Post employment victimisation

In this month’s E-News we re-visit whether the Equality Act covers post-employment victimisation; whether a 12 month restrictive covenant was too long and whether a claim of constructive unfair dismissal negated the restriction; and what the appropriate compensation should be where there has been a technical breach of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”). We also look at the implications of the Queen’s Speech for employment law.

Post employment victimisation

Prior to the introduction of the Equality Act 2010, it was clear that a former employee could bring a claim for post employment victimisation. However, the Equality Act 2010 appears to explicitly exclude such claims and the Employment Appeal Tribunal (“EAT”) confirmed this position in the case of Rowstock Ltd and another v Jessemey [2012], which was considered in last month’s ENews. The EAT has now departed from that position, and in Onu v Akwiwu [2012], held that post-employment victimisation claims are permitted.

Ms Onu is a Nigerian who had been employed as a domestic servant for Nigerian employers. Ms Onu was badly treated, left employment and brought various claims including unfair dismissal and direct race discrimination. She was successful in her claims. Six months after she left employment, it was alleged that her former employer telephoned Ms Onu’s sister to say that the Claimant had sued him and that “if she thought things would end there she was wrong”, and that “the Claimant would suffer for it”. He then phoned again and said words to the effect that there would be trouble for Ms Onu and her sister, so the sister should get the Claimant to stop. As a result of these calls, Ms Onu brought an additional claim of victimisation.

The case made its way to the EAT. For the purposes of this article, the most interesting point was that the EAT departed from its earlier judgment in Jessemey and held that the Equality Act did not expressly exclude claims for post employment victimisation and that national courts must do all that they can do to interpret domestic legislation in line with EU law.

This case will be considered further in the Court of Appeal some time before January 2014. At the moment there appear to be two conflicting EAT decisions; one that suggests that post termination victimisation is not prohibited and one that suggests it is not. Whilst this is not helpful, it is our recommendation that employers should proceed on the basis that post-employment victimisation is prohibited under the Equality Act 2010.

Enforceability of 12 month non-solicitation restrictive covenant

A case in the High Court has recently looked at a restrictive covenant that prohibited the employee, for 12 months from the date of leaving, from soliciting his former clients (Romero Insurance Brokers Ltd v Templeton and another [2013]).

Mr Templeton started work at Romero Insurance Brokers in December 2011 but later resigned claiming he had been constructively dismissed. Mr Templeton then started working for a competitor firm, Eastwoods, and it was alleged that Mr Templeton took Romero’s clients with him to Eastwoods. Romero Ltd then sought redress through the courts claiming Mr Templeton had violated a restrictive covenant which blocked him from taking orders from Romero’s clients for a year. Mr Templeton claimed the circumstances around him leaving the company (in other words, his constructive dismissal) meant that the clause could not be enforced.

The High Court determined that Mr Templeton had not been constructively dismissed. This meant that the restrictive covenant was potentially enforceable.

The starting point when considering restrictive covenants is that a contractual term which restricts an employee’s ability to earn a living is generally void, unless, the employer who seeks to enforce it can show that it has a legitimate interest to protect and that the restriction limiting the employee is no more than is reasonable.

In the current case, the ‘legitimate interest’ Romero was seeking to protect was to give it time to allow Mr Templeton’s replacement to establish good client relations with those whom Mr Templeton previously dealt with. The question therefore was whether 12 months prohibiting Mr Templeton from soliciting these clients ‘was no more than reasonable’. The High Court held that in this case, it was reasonable. In this case it was found that a 12 month period was reasonable when selling insurance policies that are genearlly renewed annually.

The case highlights the importance of well drafted covenants. Many employers adopt a standard 12 month restriction. However, for some industries where client contact is more frequent (compared with the annual renewal process of insurance companies), an employer may well find that 12 months is far too long and a much shorter period would be reasonable. It is therefore important to ensure that restrictive covenants are properly drafted in light of the business circumstances of your organisation and are regularly reviewed.

