UK Employment Law case updates - May 2017

By Ian Hunter, Pattie Walsh, Elizabeth Lang, James Froud


Latest UK Employment Law case updates - May 2017

  1. Six to twelve months non-compete clause "not excessive" for broking industry
  2. Multiple choice recruitment test is discriminatory
  3. Right to be accompanied worth £2
  4. Sleeping whilst on the job: are employees entitled to be paid?

Six to twelve months non-compete clause "not excessive" for broking industry

Tradition Financial Services v (1) Gamberoni (2) Spectron Services Limited (3) Marex Spectron Group Limited [2017] EWHC 768 (QB)

The High Court has held that a post-termination clause restricting a junior broker from working for a competitor for six months was valid even if the Claimant had already been placed on garden leave for the preceding three months.

Mr Gamberoni was a junior inter-dealer broker working in the energy market. His employment contract with Tradition Financial Services contained a six-month non-compete clause, which could not be set off against time spent on garden leave unless the garden leave exceeded three months.

When he handed in his resignation, Mr Gamberoni was placed on back-office duties for his three-month notice period, instead of on garden leave. Three months after leaving his employment, Mr Gamberoni commenced employment with Spectron Services Limited, a competitor of his former employer. Tradition Financial Services applied for an injunction from the High Court, claiming that Mr Gamberoni was still bound by the non-compete clause.

The court held that the clause was valid. Mr Gamberoni was well paid despite his junior position, with a large client base which Tradition was entitled to seek to protect; and the length of the non-compete clause was not unusual in his industry. Although he only had three years' experience in the field, the judgment held that Mr Gamberoni was both educated and experienced enough to appreciate the implications of the covenants when he signed his contract of employment.

In applying the usual test for determining the validity of restrictive covenants, the court held:

(i) there was a legitimate business interest requiring protection, as non-compete provisions are necessary in an industry where less-restrictive covenants are hard to police;
(ii) the duration of the restriction was no wider than reasonably necessary, as a non-compete clause from six to twelve months is not excessive for a broker regardless of experience; and
(iii) the breadth of the clause was no wider than reasonably necessary, as client confidentiality is only protected if the individual is prevented from working back-office jobs as well as brokering.

Despite the pro-employer outcome of this case, employers should maintain caution when drafting restrictive covenants, ensuring that they are drafted reasonably to reflect industry norms.

Multiple choice recruitment test is discriminatory

The Government Legal Service v Brookes UKEAT/0302/16

The EAT has upheld the ET's decision that an employer indirectly discriminated against a job applicant with Asperger's syndrome by failing to make reasonable adjustments to a multiple choice test during the employer's recruitment process.

Ms Brookes was made to sit a multiple choice "situational judgment test" as the first stage in what the EAT Judge called a 'fiendishly competitive recruitment process' for lawyers wishing to join the Government Legal Service ("GLS"). She argued that she was unlawfully disadvantaged by the multiple choice method of the test due to her having Asperger's syndrome, and that GLS should have allowed her to complete the test in the form of short narrative written answers. GLS countered that the requirement to sit the test was objectively justified as a proportionate means of achieving a legitimate aim; the aim being to recruit the best candidate by testing their ability to make quick and effective decisions.

Ms Brookes, representing herself, brought claims against GLS of indirect disability discrimination; discrimination due to something arising in consequence of her disability; and that GLS had failed to make reasonable adjustments for her disability. Ms Brookes succeeded on all three counts.

The PCP was held to serve a legitimate aim, i.e. to test a key competency required of trainee lawyers at GLS, but the means of achieving the aim were not proportionate to it. As such, Ms Brookes' claims for indirect discrimination and failure to make reasonable adjustments succeeded.

GLS was ordered to pay £860 compensation to Ms Brookes, and the ET made a recommendation that a written apology be issued.

Employers should take care to ensure that candidates are not placed at a potential disadvantage when competency based tests are used as part of a recruitment process. It is not a requirement that the tests be made easier for disabled candidates; rather, that a variety of formats should be offered in order that all candidates can complete such tests to the best of their ability. Examples of possible adjustments include allowing extra time for the test to be completed and changing the format of the responses to be provided, as was suggested by the Claimant in this case. See also our recent report on the revised test for indirect discrimination.

