I INTRODUCTION

In the United Kingdom, employment tribunals are the principal forum for resolving employment disputes. The Employment Tribunals Act 1996 sets out the claims over which tribunals have jurisdiction. However, typically, many employment-related contractual disputes are dealt with in the civil courts; for example, disputes relating to restrictive covenants and high-value bonus disputes.

As employment law is heavily influenced by EU law, it will be interesting to see what the impact of Brexit will be on UK employment law.

II PROCEDURE

i Employment tribunals

Acas

From 6 May 2014, a mandatory early conciliation (EC) procedure with the Advisory, Conciliation and Arbitration Service (Acas) came into force to provide the opportunity for disputes to be resolved without resorting to a tribunal. As a result, a claimant must contact Acas prior to presenting a claim to a tribunal. Conciliation is intended to be confidential, impartial, independent and free. Acas takes a fairly light-touch approach to EC and the parties are not compelled to engage in the process. The Acas conciliation officer has one month to attempt to resolve the dispute, which may be extended by up to two weeks by agreement.

If EC is refused by one of the parties, or attempts at a resolution are unsuccessful within the established time frame, an EC certificate is issued confirming that Acas conciliation has been complied with. The claimant can then proceed to issue a claim.

Data subject access requests

Individuals have a right to make a data subject access request (DSAR) to access personal data that is held about them. In light of the General Data Protection Regulation (GDPR), which came into force on 25 May 2018, there has been a rise in the number of DSARs being made by employees to employers. Increasingly, the requests are in the context of ongoing disputes or a tribunal claim by employees as a means of obtaining advance disclosure of documents or using it as leverage to achieve settlement in view of the time and expense that a company can incur by responding to a DSAR. We have seen a corresponding increase in the investigations undertaken by the Information Commission Officer. DSARs are often complex, involving careful consideration of what constitutes personal data and who the data subject is.

Employment tribunal proceedings

All tribunal proceedings are regulated by the Employment Tribunals Rules of Procedure 2013 (the Tribunal Rules). In accordance with the Tribunal Rules, to commence proceedings, a claimant must present a completed ET1 claim form, to the tribunal. With effect from 26 July 2017, there is no fee for bringing or defending a tribunal claim.

One of the key factors an individual must consider before presenting a claim to a tribunal is the time limit applicable. Generally, a claimant has three months, starting from the date of the relevant event, to bring a claim. However, during the EC period, the time limit is paused and resumes the day after the parties have received the EC certificate. In addition, in limited circumstances, a claimant may apply for an extension of time to submit a claim. There are different statutory tests that must be met to extend the time limit, depending on the type of claim.

On receipt of the ET1, the tribunal will review it to ensure that it meets the minimum requirements for a valid claim. Once the claim has been accepted, it will be sent to the party defending the claim, known as the respondent. If the respondent wishes to defend the claim, an ET3 response form must be completed within 28 days of the date on which the respondent received a copy of the ET1 from the tribunal. As there is limited discretion to extend this deadline, a respondent may put in a holding defence until a more substantive defence can be drafted if necessary.

If no response is filed within the established time limit, an employment judge can determine the substance of the claim without a hearing, if it is considered to be appropriate in the circumstances. Otherwise, a date will be fixed for a hearing before an employment judge, sitting alone, to determine the claim. The respondent will be notified of the hearing and any decision, but will only be entitled to participate in the hearing to the extent permitted by the employment judge.

The Tribunal Rules permit the tribunal to make case management orders at any stage of the proceedings, whether on its own initiative or on application by the parties. Case management orders typically provide for disclosure, the preparation of the hearing bundle and simultaneous exchange of witness statements. Tribunals also have the power to list a case management hearing or hold a preliminary hearing to deal with any preliminary issues that may arise.

The main hearing may be heard by a panel of three individuals, made up of an employment judge and two lay members chosen from a panel of lay members. One lay member will come from an employer background (e.g., a human resources professional) and the other from an employee background (e.g., a trade union official). However, it is increasingly common for the main hearing to be heard before an employment judge sitting alone. Unlike other courts, and in accordance with the Tribunal Rules, the tribunal seeks to avoid undue formality and may itself question the parties or a witness, so far as is appropriate, to clarify an issue or elicit evidence. As with the civil courts, hearings are open to the public.

