Employment Case law round-up – January 2015

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Dismissal for offensive personal tweets was fair – Game Retail Ltd v Laws UKEAT0188/14
Misuse of social media can be a tricky issue for employers to deal with and cases that address the issues for employers to consider are always welcome.

Mr Laws was an employee of Game Retail Ltd with a personal Twitter account. He followed the Twitter accounts of 100 Game Retail stores and 65 of these stores followed him in turn. His own tweets were publicly visible and came up on the Twitter feeds of the 65 Game Retail stores that followed him. Following some 28 tweets by Mr Laws containing expletives and obscene language a manager raised concerns with Game Retail. Following an investigation, Mr Laws was subsequently dismissed for gross misconduct and brought a claim for unfair dismissal.

The EAT overturned the original Employment Tribunal’s decision that Mr Laws’ dismissal had been unfair. It found that the Tribunal had failed to take full account of the public nature of Twitter and had not properly considered whether Mr Laws’ purportedly private use of Twitter was indeed private, given that he was followed by 65 of his employer’s stores. The EAT held that the question was not whether the tweets related to Game Retail or identified him as an employee of Game Retail, but was whether the tweets were offensive and whether staff or customers might have read them.

Walker Morris comment
Social media disciplinary cases like these are always fact-sensitive and it is important to remember that the usual “range of reasonable responses” test applies. A balance exists between an employee’s right to freedom of expression and an employer’s wish to reduce reputational damage through social media usage by employees. In this case, the fact that Mr Laws’ tweets were not private and could be seen by staff (and potentially by customers) was helpful to the employer. Employers should ensure that social media policies are fit for purpose and include clear guidance as to the disciplinary sanctions that will apply if staff are found to be in breach.

Right to pay in lieu of holiday if unable to take it – The Sash Window Workshop Limited and Dollar v King [UKEAT/0057/14]
As a general rule, untaken holiday is forfeited at the end of each leave year. As an exception to this, it is established by case law that if a worker is unable to take holiday during a holiday year due to illness he will be entitled to carry that holiday over to the next holiday year or be paid in lieu of it on termination of employment. A recent Employment Appeal Tribunal (EAT) decision suggests that the scope of this exception is wider and will also apply where workers are unable to take holiday for other reasons beyond their control.

Walker Morris comment
‘Reasons beyond the employee’s control’ could cover a multitude of possible situations including home emergencies, family reasons and so on. That said, if the employee was actually at work and being paid during the periods when they say they would otherwise have taken their leave entitlement they will be unable to claim holiday pay for that period as to do so would result in ‘double recovery’. The effect of this case is therefore limited to those situations where the employee is not at work nor are they sick but they are nevertheless unable to take their holiday due to reasons beyond their control. In practice, this is likely to be a rare case.

This case also confirmed the rule that injury to feelings awards for discrimination in the Employment Tribunal are subject to a 10% uplift. For further details on this point please see our October newsletter.

Employment status – Pimlico Plumbers v Smith [UKEAT/0495/12]
Businesses employ and engage individuals in many different ways and It can be notoriously difficult to make a definitive assessment as to whether an individual is an employee, a worker or genuinely self-employed. This is borne out by the number of cases reaching the appeal courts in this area. It is important to know the exact employment status of each person that works for you, not least because it will determine the extent of any employment rights and taxation obligations. In this case, the EAT considered whether a plumber engaged by a plumbing and maintenance company was an employee or a worker and held that he was a worker.

Mr Smith wore Pimlico Plumber’s uniform and drove a van with Pimlico’s logo. However, the agreements between Mr Smith and Pimlico suggested he was in business on his own account. In addition, he was paid against receipt of invoices, he personally accounted for his own tax and he was VAT registered. Pimlico required him to provide his own tools, equipment and materials and maintain his own insurance. He was able to choose his working hours (subject to carrying out a minimum each week) and was able to turn down jobs. Pimlico were not obliged to provide him with work if none was available.

The EAT held that he was not an employee having regard to the Claimant’s financial risk, the degree of his autonomy and how the work was carried out. The fact that both parties acted as though the Claimant was self-employed was also a significant factor.

The EAT did, however, hold that he was a worker primarily because it was envisaged that he would provide personal service. There was no express provision in the agreements which allowed Mr Smith to provide a substitute and, indeed, Pimlico would not have agreed to an unfettered right to do so.

Walker Morris comment
This case illustrates some of the common factors taken into account by Tribunals in determining employment status and highlights the importance of being clear in contractual agreements and practical arrangements about an individual’s employment status. Whilst workers don’t benefit from employment rights such as unfair dismissal and redundancy they are entitled to a number of other statutory rights including the right to paid statutory holiday and protection from discrimination under the Equality Act 2010.

Restrictive covenants require consideration – Re-use Collections Ltd v Sendall & May Glass Recycling Ltd [[2014] EWHC 3852 (QB)]
Restrictive covenants are normally included in an employee’s service agreement and agreed at the outset of employment so the ‘consideration’ for the covenants is the offer of employment. Sometimes, however, employers seek to agree restrictive covenants during employment or on termination of employment. In order for such covenants to be enforceable there must be consideration for them.

In this case, Mr Sendall had not had any written contract of employment with Re-use nor had he agreed any restrictive covenants with it. During the course of his employment, during 2013, he signed a written contract of employment with Re-use which contained a number of restrictive covenants including a 6 month non-solicitation and non-dealing covenant and a 12 month non-compete clause. Shortly after this, he left Re-use to join May Glass.

The High Court took the view that Mr Sendall had not received any consideration for the covenants he had signed up to with Re-use. This was because he had received no monetary or other benefit in re-turn for agreeing to them. The fact that he continued in employment with Re-use after signing the covenants was not consideration because there had not been any suggestion that he would be dismissed if he refused to sign them.

Walker Morris comment
If an employer wishes to agree restrictive covenants with an employee part way through their employment it is essential to ensure that consideration exists in order that the covenants are enforceable. Consideration may take the form of a sum of money or other non-cash benefit or may, in certain circumstances, be tied in to a promotion. An alternative is to agree the covenants under a document called a ‘deed’. We recommend that legal advice is taken to ensure that the consideration point is covered and also to obtain assurance that the covenants are drafted in such a way that they are likely to be enforceable in the first place.

Deposit orders in the Employment Tribunal – Wright v Nipponkoa Insurance (Europe) Ltd) [UKEAT/0113/14]
If the Employment Tribunal considers that a specific allegation or argument in a Claimant’s case has little reasonable prospects of success, it may order the Claimant to pay a deposit order of up to £1,000 in respect of that allegation before the Claimant will to be allowed to continue with it. There is no limit on the number of deposit orders the Tribunal can make.

In this case, the Tribunal found at a preliminary hearing that 7 of the Claimant’s 11 allegations had little reasonable prospect of success and therefore made deposit orders of £300 per allegation totalling £2,100. The Claimant appealed but the EAT upheld the Tribunal’s orders confirming that the Tribunal has a broad discretion to decide what constitutes ‘little reasonable prospects of success’. The EAT also confirmed that the amount of the deposit orders was proportionate.

Walker Morris comment
The power to make more than one deposit order is a recent and employer-friendly change to the Employment Tribunal rules of procedure. If an employer is faced with a claim that it considers to have little reasonable prospects of success it is important to make the application for a deposit order(s) at the Preliminary Hearing stage. The onus is on the employer to make this application because there is no guarantee that the Tribunal will make a deposit order in the absence of an application. Note also that the Tribunal will look at the Claimant’s means when making a deposit order so it is useful to request details of the Claimant’s means in advance of the application. Applications for deposit orders can be a very useful tactical tool.