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Our Monthly Employment Law Updates provide a summary of some of the most important cases, helping our clients and contacts to stay up-to-date on recent case law developments.

July’s Employment and HR update covers the following;

1) Will an employee covertly recording a meeting at work amount to misconduct?
2) Social media postings ‘in the course of employment’
3) An employer’s constructive knowledge of disability
4) Restrictive covenant clauses – Significant Supreme Court ruling
5) Acas’ Annual Report 2018-2019

1) Will an employee covertly recording a meeting at work amount to misconduct?

In most cases yes, but not always, the Employment Appeal Tribunal (‘EAT’) have recently concluded.

Compensation awarded for unfair dismissal can be reduced or taken away entirely if an employee has behaved in a way amounting to misconduct during their employment, even if the employer is not aware of the misconduct at the time of dismissal.

In the case of Phoenix House v Stockman, Ms Stockman was informed her role was being made redundant due to the restructure of her department. She subsequently applied for and obtained a new junior role in another department.

Following the move, Ms Stockman claimed she was being treated differently by a senior member of staff and raised this with her employer. There was then an incident whereby Ms Stockman interrupted a meeting, refused to leave and demanded to be told what was being discussed. Following this incident, Ms Stockman had a meeting with HR which she secretly recorded, during which she was told she would be disciplined for her earlier conduct when disrupting the meeting.

Ms Stockman lodged a grievance, stating she did not have a safe place to work and that she had been harassed by the senior member of staff; requesting not to work alongside this person anymore. The grievance was dismissed.

Following unsuccessful mediation, the Respondent decided the relationship between Ms Stockman and senior management had irretrievably broken down and dismissed her. Ms Stockman brought a claim for unfair dismissal amongst other complaints, and during the Tribunal it came to light that she had secretly recorded her previous HR meeting.

The Tribunal found that Ms Stockman had been unfairly dismissed and awarded compensation. The Respondent appealed the compensation award, arguing it should be reduced to nil because if they would have known about Ms Stockman secretly recording the meeting, she would have been dismissed for her misconduct.

The EAT upheld the Tribunal’s finding of unfair dismissal and agreed with the compensation awarded. They upheld the Tribunals findings that Ms Stockman secretly recording the meeting could not be deemed as gross misconduct as covert recordings were not noted within the Respondent’s disciplinary policy, she was not attempting to entrap the Respondent and she could not be sure the recording device was working properly during the meeting.

They commented that it would generally be considered misconduct if an employee secretly recorded a meeting, but consideration must be given to the intention of the employee and the purpose of the recording, for example whether it is for entrapment purposes or whether the employee is vulnerable and wants a record of the meeting to refer back to.

Note for employers:- As recordings can now be made much more easily due to the accessibility of mobile phones, employers should be aware that whilst it will generally be considered misconduct for an employee to secretly record a meeting, it might not necessarily amount to gross misconduct. It is also interesting to note the EAT’s comments that covert recordings are rarely cited as an example of gross misconduct in disciplinary procedures, therefore, if you find yourself in a similar scenario, you should consider the employee’s intentions before deciding it amounts to gross misconduct. It may also be prudent to include covert recordings within your disciplinary policy to clearly state set out that this amounts to gross misconduct, so there can be no ambiguity as to the procedures to be followed.

2) Social media postings ‘in the course of employment’

Considering the role of social media in today’s society, it is no surprise that there are instances where an employee’s activity on a social media platform may be brought into question during their employment. Interestingly, a recent ruling in the case of Forbes v LHR Airport Limited has confirmed that an employee posting an offensive image on a popular social media site was not carried out ‘in the course of employment’.

In the above case, a colleague of the Claimant shared an offensive image on social media. The Claimant was not linked with this colleague on social media, but another colleague showed them the post whilst at work. The Claimant raised a grievance alleging harassment and claimed that their employer was vicariously liable (where an employer is liable for their employee’s actions) for the actions of the colleague who shared the image.

For a claim of harassment to be successful, a person must engage in unwanted conduct related to a protected characteristic (age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation) or of a sexual nature, which either violates the other person’s dignity or creates an intimidating, hostile, degrading, humiliating or offensive environment for the other person.

The colleague who shared the offensive image was disciplined by the Respondent following the Claimant’s grievance and was given a final written warning.