At the end of the hearing, if it was heard by a panel, the tribunal will try to reach a unanimous decision on the issues and will give a judgment. In some instances, judgments can be reached by a majority of the panel. The judgment can either be announced orally or reserved to be given in writing as soon as practicable. In either case, the tribunal must give reasons for its decision.

A successful party does not automatically obtain an order for payment of its costs. In tribunals, unlike the civil courts, costs do not 'follow the event'. Tribunals do have the power to make a costs order, a preparation time order or a wasted costs order against a party's representative. However, these are awarded to the successful party in relatively limited circumstances. During the past few years, the number of costs awards by the tribunals has fallen, with only 209 being awarded in 2018–2019 out of the 121,111 claims that were accepted by the tribunals. The maximum cost award was £329,386.

A tribunal judgment can be challenged by a party either seeking a reconsideration or making an appeal to the Employment Appeal Tribunal (EAT). However, an appeal to the EAT can only be made on a question of law. Further appeals from the EAT are then heard by the Court of Appeal of England and Wales. The basis of an appeal to the Court of Appeal has to be either on a question of law or on the grounds that the judgment was one that no reasonable tribunal could have reached. It is necessary to obtain leave to appeal from the EAT or the Court of Appeal if one of the parties wishes to pursue an appeal. A further appeal from the Court of Appeal can be made to the Supreme Court, but leave to appeal must be obtained from the Court of Appeal or the Supreme Court. Only a handful of cases each year are appealed to the Supreme Court.

ii Civil court

A claim that arises from a breach of an employment contract can be brought in either a tribunal or a civil court. However, as a claimant can only claim up to £25,000 for a breach of contract claim in a tribunal, such claims are often brought in the civil courts.

A claimant has six years from the date on which the cause of action occurred to bring a claim in a civil court. However, in relation to a claim for an injunction (e.g., breach of restrictive covenants), any delay can seriously damage the claimant's prospects of success.

Before commencing proceedings in a civil court, a claimant must be aware of the cost involved in doing so. There is a fee for bringing a claim in a civil court, unlike in a tribunal, and the unsuccessful party is usually liable for a proportion of the other side's costs.

The civil courts are governed by the Civil Procedural Rules, which are far more formal than the Tribunal Rules.

iii Settlement

A dispute in a tribunal can be settled at any point, whether before or after proceedings have been instigated, up until the tribunal determines the claim. This can be achieved through Acas or private negotiations. If an agreement is reached through Acas, agreements do not have to be in writing to be legally binding. However, the terms of the agreement will generally be recorded on a standard form,2 which contains all the agreed terms and is signed by the parties as proof of the agreement. If settlement is reached via private negotiations, this will be recorded by way of a settlement agreement that must satisfy certain statutory requirements. The key requirement is that the claimant must be advised by a relevant independent adviser of the terms and effect of the settlement.

Mediation also forms part of the employment landscape for all types of disputes; however, it is not commonplace. Settlement can be reached by way of private mediation or judicial mediation. Cases suitable for judicial mediation are generally identified by the employment judge at the first case management hearing.

In a civil court, if the parties wish for the terms of the settlement to be kept confidential, a Tomlin order may be used. This is an order that stays all further proceedings on agreed terms and enables the parties to apply to the court to enforce the agreed terms, but the terms of the agreement itself are not contained within the order.

III TYPES OF EMPLOYMENT DISPUTES

i Unfair dismissal

Under the Employment Rights Act 1996 (the ERA 1996), employees who have the requisite two-year qualifying period of service have a right not to be unfairly dismissed. However, if the dismissal is for an automatically unfair reason, the qualifying period does not apply in most cases.

A dismissal will be deemed unfair unless the employer can show that it was for one of the five potentially fair reasons, which are lack of capability or qualifications, misconduct of the employee, redundancy, statutory requirement or some other substantial reason to justify dismissal. The employer will also need to show that the dismissal was reasonable and that it was carried out using fair procedures.

Unfair dismissal awards usually consist of a basic award and a compensatory award.

