membership. The number of employees who are trade union members is 6.2 million, the lowest rate of trade union membership recorded since 1995. This is a 4.2% decrease over the year from 2015, the largest annual fall recorded since 1995, despite an increase in the number of employees during that period. The proportion of employees who were trade union members fell to 23.5% in 2016, from 24.7 % in 2015. Both private sector and public sector

memberships have declined, with the overall proportion of employees who are union members remaining much lower in the private sector (13.4%) than the public sector (52.7%).

On 21 June 2017, the Queen’s Speech set out details of policies and legislation for the 2017-2019 Parliamentary session. Key points of interest in employment law include an increase in the national living wage to 60% of median earnings by 2020; a new Data Protection Bill to implement the EU General Data Protection Regulation which comes into force in May 2018; an Immigration Bill to establish a new national policy on immigration; a commitment to the recently-published Taylor Review of Modern Employment Practices; and a pledge to make further progress in

Nicholas Le Riche (Partner)E [email protected] T +44 (0)20 7783 3560

...QUEEN’S SPEECH SET OUT DETAILS OF POLICIES AND LEGISLATION ...KEY POINTS OF INTEREST ...INCLUDE AN INCREASE IN THE NATIONAL LIVING WAGE TO 60% OF MEDIAN EARNINGS...

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tackling the gender pay gap and all forms of discrimination.

The Society of Occupational Medicine has recently published a paper calling for more investment in occupational health. The paper highlights the business case for providing occupational health services as well as the benefits for employees and the wider economy. For example, occupational health services can improve work performance and productivity; reduce absenteeism; help prevent work-related illnesses; and enhance employee engagement. The paper also stresses that, although it can be difficult to quantify these benefits, investment in multi-disciplinary occupational health services should be highly cost-effective.

BSI, the business standards company, has launched a new standard for employers to provide guidance on best practice in promoting diversity and inclusion (BS76005 ‘Valuing people through diversity and inclusion – code of practice for organisations). The new standard includes

recommendations for people management and development; the evolution of more inclusive policies, procedures and behaviours; and building productive relationships with third parties such as customers, clients and within communities. It is relevant to all organisations, regardless of size or sector, and takes an approach which goes beyond the protections in the Equality Act 2010. The standard also applies to those working on behalf of an organisation, such as agencies, sub-contractors and the self-employed.

The EU Article 29 Working Party, which provides expert

advice on EU data protection law, has recently issued an opinion on data processing at work. This updates previous opinions and covers the additional obligations to be placed on employers by the EU General Data Protection Regulation. The opinion identifies areas where new technologies pose a risk to employees’ privacy, including recruitment, in-employment screening, monitoring of ICT usage inside and outside the workplace, video monitoring systems, and international transfers of employee data. Useful guidance is provided on how employers can balance their own legitimate interests in these areas with employees’ reasonable expectations of privacy. Consent will not be a valid legal basis for most data processing at work because of the imbalance of power between employer and employee. Valid grounds include processing necessary for the performance of the employment contract or to comply with employment law. However, processing must still be proportionate to the business need.

...INVESTMENT IN MULTI-DISCIPLINARY OCCUPATIONAL HEALTH SERVICES SHOULD BE HIGHLY COST-EFFECTIVE...

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