UK Employment Law Update September 2013

16 September 2013

Ian Hunter, Warren Wayne, Elizabeth Lang, Colin Kendon

Welcome

In this edition, we look at five recent cases related to disclosure of information, costs, compensation, contracts and TUPE:

  • Company ownership of emails
  • Tribunal entitled to make 50% costs order
  • Effect of post-dismissal conduct
  • Interpretation of ‘mirrored terms agreement’ after a TUPE transfer
  • 'Dynamic' nterpretation rejected

Please click on the titles below to read more.

Fairstar Heavy Transport v Adkins: Company ownership of emails

In Fairstar Heavy Transport v Adkins, the Court of Appeal revisited the case (reported by us in Dec 2012) of a CEO who was not directly employed under a contract, but provided his services through a service company. The Court of Appeal considered whether the company was entitled to information contained in emails sent and received by him on the company’s behalf, which were held on his personal computer, when his agency agreement was terminated.

In the High Court hearing, Fairstar argued that it owned those emails. The Court disagreed and held that emails are ‘information’, not ‘property’ that can be legally owned.

In the Court of Appeal, Fairstar argued that after termination of an agency agreement, it is the legal duty of an agent to produce and deliver up books and records held for the purposes of the agency relationship.

The Court of Appeal agreed with this argument; the same principle should apply to materials held in paperless form. The company was therefore entitled to inspect the emails and make copies if desired.

Points to note –

  • The problem in this case was that the CEO was not an employee, and had done nothing wrong. He had not misused confidential information nor had he acted in breach of fiduciary duty. Further, he did not hold company ‘property’ which the court could order him to hand back. Therefore in instances such as this, employers are provided with a useful tool, based on the law of agency, to force delivery up of information.
  • It was irrelevant that the information was held on the CEO’s personal computer.

Sud v London Borough of Ealing: Costs; Tribunal entitled to make 50% costs order

In Sud v London Borough of Ealing, the Court of Appeal considered the case where a claimant was ordered to pay 50% of the respondent employer’s legal costs.

Under Tribunal procedure rules, a costs order may be made against a party who has conducted proceedings unreasonably.

In this case, the claimant had succeeded in one of her claims but -

  • She had made many other claims that she either withdrew shortly before the hearing, or was unsuccessful on at the Tribunal.
  • She wanted to rely on an expert’s report which she produced late and without permission from the Tribunal. Therefore an expert had to be called to give evidence in person, which unnecessarily wasted Tribunal time.
  • Similarly, unnecessary time was spent, and expense was incurred, on the preparation and submission of a witness statement when the claimant knew the witness would not be able to attend the hearing.
  • She also rejected several offers of settlement which, in that circumstance, was held to be unreasonable conduct.

Over the years the claimant had made a large number of unspecified allegations, in many cases without a proper factual basis, and continued to do so in these proceedings. The Court of Appeal held that ‘unreasonable conduct of proceedings’ does not only relate to the conduct of the hearing, but also the background to, and events leading up to the hearing.

Her previous conduct could also be taken into account and the Tribunal was within its rights to make the costs order against her.

Points to note –

  • A Tribunal cannot make a finding of unreasonable conduct leading to an order for costs whenever a claimant withdraws a claim. Conversely, it would be wrong to follow a practice on costs which might encourage speculative claims. The crucial question is whether, considering all circumstances of the case, the claimant withdrawing the claim has conducted the proceedings unreasonably.
  • Before making a costs order, the Tribunal may consider the financial resources of the paying party. In this case the Tribunal had established that the claimant and her husband were both employed and owned their own home, albeit with mortgage commitments, before making the costs order.

Cumbria v Bates: Compensation; Effect of post-dismissal conduct

In the case of Cumbria v Bates, the EAT considered the case of a teacher who had been unfairly dismissed and awarded the maximum compensatory award (to reflect future loss of earnings and, in particular, pension loss).