As at 1 January 2020, a basic award is capped at £15,750 and a compensatory award is capped at £86,444. Individuals can be awarded an amount up to the compensatory award cap or 52 weeks' gross salary, whichever is lower. The caps are increased on 6 April each year.

ii Whistle-blowing

The ERA 1996 protects employees or workers from being dismissed or suffering any detriment at work if they have made a 'protected disclosure'. To qualify as a protected disclosure, an individual must have disclosed information that they reasonably believe relates to one of the six categories set out in the ERA 1996 (e.g., breach of a legal obligation or a criminal offence). The individual must also have a reasonable belief at the time the disclosure is made that the disclosure is in the public interest. The disclosure must also be made internally within the employer's organisation or externally to one of the 'prescribed persons' set out in Section 43d to 43h of the ERA 1996 (e.g., an industry regulator). There are additional requirements that must be complied with if the disclosure is being made to a prescribed person.

The dismissal of an employee will be automatically unfair if the reason, or the principal reason, is the qualifying disclosure. It is not necessary to have a minimum period of service to bring such a claim. A 'detriment' claim can be brought by a 'worker', a term that is defined more widely than the term 'employee' and includes, among others, agency workers, freelance workers and trainees, as well as employees. A detriment can include unfair treatment, threats of or pursuance of disciplinary action, or performance management as a result of an individual having blown the whistle.

There is no cap on compensation for whistle-blowing, whether an unfair dismissal or a detriment claim.

iii Discrimination

Under the Equality Act 2010 (the EqA 2010), there are four forms of discrimination claim that an employee or a worker can bring, namely direct discrimination, indirect discrimination, harassment and victimisation.

Direct discrimination is when an individual is treated less favourably because of a protected characteristic. The protected characteristics are age, disability, gender reassignment, marital or civil partnership status, pregnancy and maternity, nationality, race or colour, religion and belief, gender and sexual orientation. Generally, direct discrimination is not justifiable; however, direct age discrimination can potentially be justified if it is a proportionate means of achieving a legitimate aim.

An employer has a duty to make reasonable adjustments for an employee who qualifies as disabled. Failure to do so can result in an employee bringing a claim for failure to make reasonable adjustments under the EqA 2010.

Indirect discrimination relates to a provision, criterion or practice (PCP) that is not intended to treat anyone less favourably but has the effect of unlawfully putting an individual with a protected characteristic at a disproportionate disadvantage for a reason connected to that characteristic. A PCP will amount to indirect discrimination unless it can be objectively justified by the employer.

Harassment is any unwanted conduct relating to a protected characteristic (excluding marriage and civil partnership, and pregnancy and maternity) that has the purpose or is reasonably viewed as having the effect of violating an individual's dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for an individual. For example, making racial or ageist remarks or making unwanted advances of a sexual nature in the workplace would be classified as harassment. An individual need not have the protected characteristic that is the subject of the abuse; for example, it can be based on the perception that they have the protected characteristic.

Victimisation occurs when an individual is subjected to a detriment because either the individual has carried out a protected act or it is believed that the individual has carried out or may carry out a protected act. Section 27(2) of the EqA 2010 sets out what may qualify as a protected act. The most obvious form of victimisation is when an individual is penalised by an employer for bringing discrimination proceedings against that employer; for example, if an employer gives an adverse reference as a result of the proceedings having been instituted.

Compensation for all forms of discrimination claims is not capped. In 2018–2019, the highest discrimination award made by a tribunal was in relation to a disability discrimination claim in the amount of £416,015. However, most cases are settled privately.

iv Employment status

Whether an individual is an employee, worker or self-employed is of key importance in relation to any employment benefits or rights he or she may have. For example, certain rights are available to employees and workers, such as the right to the national minimum wage and paid annual leave, but only employees benefit from certain other rights, such as the right not to be unfairly dismissed. In addition, the tax treatment of an individual will depend on his or her employment status.

