Changes to UK employment law 2020

What are the changes for UK employment law in 2020?

https://pdf.printfriendly.com/camo/0722a268e6d57c8db84278feefa0b1e6ae4d0353/68747470733a2f2f73322e676f6f676c6575736572636f6e74656e742e636f6d2f73322f66617669636f6e733f646f6d61696e3d7777772e6f70656e616363657373676f7665726e6d656e742e6f7267

In this article, Sean Dempsey and Richard Lister of UK law firm, Lewis Silkin, take a look at what’s coming up in UK employment law in 2020

Lewis Silkin is the UK member firm of Ius Laboris, an HR and employment law firm alliance.

Looking ahead to 2020, various Good Work Plan reforms are coming into effect in April and the Government is planning to introduce a new Employment Bill, which will pave the way for a number of further employment law reforms. It is clear that the Government’s main priority is ‘getting Brexit done’, but we can expect several employment law reforms to be progressed during the course of this year, many of which are to be included in the proposed new Employment Bill.

Brexit impact on employment law

The prime minister has brought the Withdrawal Agreement Bill back to Parliament, and expects MPs to ratify it prior to the UK leaving the EU on 31 January 2020. The Government has, at least for the time being, ruled out extending the transition period beyond 31 December 2020. The Conservative manifesto contained no detail about long-term plans for employment law, though did include a pledge to ensure high standards of worker’s rights. For more information about the implications of the current divorce deal, and the scope for long-term divergence from the EU on employment rights, see our Brexit portal.

New IR35 rules

Changes to the operation of IR35 regime are due to take effect from 6 April 2020. Private-sector businesses engaging contractors who supply their services personally via an intermediary (e.g. a personal service company) will become responsible for determining whether IR35 is applicable. If the business considers IR35 applies, the person paying the intermediary will be responsible for operating PAYE and national insurance on the fees it pays.

Companies affected should urgently prepare for these important changes by, for example: auditing their labour supply chain to identify contractors using intermediaries; deciding on a methodology for assessing their status; and reviewing their onboarding process and documentation for contractors going forward. Before the general election, the Chancellor Sajid Javid said there would be a review of the proposed IR35 changes to ensure they were ‘right to take forward’. It seems more likely than not the reforms will proceed in April, so it remains sensible to continue preparations.

Written statements

One of several reforms being implemented from the Government’s Good Work Plan is a revamp of the rules requiring employers to supply staff with a written statement of key particulars of their employment. From 6 April 2020, statements will have to be provided to those with ‘worker’ status in addition to employees, by day one of employment. More information will need to be set out in the statement, including details of the full benefit and remuneration package. Many employers are likely to be recruiting for April starters, so now is the time to start reviewing and amending their standard documentation.

Agency workers

The law on agency workers is also changing in April. When the UK first implemented the EU Agency Workers Directive, it enacted the so-called ‘Swedish Derogation’, which provides that certain agency workers are not covered by the principle of equal treatment. This is being abolished with effect from 6 April 2020. Businesses will need to decide what to do about any agency workers on Swedish Derogation contracts and, where appropriate, migrate them onto standard agency contracts or take them on as direct hires.

Holiday pay

The reference period for calculating holiday pay is increasing from 12 weeks to 52 weeks on 6 April 2020. This change may create practical problems in relation to people who work intermittently for just some weeks of the year. Employers should review their current approach to calculation and identify any changes required, and perhaps conduct a dry run to assess any cost impact.

Information and consultation

The final April 2020 Good Work change is a reduction in the threshold for demanding information and consultation arrangements under the Information and Consultation of Employees Regulations 2004 from 10% to just 2% of employees.

Termination payments

After significant changes to the tax treatment of termination payments were introduced in April 2018, a related requirement for employers to pay employer NICs on any part of an ex gratia termination payment exceeding GBP 30,000 was put on hold. This change will now come in on 6 April 2020, making termination payments more expensive.

CEO pay ratio reporting

The first reports will be due this year under the new legislative regime requiring directors of UK-listed companies with 250 or more employees to report annually on the difference in pay between their CEO and average workers.

