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Latest Brief - Week Ending 23 June 2017

The Queen's speech

This week, the Queen's speech has set out details of the legislation that the government intends to carry over, or introduce in the coming Parliamentary session.  As far as employment law is concerned, there are a few points of interest.  The national living wage will be increased to 60% of median earnings by 2020, and steps will be taken following the introduction of the Taylor Review into modern workplaces and employment status to ensure fairness for all.  The government has announced the intention to take further progress in tackling the gender pay gap and discrimination on all grounds, although no new specific measures were announced in relation to this.  A Data Protection Bill aims to make the UK's data protection framework fit for the digital age, and given individuals more control over their data, including the right to be forgotten.  

Unsurprisingly, Brexit was a major theme of the speech. Legislation relating to employment includes a new Immigration Bill, to include new powers concerning the immigration status of European nationals.  The Bill will allow the government to repeal EU law on immigration, primarily free movement, which would otherwise have been converted into UK law by the Repeal Bill.  

TUPE and garden leave

The High Court has held that a senior executive who was on garden leave at the time of a share sale was not entitled to object to what he considered to be a TUPE transfer and therefore terminate his garden leave.  The executive had been placed on garden leave after giving notice in order to join a competitor.  The employer was then the subject of a share sale acquisition, and the High Court rejected the executive's argument that there had been a TUPE transfer, on the basis that a share sale does not involve a change of employer.  This was not the kind of exceptional case envisaged in the 2007 case of Millam, where after a share sale, it was held that there had been a de facto TUPE transfer because of the supreme control exercised by the new owner.  In this particular case, it was business as usual, and the operating and service companies carried on in the same way as before the share sale.  Therefore there was no TUPE transfer, so the employer in this case succeeded in obtaining an injunction to enforce the garden leave period.  

A quarter of fathers do not qualify for paternity leave

According to research carried out by the TUC, in 2016 a quarter of the fathers in employment with a child under the age of one did not qualify for statutory paternity leave or paternity pay.  This was largely attributable to fathers either being self employed, or not having the six months continuous service necessary to qualify for the right to paternity pay.  The TUC has also raised concerns that many low-paid fathers can't afford to take paternity leave.  The TUC believes that the government should introduce a right to paternity leave for all workers from their first day in employment, an increase in paternity pay to at least the level of the minimum wage, and a month of well-paid parental leave reserved exclusively for fathers.  It will be interesting to see if the government considers taking any of the steps suggested by the TUC, as part of its commitment to reducing the gender pay gap.

Latest Brief - Week Ending 16 June 2017

Sex discrimination and shared parental pay

A male employee has succeeded in a direct sex discrimination claim for failure to pay enhanced shared parental pay, in circumstances where the employer paid enhanced maternity pay.  The Tribunal decided that the comparison between a man on shared parental leave and a woman on maternity leave was not prohibited by the Equality Act, on the basis that paying enhanced maternity pay (beyond the initial two week compulsory maternity leave period) did not amount to special treatment in connection with pregnancy or childbirth.  The Tribunal distinguished pregnancy or childbirth from caring for a newborn, commenting that nowadays, this is a responsibility that men are encouraged to share.  This decision contrasts with an earlier employment tribunal decision, and has been appealed to the EAT. This issue is likely to arise more and more frequently going forward, and it would therefore be helpful to get some clarity in relation to this point.  

Carry over of paid annual leave

The Advocate General has given an opinion in relation to a case about carry over of holiday pay in circumstances where the employee does not take holiday because their employer refuses to pay for it.  The Advocate General decided that a worker is entitled to be paid on termination for any periods of annual leave that have accrued during employment, which the worker has been discouraged from taking because it would have been unpaid.  This was on the basis that it was unreasonable to expect a worker to take annual leave before they knew whether they would be paid for it. 

Where a worker does not use their paid holiday entitlement because they would not be paid by the employer, the worker can claim he was prevented from exercising his right to such paid leave.  The right then carries over until the worker has had the opportunity to exercise it, in this case on termination of employment.

The worker does not have to ask to take his leave first before being able to establish whether he is entitled to be paid for it, because the risk of not being paid for the leave would be a deterrent to taking it.  The Court of Justice of the European Union normally, but not always, follows the opinion of the Advocate General.

And finally..

Two Managing Directors have been criticised after reportedly telling staff that their jobs were at risk if they failed to vote Conservative.  One sent an email to staff stating "If by any chance Labour win, we'll have to rethink a few things here at the company so if you value your job and want to hold onto your hard earned money vote Conservative."  An MD of a bookmaker warned staff to vote Conservative because of their liberal attitude towards fixed-odds betting terminals, and warned that if pledged by Labour and the Liberal Democrats were implemented, "business will be unable to continue and jobs will be lost."

Latest Brief - Week Ending 9 June 2017

Redundancy following sickness absence

The EAT has confirmed in a recent case that making an employee redundant after a period of disability-related sickness absence did not amount to discrimination arising from disability.  This was the case even though the reason for the redundancy situation arising was that it had become apparent to the employer during the employee's absence that it could manage without his post.  The EAT found that this was not sufficient on the facts to meet the test for discrimination arising from disability.  Even though the Tribunal had found that there was a link between the employee's absence and the decision to make him redundant, this was not the same as finding that he was dismissed because of his absence.  

Are employees under a duty to disclose their intention to compete?

Probably not.  In a recent case, two moderately senior employees planned to set up a new company in competition with their employer after their restrictive covenants expired.  After handing in their resignations, they were asked by their employer about their intentions going forward, and they lied.  The employer sought an injunction from the courts based on alleged misuse of confidential information, and the breach of the duty to answer questions truthfully.  The judge held that whilst there was a general duty to answer questions truthfully, he was reluctant to hold that a departing employee is under a contractual obligation to explain confidential plans to set up in lawful competition.  
It is worth noting that had the employees been senior enough to owe fiduciary duties to the employer, this decision might have been different.  

Assessment of non-compete clauses

When it comes to the interpretation of restrictive covenants, a court will consider whether the wording of such covenants was reasonable on the basis of the position that the employee held at the point that the covenants were entered into.  This can cause difficulties where employees are recruited to a junior role and then promoted, and their restrictive covenants are not updated.  

In a recent case, the High Court upheld a six month non-compete restriction, finding that it went no further than necessary to protect the legitimate business interests of the employer.  The employee was very senior at the time of the termination of her employment, but had not signed new restrictive covenants since she was originally hired in a more junior role.  However, as she had been recruited on the basis that she would be swiftly promoted, and the company had high hopes for her future potential, the court held that it was appropriate to consider this as part of the assessment of the reasonableness of the covenants.  The correct approach was therefore to determine the reasonableness of the covenant at the date of the contract by reference both to the employee's status at that time, and what was contemplated by the parties as a result of that.  The court also needed to have regard to the view taken at the time of the employee's prospects, and whether that in fact gave her a level of engagement with protectable interests which was greater than it would have been otherwise.