The Claimant issued claims for harassment, victimisation and discrimination on the grounds of race against the Respondent. The Tribunal dismissed the claims, commenting that the offending employee had not acted ‘in the course of employment’; a key element of vicarious liability.

The Tribunal commented that the Respondent could not be held liable as the image was posted on a personal, private social media page and the post itself was not made during work time, not posted using a work device and did not refer to the Respondent or any of its employees. They also concluded that sharing the image did not constitute as harassment.

The Claimant appealed but the EAT dismissed the appeal. The EAT held that the posting of the image was not ‘in the course of employment’ for the reasons given by the Tribunal. They also commented that the Tribunal had correctly identified that the Respondent had taken reasonable steps to prevent the alleged discrimination and had taken the misconduct of the offending employee seriously, disciplining her and giving her a final written warning.

Employers should be mindful that they can still be held to be vicariously liable for their employee’s conduct and social media posts if carried out ‘in the course of employment’. Determining whether anything is carried out ‘in the course of employment’ will depend on each individual case and set of facts. Considering how popular social media now is, employers need to scrutinise their social media and IT policies to ensure they are robust and fit for purpose.  If you need any assistance with drafting or reviewing your IT or Social Media policies, please contact us.

3) An employer’s constructive knowledge of disability

In the case of A Ltd v Z, the Tribunal had to determine whether the Respondent had constructive knowledge of an employee’s disability where the Claimant had not informed them of her mental health conditions when commencing employment or throughout.

The Claimant was employed for just over a year, during which she had a very poor attendance record, resulting in her being dismissed. Her poor attendance was the result of her disabilities, however, when asked by the Respondent she confirmed the absences were due to other reasons such as knee surgery, back and neck injuries and minor complaints.  The Claimant brought a claim of disability discrimination against the Respondent following her dismissal.

The Tribunal concluded that whilst the Respondent knew the Claimant had been experiencing difficult personal circumstances which caused her distress and low mood, they did not know she had been suffering from a mental illness and therefore had no actual knowledge of her disability.

However, the Tribunal did confirm that the Respondent had constructive knowledge of the Claimant’s disability as they had received GP certificates that referred to her ‘low mood’ and ‘mental health and joint issues’ and a hospital certificate confirming the Claimant would be an in-patient for four weeks, which demonstrated a deterioration in her mental state.

The Tribunal concluded that receipt of these certificates coupled with the Claimant’s absences should have prompted the Respondent to make further enquiries into the Claimant’s mental condition. Dismissing her was not proportionate; there was no return to work meeting and they did not consider involving occupational health. As the Respondent should have known about the Claimant’s disability, it was found to have constructive knowledge of it.

Whilst the Respondent agreed the Claimant did have a disability due to her conditions such as stress, depression and schizophrenia, they appealed the decision. The EAT allowed the appeal and dismissed the Claimant’s claim of disability discrimination, commenting that the question the Tribunal should have been considering when deciding whether the Respondent had constructive knowledge of the Claimant’s disability was what they reasonably should have been expected to know in terms of the Claimant’s mental health, not what processes they should have followed.

The EAT agreed with the Tribunal that the Respondent should have made further enquiries in to the Claimant’s mental state, but also highlighted that the Tribunal did not take in to account its own finding that even if the Respondent did make further enquiries, it was likely that the Claimant would not divulge information relating to her mental health issues in any event. The EAT therefore concluded that the Respondent could not have had constructive knowledge of the Claimant’s disability.

Note for employers:- Whilst it was found that the employer did not have constructive knowledge of the Claimant’s disability, employers should not rely heavily on this case as the facts are unusual and extreme. The Claimant went to severe lengths not to disclose her disability, which is what ultimately led to the EAT’s conclusion that even if further enquiries were made by the Respondent, they would not have known about her disability.

If you are having issues with an employee’s attendance, it would be best to make further enquiries into the employee’s mental wellbeing and the cause of their absence. If there are any suggestions that they may be suffering with their mental health, steps should be taken to investigate the issues further in order to assess whether the condition could amount to a disability (such as considering involving occupational health).

4) Restrictive covenant clauses – Significant Supreme Court ruling

The recent ruling in Tillman v Egon Zehnder Limited is significant as it is the first Supreme Court ruling on an employment competition case in over 100 years.