Parental Bereavement (Pay and Leave) Act 2018

A new right to parental bereavement leave, giving parents two weeks’ paid leave if they lose a child under 18, is expected to come into force sometime this year. Regulations setting out details of how the right will operate are still awaited.

Discrimination

The Government has promised to implement a planned reform to provide priority access to redeployment opportunities for pregnant women and new parents in a redundancy situation. The new Employment Bill will include provisions to implement these new rights.

Regulation of NDAs

The Government is expected to bring forward legislation introducing new restrictions on confidentiality clauses in employment contracts and settlement agreements. This follows the publication of a consultation response on the issue last July. There is no draft legislation yet and the implementation date is unknown.

Family and carers’ rights

The Government will be taking forward plans to allow parents to take extended leave for neonatal care (following a consultation published last July). The Employment Bill will also provide for a new right for carers to take a week’s leave each year. The Conservative manifesto said they would look at ways to make it easier for fathers to take paternity leave, but no further details have been released.

Making flexible working the default

The Government intends to encourage flexible working arrangements and consult about making them the default unless employers have a good reason otherwise. Details are not yet clear, but the plans could go further than the proposals currently under consultation that would require employers to say if flexible working is available in job adverts and publish their flexible working policies.

Employment status and protections

Despite the unresolved issue of employment status (see above), the Conservative manifesto did promise that workers would gain the right to request a more predictable working contract. This is something which had already been promised in the Good Work Plan, and forms part of the requirements of the EU Transparent and Predictable Working Conditions Directive.

The right to a more predictable working contract will form part of the new Employment Bill. The manifesto also mentioned other ‘reasonable protections’, which may refer to rights to reasonable notice of work schedules and compensation for shift cancellation, which are already under consultation.

Staff tips

The new Employment Bill will provide for legislation requiring employers to pass on all tips. The Government also plans to introduce a new Statutory Code of Practice to ensure that tips are distributed fairly and transparently.

New state enforcement body

The Conservative manifesto also pledged to create a new state enforcement body to tackle non-compliance in the labour market, following a consultation published last year.

The plan outlined in the consultation was to bring together the existing patchwork of enforcement under the remit of a single body, and then expand its remit to cover holiday pay for vulnerable workers and umbrella companies operating in the agency workers sector. The Government is likely to focus on targeting the most exploitative employers.

Upcoming cases in 2020.

Important employment cases to be decided this year include the following:

  1. Data protection

The case of Morrison Supermarkets plc v Various claimants was heard by the SC last November and the judgment is expected soon. Morrisons is appealing against the CA’s ruling that it was liable for the wrongful disclosure of payroll data on around 10,000 staff by an aggrieved employee.

2. Minimum wage

In February, the SC is due to hear Royal Mencap Society v Tomlinson-Blake, a case of huge significance for the care sector. The CA decided that care workers carrying out ‘sleep-in’ shifts were not entitled to the national minimum wage for the whole shift, but only when they are required to be awake and working.

3. Employment status

In Uber BV v Aslam and others, a case of major interest for the gig economy, the CA upheld by a majority the finding that drivers engaged by Uber are workers rather than self-employed, whenever they are signed into the relevant app and ready to work. The SC is scheduled to hear Uber’s appeal in July.

4. Equal pay

Asda Stores Ltd v Brierley (see here) is likely to be decided by the SC this year. A hearing date for Asda’s appeal is awaited.

Share this page:

Emails Outside Work..are they illegal?

It is common for many employees to send, read and reply to work emails at all hours of the day and night, including weekends. This change in work culture developed in recent decades and has accelerated with the advent of smartphones. But is this a breach of employment law? The short answer is that ‘it depends’ and we need some test cases to clarify the situation, not least in the UK.

Some workplaces have a culture of long working hours and it can be difficult for an individual employee to go against it. The contract may refer to a 40-hour week but the reality may be very different. Smartphones and other digital devices have contributed to a culture of ‘digital presenteeism’.

