UK Employment Law case updates - August 2018

Latest UK Employment Law case updates - August 2018

1. Beware unsigned employment contracts when considering an injunction
2. Philosophical beliefs do not extend to the sanctity of copyright
3. No additional payments for sleeping care-workers
4. Significant gap in services may not preclude TUPE transfer

Beware unsigned employment contracts when considering an injunction

Tenon FM Limited v Cawley (High Court)

The High Court has emphasised that where an employer wishes to vary an employment contract to incorporate more onerous post-termination restrictive covenants, it is advisable to ensure it has evidence of valid consideration for the change and should always ensure it obtains proof of agreement from the employee; ideally in the form of signature. Any unreasonable conduct from employers when seeking interim relief can also reduce chances of success.

An employee worked for a large cleaning company from May 2008 until her resignation in May 2018. During this ten-year period, the employee's employment contract was varied twice to contain more onerous restrictive covenants. These amended contracts confirmed that they would only be effective from their date of signature; but there was no evidence that they had ever been signed. In August 2018, the employee was suspected of attempting to solicit an ex-colleague on behalf of her new company, itself a competitor. Her previous employer promptly applied for interim injunctive relief to enforce her amended post-termination restrictive covenants and prevent such damaging conduct.

The High Court dismissed the application on numerous grounds, but placed significant weight on the fact that: (i) the ex-employer was not able to prove affirmative agreement with the covenants by way of a signed contract; and (ii) there was no identifiable, adequate consideration flowing in exchange for entering into the more onerous restrictions. The Court also criticised the disproportionate costs incurred in seeking the injunction, and the inequitable, aggressive way in which it had been pursued; including the insistence on unreasonably short (12 hours) and arbitrary deadlines to respond to letters before action.

This case not only highlights the importance of ensuring – through effective HR administration – that evidence of valid agreement to post-termination restrictions is in place, but also reiterates that any perceived unreasonable conduct on the part of an employer leading up to or during proceedings for injunctive relief can have implications on prospects of success.  Careful strategy planning before pursing individuals aggressively is essential.

Philosophical beliefs do not extend to the sanctity of copyright

Gray v Mulberry Company (Design) Ltd (Employment Appeal Tribunal)

An individual did not genuinely believe in the sanctity of copyright so it could not amount to a protected philosophical belief under UK discrimination legislation. Her claim of indirect discrimination on the grounds of such belief therefore failed.

The employee refused to sign her employment contract because it contained a standard clause which required her to assign any intellectual property created during the course of her employment to her employer, a well-known fashion house. She contended that this provision would interfere with her personal creative output as a writer and film-maker. Attempts to mutually agree on amended wording failed, the employee was dismissed and she bought claims for direct and indirect discrimination on the grounds of an apparently philosophical belief; namely the 'human or moral right to own the copyright and moral rights' of creative works and outputs.

Applying the well-established criteria for a protected 'philosophical belief' under the UK's Equality Act 2010, the Employment Tribunal agreed that this was a belief (not merely an opinion) that was genuinely held and which concerned a substantial aspect of human life and behaviour worthy of respect in a democratic society. However, it did not accept that – as required – the employee held her belief as part of a cogent or cohesive belief pattern that made it a 'philosophical touchstone' in her life. The EAT agreed on appeal, holding that her position was aimed more at protecting the commercial fruits and benefits of her creative activities, rather than as part of any deep-rooted ideal.

This case reiterates that a belief does not have to be religious in order to benefit from protection against discrimination in the UK. It also provides a helpful explanation of the definition of a philosophical belief, suggesting that purported manifestations which are entwined with private, commercial interests may not qualify for protection. Regardless, employers would be well advised to treat all claimed beliefs with care and to not apply a blanket approach.

No additional payments for sleeping care-workers

Royal Mencap Society v Tomlinson-Blake; Shannon v Rampersad (t/a Clifton House Residential Home) (Court of Appeal)

Individuals who are contractually obliged to perform sleep-in shifts at or near their place of work are only entitled to the national minimum/living wage, as applicable (“NMW”), in respect of hours during which they are awake for the purposes of working. NMW was not payable for time spent asleep during their shifts.

In this case, two care workers were required to sleep at or near their workplaces and could be woken if they were urgently required to treat residents. They were paid a fixed amount of money for each sleep-in shift performed, with one receiving the additional benefit of free accommodation and the other a supplementary amount for any time spent actually working throughout the night in excess of one hour. Both individuals claimed that they had been underpaid, on the basis that they had only been paid in respect of waking hours and had therefore not received NMW commensurate with the entirety of their sleepover shifts (regardless of whether they were called upon to assist).

The EAT delivered contradictory verdicts in their respective cases and a consolidated appeal to the Court of Appeal was permitted to clarify the issue. The CA considered that the essence of this type of ‘sleep in’ care home shift is that the relevant worker is actually – in practice - expected to sleep. Whilst asleep, but ‘on call’ to respond to urgent issues, the employees were merely ‘available for work’ and therefore not entitled to NMW. They were only entitled to remuneration for hours spent awake and actually working during sleepover shifts.

Whilst employers in the care sector may welcome this decision, individual working arrangements should always be assessed on a case-by-case basis; previous case law makes clear that sleeping is not itself incompatible with work and that subtle nuances may be important. We understand that an application to appeal this decision has been submitted.

Significant gap in services may not preclude TUPE transfer

Colino Sigüenza v Ayuntamiento de Valladolid and others (Court of Justice of the European Union)

The Court of Justice of the European Union ("CJEU") has determined that a five-month suspension of an undertaking’s activities did not inhibit the subsequent transfer of that undertaking under the terms of the Acquired Rights Directive (implemented as TUPE in the UK), to which its statutory protections - including the protection against dismissal for a reason connected with such transfer - would apply.

The Claimant, a teacher at a Spanish music school, was engaged by a contractor assigned to manage teaching operations on behalf of the local authority. Due primarily to falling pupil numbers and consequent financial difficulties, the contractor dismissed its entire staff (including the Claimant) and ceased activities in April 2013. The local authority subsequently re-tendered the contract for services, which commenced with a new provider in September 2013, at the beginning of the new academic year. Whilst the new contractor used the same premises, equipment and resources, it did not re-hire any of the previous employees. The Claimant claimed that his employment should have automatically transferred to the new provider under the EU’s Acquired Rights Directive (“ARD”), which has been implemented in the UK as TUPE.

At first instance, the Spanish court found that there had been no transfer of an economic entity which had retained its identity, as required by the ARD, because of the 5-month gap between the Claimant’s dismissal, the winding-up of the initial service provider and the subsequent outsourcing of services. Upon a request for a preliminary reference made as part of appeal proceedings, the CJEU disagreed with this approach. It held that the fact that an undertaking is inactive at the time of a transfer is not determinative; each case should be assessed on its own facts. Here, the subsequent contractor managed the same premises, for the same purposes and using the same equipment. All material assets had – in effect - transferred between contractors, the latter of which was now providing largely identical services on behalf of the local authority. Further, whilst the gap in time was a relevant factor to be taken into account as part of any assessment, 3 months of this 5-month suspension represented the annual school holiday, during which the school would normally be closed. The CJEU therefore considered that a TUPE transfer was possible and the case was remitted back to the national appeal court for determination.

This decision does not significantly affect the legal position in the UK, where TUPE recognises the additional, broader concept of a ‘service provision change’ (which covers the subsequent outsourcing scenario as occurred in this case) as qualifying for the protections envisaged by the ARD. It does, however, serve as a helpful reminder that gaps in services or suspended activities – even if they last for a period of months - will not be sufficient to preclude the operation of TUPE in themselves.

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