After his dismissal (and indeed after the original Employment Tribunal hearing), he was convicted of common assault on a 16-year old former pupil. He was given a jail sentence and subsequently was banned from teaching for life. This incident was not the reason for his dismissal, but the employer argued that the level of any compensatory award should take this post-dismissal conduct into account, as it would clearly affect the level of his future earnings.

The claimant argued that anything that occurred after the Tribunal hearing date could not be taken into account when assessing compensation.

The EAT disagreed.

The law requires a Tribunal, when assessing compensation, to award such amount as it considers just and equitable. When considering loss of future earnings, this ‘inevitably involves a speculative element’.

A Tribunal is also entitled to make a so-called Polkey deduction if it thinks that compensation should be reduced to reflect the fact that the claimant would have been dismissed at a later date (in this case when he was banned from teaching). The evidence demonstrating this may be wholly unrelated to the circumstances of the dismissal. This was such a case, and compensation for future loss of earnings and pension loss should be reduced.

Points to note –

  • In deciding whether a dismissal is fair, remember that an employer can only fairly dismiss for misconduct if the misconduct was known to the employer at the time of the dismissal(not if the employer found out about it afterwards)
  • However, compensation may be reduced in at least three ways: where it is not ‘just and equitable’ for the employee to be compensated for the full amount of their loss; where pre-dismissal conduct may give rise to a deduction for ‘contributory fault’; and where post-dismissal conduct breaks the ‘chain of causation’ of the employer’s liability for the employee’s future loss of earnings.

This article is part of the UK Employment Law Update for September 2013

Visteon Engineering v Oliphant: Contract; Interpretation of 'mirrored terms agreement' after a TUPE transfer

In Visteon Engineering v Oliphant, the EAT considered the effect of a TUPE transfer that took place thirteen years ago.

In 2000, Visteon (a new business), was ‘spun out of’ Ford. It was a TUPE transfer affecting some Ford employees. A ‘Mirrored Terms Agreement’ (‘MTA’) was entered into between Ford and its European Works Council which said that the employees' pay terms would mirror those of Ford employees and that they would continue to be represented in Ford collective bargaining procedures for the next six years.

Was the MTA still effective? Visteon argued that the whole MTA was only intended to last for six years and had now come to an end.

The EAT disagreed. There was no clear term in the contract that the whole MTA (as opposed to the employees’ right to be represented in Ford pay negotiations) should come to an end after 6 years. The MTA could have been varied or replaced at any time but that had not been done, even though Visteon had entered into a collective bargaining agreement with UNITE (that covered all employees) in 2007. The MTA was still effective.

Point to note –

  • This case covers similar ground to Alemo-Herron and others v Parkwood Leisure Ltd (see below) and appears to be an example of a "dynamic" approach to the TUPE automatic transfer principle, which the ECJ ruled is precluded by the Acquired Rights Directive. The effect of the EAT's decision was that the transferee was bound by Ford's collectively agreed pay increases even though it had no control over, nor input into the process. This case was heard prior to the ECJ's judgment in Alemo-Herron being released.

Alemo-Herron v Parkwood Leisure: TUPE; 'Dynamic' interpretation rejected

In Alemo-Herron v Parkwood Leisure, the European Court of Justice upheld the Court of Appeal decision made in this case in 2010 that TUPE does not require a transferee employer to be bound by a collective agreement made by the transferor employer (and to which the transferee employer was not party) subsequent to the one that was in force at the time of the TUPE transfer.

The ECJ said that this was because the Acquired Rights Directive, on which the TUPE regulations are based, does not seek to ensure anything more than a ‘fair balance’ between the interests of the employees and the transferee employer.

Point to note -

  • The Government is proposing to amend the TUPE regulations in the New Year. One proposal is that, once a TUPE transfer has taken place, a transferee employer should be free, as in this case, to negotiate contractual changes with its workforce in the normal way. We shall keep you posted on further developments.

This article is part of the UK Employment Law Update for September 2013

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