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Employment Law - notable cases in 2016

July 2016

We take a look at some of the significant cases in employment law so far this year.
Vicarious liability in the workplace

The Supreme Court has recently expanded the range of factual circumstances in which an employer can be held responsible for the actions of its employees. In order to establish this vicarious liability, it must be shown that there is:

o    A sufficient relationship between the employer and the wrongdoer; and
o    A sufficient connection between that relationship and the wrongdoer’s act.

In Cox v Ministry of Justice an employee of HM Prison Swansea was injured after a prisoner dropped a sack of rice on her back. The Supreme Court decided that the Ministry of Justice was liable for the negligence of the prisoner, thus concluding that vicarious liability can be established in employment-like relationships and not only in the case of employer and employee.

In Mohamud v WM Morrison Supermarkets plc the Supreme Court held that an employer was vicariously liable after an employee racially abused a customer at a petrol station. It was held that vicarious liability can be established as long as the employee acts within the field of activities entrusted to him by his employer and there is an unbroken sequence of events leading to the incident.

Both decisions highlight the importance of employers taking all reasonable steps to prevent employees from committing acts of discrimination. This can be done by providing appropriate training and implementing suitable policies. If all reasonable steps are shown to have been taken, the employer will avoid being held vicariously liable for its employees’ misconduct.
Privacy at work: can employers monitor an employee’s communications

The case of Barbulescu v Romania in the European Court of Human Rights’ attracted a fair amount of media attention and raised concerns about an employer’s ability to access an employee’s private communications. Contrary to many media reports, the decision in Barbulescu does not allow employers to freely monitor the private communications of employees. Instead, employers are able to access private communications but only where there has been an element of pre-warning and there is a legitimate purpose for the intrusion. Pre-warning can be in the form of company policies which are often found in employee handbooks.

In Barbulescu the employee was dismissed for personal internet use at work contrary to the employer’s internal rules. The employer accessed intimate messages sent by the employee to his fiancĂ©e and his brother which were then used in disciplinary proceedings. The court found that the intrusion was proportionate in achieving the legitimate aim of enforcing the employer’s blanket ban policy on personal internet usage. The European Court of Human Rights found that a fair balance had been struck between the employer’s interests and respect for the employee’s private life. 

In order to comply with their legal obligations, employers should have policies which set out:

o    the extent of any monitoring by the employer;
o    the permitted use of IT equipment at work; and
o    the sanctions that will be imposed for any improper conduct

Employers should also consider whether there is a less intrusive means of achieving its aim that does not involve the monitoring of private communications, for example, conducting interviews and/or monitoring the performance of the employee rather than the use of private communications.
Raising written concerns with an employee on sick leave

In Private Medicine Intermediaries Ltd and others v Hodkinson an employer wrote to an employee, while the employee was on sick leave, in order to raise concerns regarding the employee’s employment that were not serious or urgent. The employee was considered disabled within the meaning of the Equality Act 2010. In September 2013, the employee returned to work from a period of sick leave and, following advice from its occupational health adviser (OH), the employer implemented several adjustments to the employee's working conditions although two recommendations (a requirement for weekly meetings and a formal review) were ignored and considered too formal in the circumstances. 

In October 2013, the employee went on sick leave for work-related depression and anxiety. She believed she had been bullied and intimidated by her line manager. Following receipt of a fit note that referred to bullying, the employer wrote to the employee asking whether she wished to raise a grievance and to discuss the issues. The employee explained that she was too upset to be able to communicate properly. The employer then wrote to the employee suggesting that they have a meeting to discuss the issues before the end of the month, the letter also set out six areas of concern that needed to be discussed with her.

It was held that this was a repudiatory breach of the mutual trust and confidence between the employer and employee and that the employee had been constructively dismissed. The timing and nature of the issues raised in the employer’s letter were intended to elicit the employee’s resignation. The employer should reasonably have known that the timing of the letter would cause the employee distress. The concerns raised in the letter were not serious and could have been dealt with at a later stage.

Whilst the employee’s claim for constructive unfair dismissal was successful, her claims for harassment and discrimination arising from disability were dismissed. The Employment Appeal Tribunal held that allowing a claim for discrimination arising from disability was inconsistent with a finding that the employer had made reasonable adjustments.