In general terms, an employee is someone who has entered into or works under a contract of employment. An individual is self-employed if she or he is in business on his own or her own account. In contrast, a worker is an individual who has entered into or works under a contract of employment, or any other contract whereby the individual performs the work personally for another party to the contract, but the individual is not carrying out business on his or her own behalf. In determining employment status, the courts, tribunals and Her Majesty's Revenue and Customs will look at a number of factors governing the arrangement between the parties. There is no single conclusive test for an individual's employment status. Under tax rules,3 an individual who would have been an employee if engaged directly by the end user (instead of being provided via an intermediate company such as a personal service company) may be deemed to be an employee for tax purposes (see See Section IV for further detail).

v Other disputes

Other common disputes heard in a tribunal are those relating to holidays and wages. Holiday disputes usually involve employees or workers claiming they have been underpaid or prevented from taking annual leave, whereas wage disputes usually arise from an employer making an unauthorised deduction from a worker's wages.

vi High Court disputes

Employment claims issued in the High Court are typically either high-value breach of contract claims (e.g., in relation to notice periods or bonus issues) or claims relating to restrictive covenants (e.g., when an employer seeks to restrain an employee from acting in breach of a covenant). Breach of contract claims valued at more than £25,000 must be issued in the High Court or County Court as the tribunals do not have jurisdiction to hear such claims.

When a dispute relates to post-termination restrictions, an employer may seek to enforce the restrictions by asking the High Court to grant an injunction. It is possible to apply for an interim injunction or a final injunction, or both. An injunction is an equitable remedy, granted at the discretion of the court, and the court will consider the competing interests of the parties when exercising its discretion.

At the interim or interlocutory injunction stage, before a final determination of rights has taken place, the High Court must take whichever course of action is likely to 'hold the ring' until trial. The factors that the High Court should take into account when exercising its discretion in a claim for injunctive relief were set out in American Cyanamid Co v. Ethicon Ltd [1975] AC 396. Broadly, the High Court is required to consider whether there is a serious issue to be tried, whether damages would be an adequate remedy and which party would be most prejudiced by its decision to grant or decline the interim injunction.

Once the trial has taken place, a final injunction may be granted in respect of the successful party's rights. As an alternative to seeking an injunction (or if the injunction is refused), an employer can consider other types of High Court claims; for example, a claim for damages for breach of covenant against an employee and, where relevant, any new employer who has facilitated or procured a breach.

IV YEAR IN REVIEW

i Key themes

Sexual harassment

Sexual harassment has been a topic of concern throughout 2019, spurred on by the #MeToo movement, which gathered momentum in the wake of high-profile sexual harassment scandals in both the United Kingdom and the United States. In the United Kingdom, a parliamentary select committee, the Women and Equalities Committee (WEC), launched an inquiry into workplace sexual harassment and published its report in July 2018, outlining a five-point plan with recommendations for the government to implement to address the issue. The UK government responded to this report in December 2018, setting out the recommendations it had accepted and would begin to implement, and those on which it would consult. Subsequently, in June 2019, the WEC published its report on the use of non-disclosure agreements (NDAs) and, more importantly, the misuse of confidentiality clauses in circumstances of workplace harassment or discrimination, and called upon the government to 'reset the parameters' around the use of these, and made a series of 45 recommendations. In July 2019, the UK government published its own consultation and, while acknowledging that NDAs were important, it agreed that using NDAs as a tool to keep victims of harassment and discrimination suppressed and silenced was unacceptable. As such, the government committed to introduce new legislation in this area. Until then, employers do still need to ensure that clauses are properly drafted and permit legitimate disclosure of wrongdoing by employees. Employers need to be aware that it is increasingly difficult to ensure that settlements can be kept private, as there have been a number of private settlements that have seen the light of day.

Data privacy

Employers often wish to monitor their workplace, for example, through CCTV or monitoring of emails and devices. Although the Data Protection Act 2018 does not prevent workers from being monitored, there is a balance to be struck, with respect for a worker's statutory right to privacy and appropriate processing of personal data. Monitoring has been a contentious issue, with a few cases having been heard in 2019 relating to covert monitoring, each of which has had a significant yet differing outcome. As the United Kingdom awaits Brexit, it seems inevitable that this area of law will continue to develop.