Staff may feel that, if they don’t keep up with the always-on culture, their job may not be safe. It doesn’t help when senior people talk up their own commitment to long hours. Perhaps it made some workers at the University of Cambridge uncomfortable recently when Professor Mary Beard tweeted that she works 100 hours a week, for instance.

The EU Working Time Directive

The employment relationship is contractual so, in principle, there is freedom to contract as both parties see fit. But many regulations limit this freedom, usually to redress a perceived imbalance in the bargaining power between employers and employees.

The EU Working Time Directive, introduced in 1993 and revised in 2003, specifies that an employee’s average weekly working time should not exceed 48 hours. It also contains requirements on daily rest periods, weekly rest periods and annual holidays. Member states can decide that aspects of the working-time rules do not apply to workers who decide their own working hours.

The directive was grounded on principles of health and safety at work. It is obviously unsafe for workers, such as drivers or medical staff, to have long working hours, as they are more likely to make a mistake if they are tired. But long working hours are unsafe for all workers, as they may contribute to stress, burnout, fewer opportunities for exercise, poor diet and in some cases heart disease.

In the case of employees who work to a set schedule, perhaps with ‘clocking in and out’ systems, it is relatively easy to check whether the 48-hour limit is being breached. Many employers do not keep records of hours worked by salaried employees, however.

In a recent case brought from Spain — Deutsche Bank (2019) — the European Court of Justice held that to satisfy the Working Time Directive, EU member states must require employers to set up an objective, reliable and accessible system so that each worker’s daily working hours can be measured. One implication might be that national laws would require employers to keep more detailed records, thus potentially drawing attention to after-hours time spent dealing with emails.

Share this page:

UK employment rights in a no-deal Brexit

Introduction

What might a no-deal Brexit mean for UK employment rights? What could employers do now to prepare? And what might the future hold in a no-deal scenario?

Prime Minister Boris Johnson is clear that he would be prepared to leave the European Union without a deal if necessary and the current legislation commits the United Kingdom to leaving the European Union at 11:00pm on 31 October 2019. Thus, it seems like a good time to revisit the employment law implications of a no-deal Brexit.

What can employers do now to prepare for a no-deal scenario?

European works councils

Employers must have pre-designated their new representative agent if their European works council is currently located in the United Kingdom. If the European works council is (or will become) located in another EU country, employers must decide what to do about their existing UK representatives after Brexit (for further details please see “European Commission confirms its views on European works councils and a no-deal Brexit“). Employers that are currently negotiating a European works council agreement or have a European works council operating under the default subsidiary requirements should consider relocating their arrangements now if they have not done so already.

Data protection

If a no-deal Brexit approaches, employers may need to take steps to protect data flows from the United Kingdom to the European Union.

Impact on business

There are certain legal requirements that employers should contemplate if they are considering restructuring or relocating after Brexit. The key point is that employers may need to consult on the business case for closure before any decision to close a business is taken. Employees should also be offered the opportunity to move with the business if it is relocating, subject to them meeting any relevant language, immigration or qualification requirements.

Following a no-deal Brexit – what would it mean?

Employment law

In the event of a no-deal Brexit, the European Union (Withdrawal) Act 2018 will convert all EU employment law as it stands before Brexit into UK law. The Employment Rights (Amendment) (EU Exit) Regulations 2019 will make some small technical changes and introduce new provisions intended to preserve UK-located European works councils (although it has been argued that the European works council arrangements do not actually work) but, apart from the changes made by those regulations, employment law will remain the same in the immediate term (for further details please see “Will Brexit frustrate your European works council?“).

Business travel to EEA and Switzerland

The rules for British citizens travelling to Ireland will not change and they will be allowed to undertake any activity without restriction. After Brexit, British citizens travelling to the other EEA countries or Switzerland will be exempt from visa requirements for up to 90 days in a 180-day period. This is for visits only, including for attending business meetings. However, British citizens will be unable to undertake paid work, so employees must understand the scope of the proposed activities on each trip and obtain any required work permissions if these go beyond the activities allowed for visitors. It will also be important to calculate the time spent in the Schengen area on a rolling basis to ensure that the 90-day maximum stay is not exceeded. British citizens will also need to have a passport which is valid for at least six months from the time that they enter the European Union. Note that some British passports are issued for more than 10 years in total but only the first 10 years of validity can be counted towards this six-month requirement. The government has produced a calculator that people can use to check if they have enough time left on their passport to cover a visit.