This case looks at post termination restrictions; these are widely used in Employment Contracts but can be notoriously difficult to enforce if they are not drafted carefully. Restrictive covenants will only be valid and enforceable if they are reasonable and if they are to protect the genuine business interests of an employer, otherwise they will be deemed void for being a restraint of trade.

When Ms Tillman left her employment to join a competitor, she argued that the non-compete post-termination covenant contained within her Contract of Employment was void as it was an unreasonable restraint of trade. The Respondent issued proceedings and sought an injunction, arguing that by joining a competitor, the Claimant would be breaching the six-month non-compete covenant.

If enforceable, this covenant would prohibit the Claimant for a period of six months after leaving her employer from working for a competitor, but she argued that the wording was drafted too widely. The clause prevented her from ‘engaging’, ‘being concerned’ or ‘interested in’ a competitor.

Ms Tillman argued that the non-compete covenant was wider than reasonably necessary to protect the Respondent’s business interests and that trying to prohibit her from being ‘interested in’ a competing business was too wide, as it would result in her being unable to hold even minor investment shares in any competitor.

The High Court upheld the restriction, claiming the clause was not void as it allowed Ms Tillman to hold a minor investment shareholding in a competitor and was therefore not drafted too widely. The Court subsequently granted the injunction preventing Ms Tillman from breaching the covenant.

This decision was appealed; the Court of Appeal overturned the injunction and held that the clause was too wide and therefore void. The Court of Appeal commented that a shareholder would be ‘interested in’ a company to which they hold shares. The Court stated that the covenant had to be read as a whole and would not remove ‘or interested’ from the clause and it was therefore deemed void.

The Respondent appealed to the Supreme Court, who ruled that specific, problematic words in a clause can be removed, as opposed to the whole clause being void, to enable the remainder of the clause to be enforceable.

The Supreme Court noted that ‘engaged or concerned or interested’ has regularly been used in non-compete covenants and includes a prohibition on shareholding. They also commented that ‘interested in’ should be given its natural meaning, which would therefore include any shareholding of whatever size in a competitor. This interpretation would therefore, subject to severance, render the clause void as an unreasonable restraint of trade.

The Supreme Court decided to move away from the precedent established in leading caselaw regarding severance (Attwood v Lamont), and instead decided to follow the three-step approach set down by the Court of Appeal in Beckett Investment Management Group Ltd v Hall. This enables a covenant to remain effective after removing or severing an unenforceable provision if the three following conditions are satisfied:-

  • firstly, the Court has limited power to sever unreasonable parts of a restriction so long as there is no need to add or modify what remains of the clause (known as the ‘blue pencil test);
  • secondly, the remaining terms must continue to be supported by adequate consideration;
  • lastly, the employer must establish that by removing the unreasonable aspects of a covenant, this would not cause a major change to the overall effect of the post-termination restraints contained in the contract.

The Supreme Court therefore applied the above three step criteria and determined that the words ‘or interested’ could be removed from the covenant, as this would not require any modification to the rest of the wording of the clause, nor would it majorly change the overall effect of the restraints. The High Court injunction was formally restored, subject to the removal of the words ‘or interested’ within the offending clause.

Note for employers:- This ruling from the Supreme Court is significant as it relaxes the severance test. However, employers should not be too hasty following this decision. It is still best practice to draft post-restriction clauses within employment contracts as tightly as possible in order to avoid any ambiguity and to try and make the position as clear as possible.

5) Acas’ Annual Report 2018-2019

Acas have recently published their Annual Report for 2018-2019. They received over 132,000 requests for early conciliation; a 21% increase on last year’s figures. Some of the findings include:-

  • most disputes notified for conciliation did not result in a Tribunal hearing (73% of individual conciliation cases);
  • of those disputes that progressed to a Tribunal hearing, Acas conciliation facilitated in arranging settlements in 51% of those cases;
  • 80% of the mediations Acas were involved in reached a full or partial settlement;
  • the cost of processing an individual conciliation case is £120 and the cost of an arbitration hearing case £2,132;
  • the most common ground of complaint noted on early conciliation notification forms was unfair dismissal. Unfair dismissal was also the most common ground of complaint noted on ET1 cases received for conciliation from the Employment Tribunal Service.

If you would like to read Acas’ full findings, the report can be found here

For more information, please contact Tom Evans: 0151 230 1217
Tom Evans Employment and HR

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