Right to be accompanied worth £2

Gnahoua v Abellio London Ltd (2303661/2015)

 A claimant was awarded only £2 in compensation after his employer denied him the right to be accompanied at a disciplinary hearing. The Employment Tribunal held that he did not suffer a detriment in being denied a companion at his disciplinary, despite the fact that his rights were breached by his employer's stance.

Mr Gnahoua was employed as a bus driver for Abellio London Ltd (Abellio). He was summoned to a disciplinary hearing over allegations that he was using an electronic device whilst driving a bus, and that he had failed to carry out procedural checks of the vehicle. 

Abellio denied permission for Mr Gnahoua to bring his chosen union representatives with him to the hearing. He had requested to be accompanied by two members of the Public Transport Service Corporation union, the first of whom was a former employee of Abellio and had brought a claim for unfair dismissal against his employer; the second, his brother, had represented the first in Tribunal proceedings. Their case was struck out on the basis of vexatious conduct and attempts to obtain compensation by dishonest means. Abellio prohibited both brothers from representing employees at hearings; as such, Mr Gnahoua attended the disciplinary alone. 

No criticism was made of Abellio in this case: their interference in Mr Gnahoua's choice of representative was based on strong grounds and their position was held to be understandable. However, the Tribunal held that employees have an unfettered right to choose their companion. 

Notwithstanding the finding, the ET declined to make an award of the maximum compensation award for a breach of this right (two weeks' pay) and instead awarded him the nominal compensation of £2, satisfied that he had suffered no loss or detriment.

The eventual award in this case will be heartening for employers, but caution should still be taken in such matters: should a tribunal find that a fair procedure was not carried out during a disciplinary process, the employer could face an uplift of 25% of an award.

Sleeping whilst on the job: are employees entitled to be paid?

Focus Care Agency v Roberts UKEAT/0143/16; Frudd and another v The Partington Group Ltd UKEAT/0244/16; Royal Mencap Society v Tomlinson-Blake UKEAT/0290/16, 21 April 2017

The Employment Appeal Tribunal (EAT) has concluded that a multifactorial approach is required when deciding whether employees who are on-call or carrying out sleep-in shifts are engaged in "time work" for the duration of the shift, or whether they are only entitled to be paid the National Minimum Wage (NMW) when they are awake and carrying out their relevant duties.

Hearing three joined appeals, the EAT emphasised that each case will depend on its own facts, with no single factor being determinative. A tribunal must consider whether an employee is working merely by being present, even if asleep at work, or whether they are "available and required to be available at or near work for the purposes of working" and thus subject to the special rules in regulation 32 of the National Minimum Wage Regulations 2015.

The EAT considered the following potentially relevant factors in determining whether an employee is working by being present:

  • the employer's particular purpose in engaging the worker: this could be relevant to the extent that it informs what the worker might be required to do;
  • the extent to which the worker's activities are restricted by the requirement to be present and at the disposal of the employer: is the worker required to remain on the premises or will be they be disciplined if they leave their post;
  • the degree of responsibility undertaken by the worker; and
  • the immediacy of the requirement to provide services if something untoward occurs or an emergency arises.

In Frudd, on-site wardens living at a caravan park were paid a flat-rate per call-out were held only to be doing time work when actually working.

In Focus, a care worker who had to work sleep-in shifts with a continuing obligation to look after patients on-call, was held to be performing "time work". Similarly, in Royal Mencap, two types of night worker, waking (working throughout the night) and sleep-in (on-site but only worked if required) were held to be entitled to NMW.

This decision follows a recent spate of case law in the area, and while it does not provide certainty, it is at least helpful to employers of on-call or sleep-in workers by establishing factors that must be taken into consideration when determining workers' remuneration. Pay practices that do not accurately reflect workers' shifts leave the employer open to the risk of penalties and criminal sanctions including fines, so employers must remain vigilant when assessing these matters.