Correct compensation for technical breach of TUPE

In a recent case, Shields Automotive Ltd v Langdon and other [2012], the EAT looked at the appropriate award to be made where the employer had breached the TUPE regulations for failure to inform and consult prior to a TUPE transfer.

TUPE requires the transferor and transferee to inform and consult with appropriate represenatives. TUPE sets out detailed procedures for electing employee represenatives to enable the information and consultation to take place, including a requirement that the arrangements regarding election of representatives, are, as far as possible, fair. The penalty for failing to inform or consult in accordance with TUPE is a maximum of 13 weeks actual pay; when considering the amount that should be awarded the Tribunal should consider the seriousness of the failure of the employer to comply with its duty.

In this case, the employer called an election for the purpose of electing the representatives at 2pm, with an instruction that voting be completed by 5pm that day. As a result, one employee chose not to vote because of the short time in which to make up his mind, and another was unable to vote because it was his day off. Both of these employees brought a claim in the Employment Tribunal alleging that their employer had failed to comply with their obligations to inform and consult. The Employment Tribunal and, on appeal, the EAT, both found that the employer had not complied with its duty to take reasonable steps to ensure that the election was fair.

The EAT confirmed that the purpose of compensation in these types of cases was punitive, in other words, reminded employers of their obligation to inform and consult. However, the EAT also recognised that where there is evidence that an employer has taken at least some steps to comply with its obligations, the punishment should not be as great for an employer who has taken none. The EAT therefore determined that in the present case, the appropriate award should be reduced from the 7 weeks’ awarded by the Employment Tribunal to 2 week’s.

The case is helpful as it does show that Tribunals are prepared to distinguish between cases where there has been some compliance and others where there has been none. It is also interesting because it also shows that complying with TUPE need not be viewed as a lengthy onerous obligation, and that it can be done quite quickly.

Implication for employment law following the Queen’s Speech

The Queen’s Speech was delivered on 8 May. As you know, this sets out the government’s plans for legislation in the next parliamentary session. The following proposals will be of interest to employers:

National Insurance Contributions Bill: a proposal to introduce, from April 2014, an Employment Allowance worth £2,000 to reduce the cost of employment by reducing the level of National Insurance contributions to be paid.
Deregulation Bill: the government intends to push forward with its proposal to repeal the power of employment tribunals to make recommendations in discrimination claims. This is part of the government’s drive to reduce the burden of excessive regulation.
Immigration Bill: tougher action against organisations who use illegal labour, including more substantial fines. Employers should make sure all those working for them have the right to work in the UK and retain evidence of this in their file.

***Stop Press: Charging fees in Employment Tribunals and the Employment Appeal Tribunal***

The Ministry of Justice announced on 29 May 2013 that the date for implementing the introduction of fees into the ET and EAT will be Monday 29 July 2013. Subject to the necessary Parliamentary approvals, from this date, all ET claims and EAT appeals will be required to pay the necessary fee or apply for fee remission under the HM Courts & Tribunals Service remissions scheme.

A claimant will be required to pay two fees: an issue fee on submitting the claim, and a hearing fee around four to six weeks before the full tribunal hearing. Tribunal judges will have a power to order the unsuccessful party to reimburse any fees paid by the successful party, although this will be at the judge’s discretion rather than automatic.

The amount of the fee will depend on whether the claim is a ‘Type A’ claim or ‘Type B’ claim. Type A claims will include breach of contract, wages claims, holiday pay, redundancy pay, some time off rights and equal pay. Type B claims will include unfair dismissal, detriment, and discrimination claims. There are separate proposals for multiple claimant cases. There will also be set fees for certain other applications, such as an application for setting aside a default judgment, dismissing a claim on withdrawal, breach of contract counterclaims, judicial mediation, or review of a judgment. Issue fees and hearing fees will be:

Type of fee
Type A claims Type B claims
Issue fee £160 £250
Hearing fee £230 £950

 


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.

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