Whistle-blowing

Whistle-blowing continues to be a complex area in employment law. The past year saw the European Parliament formally adopt Directive (EU) 2019/1937, designed to improve on and harmonise the current whistle-blowing protections within the European Union, and which will be implemented across 28 countries by May 2021. The new Directive will build on the existing legislation in the United Kingdom, including the requirement for organisations with 50 or more employees to establish internal channels and procedures to respond effectively to reported concerns within a set time frame. Case law has also continued to develop in this area, with recent Supreme Court case decisions also widening the scope of whistle-blowing protections. It, therefore, seems inevitable that this area of law is likely to develop dramatically over the coming year.

IR35

IR35 is the collective name given to two sets of tax legislation; the first set has been in force since 2000, and the second (the 'off-payroll reforms' (OPRs), applicable to public companies) has been in force since 2017. Introduced to resolve the issue of 'deemed employment', where workers are engaged on a self-employed basis, usually through an intermediary (i.e., a personal service company), IR35 is now being significantly amended. This set-up is beneficial to the engaging company, as it removes the company's obligation to pay employers' National Insurance contributions and apprenticeship levies, or offer employment benefits to these self-employed workers, such as holiday and pension benefits. It makes it much more difficult for an individual to claim they are an employee. Employer concerns throughout 2019 have centred around the forthcoming rollout of OPRs to private sector businesses, which are currently expected to come into force in April 2020. This means that these private sector businesses, in their new role as the end client, will be responsible for determining the employment status of hired contractors, rather than the contractors themselves being considered the end client. Determination of whether a contractor is caught by IR35 has been considered in several cases; however, this area of law will undoubtedly see further developments in the coming year.

Good Work Plan

The Good Work Plan is a programme designed by the government to ensure that the labour market works favourably for everyone and provides adequate protections for workers and their rights. Under this new Plan, the government has proposed several important changes, such as the reform of family-related leave and pay, proposals for neonatal leave and pay and the creation of a new single enforcement body (SEB). The aim of the SEB is to ensure that vulnerable workers are protected from exploitative practices and that they are aware of and can exercise their rights, and also to create a level playing field for businesses that do comply with the law.

ii Significant cases

Whistle-blowing

Reported cases on whistle-blowing have continued, and 2019 has seen significant Supreme Court decisions. These cases continue to be of importance to employers because of the possibility of uncapped damages, personal liability for managers involved in penalising whistle-blowers and reputational damage due to the public nature of hearings and easy access to judgments online.

The EAT, in Elysium Healthcare No 2 Ltd v. Ogunlami UKEAT/0116/18, considered the tribunal's approach to whether a worker had a belief in the breach of a legal obligation disclosed and the public-interest nature of the disclosure. The EAT held that the question of whether a claimant held a particular belief that a disclosure was in the public interest was ultimately a matter of inference for the tribunal. In addition, it is not necessary for an individual to explicitly refer to a breach of a legal obligation when making a disclosure, it is sufficient to establish a belief that the information disclosed showed a breach of a legal obligation. It, therefore, highlights that anything that is capable of amounting to a breach of contract that also has a public-interest element may amount to a qualifying disclosure.

Royal Mail Ltd v. Jhuti [2019] UKSC 55 is an important case that was recently decided by the Supreme Court, which considered the question of whether, in identifying the reason for a dismissal, it is only the motivation of the ultimate decision-maker that matters. The Supreme Court overturned the Court of Appeal's decision and found that the fairness of a dismissal can be influenced by events that the dismissing manager was not aware of at the time. In this case, the claimant had complained of regulatory breaches to her line manager, who subsequently subjected her to a series of detrimental acts. A different manager later genuinely took the decision to dismiss the claimant on account of poor performance. The dismissing manager did not have the claimant's complaints to her line manager in mind when she made the decision to dismiss, as the line manager had misled the dismissing manager over the existence of the complaints. The court held that where an individual who is in the 'hierarchy of responsibility above the employee', such as a line manager, conceals the real reason for dismissal from the dismissing manager behind an invented reason, it is necessary for the court to 'penetrate through the invention' to look at the real underlying reason for the dismissal.

Although the facts of this case are rare as it involves the fabrication of grounds for dismissal, in instances where there are whistle-blowing disclosures and any other form of human resources process (e.g., a disciplinary or grievance process), the two processes should be separated, with different decision-makers being appointed for each.