Whilst it is important to maintain appropriate contact with an aggrieved employee on sick leave, employers should consider whether it is really necessary to contact the employee or whether the issue could wait for the employee’s return to work. The deciding factor in this case was that the concerns raised by the employer were not serious or urgent. Employers should always ensure that an employee’s grievance or potential grievance issues are dealt with separately from any potential performance or disciplinary issues.
Whistleblowing: relationship between information and allegations

In Kilraine v London Borough of Wandsworth the Employment Appeal Tribunal held that in relation to whistleblowing claims, to be protected, a disclosure must involve information, and not simply voice a concern or raise an allegation. The fact that information can also be an allegation is not relevant; the question to be asked is whether information was provided at all. Mere allegations are not sufficient to make a whistleblowing claim.
Transfer of all activities not required under TUPE service provision change regime

In Arch Initiatives v Greater Manchester West Mental Health NHS Foundation Trust & others, it was held that it is not necessary for the whole of a service to transfer in order for the service provision change provisions of TUPE to apply. A TUPE transfer can take place even if only part of the service is transferred. In deciding whether there has been a transfer of service, the Tribunal will consider the following:

o    were the activities pre and post transfer "fundamentally or essentially" the same; and
o    was there an organised grouping of employees that had, as its principal purpose the carrying out of the activities concerned on behalf of the client?

The case of Arch Initiatives concerned Bolton Council who contract out the provision of services to adults who are alcohol and/or drug dependent in the Bolton area. The services were provided by Greater Manchester West Mental Health NHS Foundation Trust until 31 December 2012 when a re-tendering exercise was conducted. Following the tender, the services that were previously provided by the NHS Trust were then provided by Arch Initiatives and Lifeline Project Ltd. The Trust employees who had been performing the services argued that their employment had transferred on 1 January 2013 to Arch and that since Arch had not taken on any of the employees, they had been unfairly dismissed.

The Tribunal found that there had been a service provision change on 1 January 2013. It also found that there were two organised groups of employees, one providing case management services and the other was providing alcohol related services. Arch appealed this finding stating that there could not be a transfer of part of a service under TUPE. The appeal was dismissed on the grounds that the correct approach to the service provision regime was to adopt a natural and straightforward reading of the legislation by looking at the two key issues bullet-pointed above.
Temporary cessation of work by subcontractor did not preclude TUPE business transfer or service provision change

The case of Mustafa and another v Trek Highways Services Ltd and others concerned an appeal against an Employment Tribunal’s finding that there had been no business transfer or service provision change where a subcontractor’s employees had been laid off as a result of a commercial dispute with the main contractor, shortly before the expiry of the main contract and the transfer of the services to a new contractor. The employees were due to transfer to the new contractor on 21 March 2013, however they were laid off by the subcontractor on 8 March 2016.

The Claimants’ appeal was upheld by the Employment Appeal Tribunal concluding that there had in fact been a business transfer or service provision change. Despite the suspension of work on around 8 March, there were no findings to suggest that the entity did not continue in existence in the form of the dedicated staff, vehicles, equipment and the subcontract itself (which remained in place until 20 March). There was a temporary cessation of activity by the subcontractor, but this did not destroy the entity.

The case reinforces the point that employers should not place too much reliance on a temporary cessation of work when deciding whether there has been a TUPE transfer. A temporary cessation should in fact be just one of the relevant factors taken into account. Tribunals will consider the length and purpose of the cessation when deciding if there has been a transfer. The case also suggests that the reason why "activities cease to be carried out" under regulation 3(1)(b) of TUPE 2006 will usually be immaterial.
Summary dismissal for disclosure of confidential information was wrongful and unfair where employer had culture of information-sharing

In Stimpson v Citibank a foreign exchange trader was dismissed after he disclosed confidential client information to traders from different banks via an online chat room. Whilst this conduct was prohibited by the employer’s codes of practice, there was actually a culture of information-sharing between foreign exchange traders at different banks. The employer failed to carry out a proper investigation and had relevant witnesses been interviewed, the employer would have learned that the employee’s conduct was similar to that of his peers and immediate managers. The breach of confidentiality was therefore not deliberate.

The case highlights the importance of employers not only having in place strict rules and policies, but also ensuring that those policies are actually applied and enforced within the business. As management had appeared to condone information sharing by not enforcing their code of practice, they were unable to rely on the employee’s actions as a breach of its rules. The case also emphasises the need for thorough investigation, particularly in regulated sectors where disciplinary sanctions could seriously affect the employee's future career prospects.

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