Harassment

Reported cases on workplace harassment, specifically sexual harassment in the workplace, have increased within the UK employment law landscape this year, and there have been a number of interesting issues.

In Raj v. Capita Business Services Ltd & another UKEAT/0074/19/LA, the claimant's employment was terminated on account of performance issues and the claimant then brought a tribunal claim regarding, among other things, allegations of sexual harassment relating to an incident where his female manager massaged his shoulders while at his desk. The tribunal found that although the claimant had been subjected to unwanted physical contact by his manager, there was no evidence that the conduct was related to sex. The tribunal held that the behaviour was gender-neutral as the actions were the result of a misguided attempt at encouragement, and it dismissed the claim. The claimant appealed on the grounds that the tribunal erred in law by failing to apply the shifting burden-of-proof provisions, which would result in the burden of proof being placed on the respondent rather than the claimant, to determine whether unlawful harassment relating to sex had occurred. However, the EAT upheld the tribunal's finding and held that not all of the elements necessary to shift the burden of proof had been proven by the claimant. This case highlights the need to establish all the necessary elements in a claim for sexual harassment and in particular that a gender element is necessary for it to amount to unlawful harassment. It also demonstrates the need for employers to set clear policies and deliver training sessions to establish what is acceptable conduct in the workplace.

Discrimination

The themes arising from discrimination cases continued to be varied in 2019. In the ongoing saga of Ali v. Capita Customer Management Ltd and Hextall v. Chief Constable of Leicestershire Police [2019] EWCA Civ 900, both cases were appealed to the Court of Appeal on the question of whether it was unlawful sex discrimination, as prohibited by the EqA 2010, for men to be paid less on shared parental leave than women on maternity leave. In Ali, the company did not offer voluntary enhanced shared parental leave pay and as a result the employer faced a claim for direct sex discrimination for pay at the higher voluntarily enhanced maternity rate that his wife was entitled to. In Hextall, the individual brought a claim for indirect sex discrimination on the basis that shared parental leave would be taken by a higher proportion of men, whereas maternity leave would predominantly be taken by women. The Court of Appeal held in both cases that it did not amount to either direct or indirect discrimination, nor a breach of the equal pay sex quality clause. This was due to the fact that the purpose of shared parental leave was considered different from that of maternity leave, which was designed to enable the mother to prepare for and cope with the latter stages of pregnancy and then to recover. These cases, therefore, demonstrate that it is not necessary for employers to ensure that individuals receive the same level of payment on shared parental leave and maternity leave and it remains at the discretion of the employer whether to do so. Both cases have been appealed to the Supreme Court.

Disability discrimination also remained highly topical in 2019. In A Ltd v. Z UKEAT/0273/18/BA, the EAT allowed an appeal against a tribunal decision that the claimant's complaint of discrimination under the EqA 2010 was correctly founded. The claimant had an extensive history of severe mental health problems, including depression, schizophrenia and low moods, and was considered a disabled person for the purposes of EqA 2010. However, she suppressed this information from her employer and was therefore dismissed in view of her poor timekeeping. The tribunal found that the employer had constructive knowledge of the claimant's disability prior to her dismissal by way of the GP certificates and hospital certificate provided by the claimant to the employer. However, the EAT reversed this decision and confirmed that the tribunal erred in focusing only on what the employer ought reasonably to have done and failing to also consider what it should reasonably have known in order to reach its conclusion. In this instance, the EAT held that even if further enquiries had been made, the employer would not have reasonably been expected to know more because it was likely that the claimant would have continued to hide her mental health problems.

Base Childrenswear Ltd v. Otshudi [2019] EWCA Civ 1648 concerned an allegation of race discrimination. In this case, the claimant was summarily dismissed on the grounds of redundancy after only three months of employment and therefore commenced proceedings for race discrimination. Shortly before the tribunal hearing, the employer amended its defence to change the reason for dismissal to her conduct, namely suspected theft, rather than by reason of redundancy. The employer appealed on the grounds that there was no evidential basis for the tribunal and the EAT's finding that the claimant had proved that race was a factor in her dismissal. The Court of Appeal dismissed the appeal and found that the manager's persistence in lying about the reason for the dismissal formed a prima facie case of race discrimination and therefore shifted the burden of proof onto the employer to show that race played no part in the dismissal, which it failed to do. This cases demonstrates the importance of being honest to employees about the real reason for dismissal.

Data privacy

A topical theme coming out of data privacy law has specifically related to the interplay between employee monitoring and surveillance and individuals' fundamental right to privacy under Article 8 of the European Convention of Human Rights.

In Garamukanwa v. United Kingdom (70573/17) [2019] 6 WLUK 109, the European Court of Human Rights (ECHR) considered whether an employee's right to privacy was breached when the employer relied on material found on the employee's mobile phone. The claimant had been involved in a personal relationship with a female colleague, which then ended. Subsequently, the claimant emailed her and other colleagues about his concern that she had formed a personal relationship with another colleague. Complaints were raised and the claimant was warned about the inappropriateness of his behaviour and later suspended and arrested by the police, who were investigating claims of harassment and stalking against the claimant. During the police investigation some material was passed to the employer by the police and the employer then used it to dismiss the claimant for gross misconduct. The tribunal and the EAT held that there was a sufficient connection to work in the communications for it not to be a matter purely of his private life, which the ECHR upheld. Further, he had voluntarily provided the disciplinary panel with some private communications.

In López Ribalda and others v. Spain (applications Nos. 1874/13 and 8567/13), the Grand Chamber of the ECHR overturned its previous judgment and found that the right to privacy had not been violated. In this case, because of suspicions by employees, a Spanish supermarket installed both visible and hidden cameras and covertly monitored employees. The footage revealed five employees stealing from the supermarket and helping customers to do the same, and resulted in the employees' dismissal. The employees later brought unfair dismissal claims. The initial hearing held that the covert surveillance had been obtained unlawfully and thus violated their right to privacy under Article 8 of the European Convention of Human Rights. However, at the appeal stage, it was held that the installation of covert surveillance was justified by legitimate reasons and that it was necessary to distinguish, when considering the proportionality of covert video surveillance, the places in which the monitoring was being carried out. While the Grand Chamber observed the importance of informing monitored individuals clearly before the implementation of covert surveillance, on the case-specific facts, it could be said that there was an overriding requirement relating to the protection of significant public or private interests to justify a failure to notify the employees of the covert recording.

In contrast, the EAT in Phoenix House Ltd v. Mrs Tatiana Stockman UKEAT/0058/18/OO considered the issue of whether an individual's covert recording of a meeting with human resources personnel following an incident amounted to misconduct and, if so, whether the compensation awarded by the tribunal in relation to the individual's successful unfair dismissal claim should be reduced to nil. On appeal, the company argued that if it had known about the covert recording, it would have dismissed the claimant for gross misconduct and therefore her award should be reduced to zero. The EAT dismissed the appeal and held that the decision about whether any compensation should be reduced on account of an individual's behaviour will vary based on the importance attached by the particular employer to the conduct under consideration. In this instance, the tribunal had correctly placed importance on the fact that covert recordings were not listed as amounting to gross misconduct in the company's disciplinary policy nor had it been updated in light of the proceedings. Importantly, the EAT considered the purpose of covert recording as highly relevant and pointed out that because many individuals own devices readily capable of recording conversations, this reduced the likelihood that a covert recording would be done with the intention of entrapment. The fact that the claimant had only recorded the one meeting and not relied on it at any point during the internal grievance or disciplinary proceedings assisted in demonstrating that her intention had not been one of dishonesty.

For employers who believe that covert recording is not in line with company practice, this decision is an important demonstration that they must ensure it is conveyed clearly to employees this practice constitutes gross misconduct, preferably in writing or via the company handbook.

Employment contracts

Cases on restrictive covenants are often limited in number; however, several cases have been heard in 2019 that offer employers guidance on the enforceability of restrictive covenants and the importance of reviewing and drafting them with sufficient clarity. A particularly important case in 2019 was the Supreme Court decision in the matter of Tillman v. Egon Zehnder Limited [2019] UKSC 32. The Supreme Court considered whether a non-compete restriction was valid, because it would preclude the employee from holding any shares whatsoever for the purpose of investment only in a competitor and, if it was, whether the provisions could be severed. The Supreme Court unanimously allowed an appeal against the Court of Appeal's refusal to sever certain words from the non-compete restriction, which had meant that the covenant was void as an unreasonable restraint of trade. The Supreme Court held that the covenant could be severed to remove the offending words 'or interested in' from the restriction, which employed the following wording: 'directly or indirectly engage or be concerned or interested in any business carried on in competition with any of the businesses of [the Appellant]' without changing the meaning or effect of the covenant.

This decision makes the enforcement of restrictive covenants easier as drafting errors are less likely to cause the entire covenant to collapse. However, it is advised that drafting should always be clear and unambiguous – and challenges to covenants are likely to be fact-based rather than legally based.

IR35

In Christa Ackroyd Media Limited v. HMRC [2019] UKUT 0326 (TCC), the Upper Tribunal rejected an appeal against a decision that IR35 applied to the provision of Christa Ackroyd's services as a presenter to the BBC through a personal services company (PSC). When considering the hypothetical contract between the parties, the Upper Tribunal determined that, despite there not being an express term regarding control in the contract with the BBC, it did have sufficient control over her. Further, Ms Ackroyd did not have a right to provide a substitute to perform her work. On this basis, the first-tier tribunal was satisfied the BBC did have sufficient control over what work Ms Ackroyd did, and how she did it, for her to qualify as a hypothetical employee. This case indicates that the legislation is likely to give HMRC and, therefore, the tax tier tribunals, quite some leeway to determine whether something would or would not be an employment contract in a hypothetical world.

In Canal Street Productions Limited v. HMRC [2019] UKFTT 647 (TC), however, the first-tier tribunal allowed the appeal of the television presenter's PSC against HMRC's determination that IR35 applied. The tribunal found that several factors, such as the lack of ongoing work-related obligations, were inconsistent with the hypothetical contract of employment, and that the individual was to be regarded as a self-employed person. In this case, the tribunal looked at the overall arrangements that were in place, such as the individual actively seeking other work throughout the time she was engaged with the network, rather than just focusing on the hypothetical arrangements with the television network. This case does highlight that individuals who are tied in to one particular client are going to be more at risk of IR35 applying and, therefore, there will be an increased risk for the end client that they will need to pay income tax and National Insurance contributions post-April 2020.

Legal advice privilege

In Curless v. Shell International Ltd [2019] EWCA Civ 1710 CA, the Court of Appeal considered whether legal advice privilege applied to a leaked email concerning a redundancy exercise relating to the possible dismissal of the claimant. The claimant was a long-standing senior legal counsel and suffered from diabetes and sleep apnoea. The employer had ongoing concerns about the claimant's work dating from 2011, and the claimant was dismissed by reason of redundancy in 2017. Subsequently, the claimant issued tribunal proceedings for victimisation, disability discrimination and unfair dismissal, and relied on a copy of an email, marked 'Legally Privileged and Confidential', between an in-house lawyer and an external lawyer, which had been sent to the claimant anonymously. He used it as a basis to argue that his redundancy was a sham. The Court of Appeal agreed with the employment tribunal's view that the email did not fall foul of the 'iniquity principle' (which states that iniquitous behaviour cannot be hidden by cloaking the communication in a legally privileged communication) and was, therefore, legally privileged as it contained the sort of advice that employment lawyers give from day to day. The Court held that the advice was relevant for the employer to decide whether, and, if so, how, the claimant might be offered either voluntary severance or dismissed on the grounds of redundancy in the course of the ongoing reorganisation 'with appropriate safeguards and in the right circumstances'. This decision is positive for employers and their advisers, demonstrating that legal advice privilege cannot be easily undermined. However, it does also highlight the care with which private communication should be disclosed to the other side.

V OUTLOOK AND CONCLUSIONS

There have been significant developments in employment law during 2019. With certain legislation due to take effect in 2020 and more cases due to be heard, specifically within the realms of whistle-blowing, IR35 and sexual harassment, we are likely to witness further developments in UK employment law next year.


Footnotes

1 Nicholas Robertson is a partner at Mayer Brown International LLP.

2 Acas settlement form, known as a COT3.

3 Off-payroll working rules, known as IR35; see Section IV.