Business travel to United Kingdom

If the British government proceeds with its original plan to bring in new primary legislation to end the free movement of EEA and Swiss nationals to the United Kingdom, there is likely to be a short period after a no-deal Brexit in which free movement will still apply. However, recent press reports suggest that the government may seek to end free movement using secondary legislation. It is likely this will ultimately prove to be unfeasible. However, if the government is successful in using secondary legislation, it could mean that free movement will end on exit day. After this, Irish nationals will continue to undertake business travel to the United Kingdom without restriction due to the common travel area arrangements. The arrangements for EEA or Swiss citizens arriving in the United Kingdom between the date that free movement ends and 31 December 2020 are currently unknown. The government previously announced that they would be able to enter visa-free for up to three months and would be allowed to undertake any activities without restriction; however, this plan has now been scrapped and its replacement is yet to be announced.

What would a no-deal future look like?

In the longer term, there are lots of potential employment implications for which employers should prepare.

Possible divergence from ECJ case law

Pre-Brexit decisions of the European Court of Justice (ECJ) will remain binding on most UK tribunals and courts, but need not be followed by the Supreme Court. New ECJ decisions will not be binding on any court or tribunal, although they could be considered if relevant. Overall, the UK courts are likely to continue to respect most ECJ rulings, as long as UK and EU legislation remain the same.

No new directives

The United Kingdom would not be required to adopt the Transparent and Predictable Working Conditions Directive, the Work Life Balance Directive, the Whistleblower Directive or any future EU directives. However, the United Kingdom:

  • has already committed to implementing some aspects of the Transparent and Predictable Working Conditions Directive;
  • is one of the few EU countries to already have whistleblower protection; and
  • already provides some of the rights established under the new Work Life Balance Directive.

Thus, while differences in employment law could open relatively soon, they will be quite small.

Longer-term changes to employment law

Larger gaps will open if the UK government dismantles EU-derived employment laws after Brexit. Theresa May was always emphatic that her government would look to enhance workers’ rights after Brexit, not reduce them. However, other prime ministers may take a different stance.

Boris Johnson is reported to be keen to renounce the Working Time Directive. He gave evidence to a select committee that it has proved too expensive to implement in the United Kingdom and it would be surprising, given the strength of his previous statements, if his government made no changes to EU-derived working time laws. However, it is hard to imagine any modern UK government ending all rights to paid holiday. Instead, the United Kingdom can reasonably expect the scrapping of EU rules on working time limits and record-keeping requirements, but the retention of some rights to paid holiday (possibly paid at the rate of basic pay only). Similarly, some rights provided by the Agency Workers Directive could be abolished (eg, the right to pay parity after 12 weeks), but limited agency worker rights are likely to remain.

In the longer term, if a Conservative government remains in power, the country might also expect to see collective redundancy consultation being abolished or made less onerous and the restrictions on changing terms after a Transfer of Undertakings (Protection of Employment) (TUPE) being lifted (although TUPE is unlikely to be scrapped). Previous governments have explored whether discrimination awards could be capped (eg, at one or two years’ pay) but this was problematic under EU law. Capping discrimination awards is unlikely in the short term, not least because of the #metoo movement, but it could come back on the table later.

Ultimately, the United Kingdom faces the same challenges as any other modern economy: how to regulate the increasing volume of platform and contingent working and respond to the impact of demographic and technological change on the workplace. The United Kingdom’s withdrawal from the European Union will mean that the United Kingdom will need to find its own regulatory solutions to these challenges.

Discrimination rights

UK law prohibits workplace discrimination on grounds of nationality and national origin. In the (hopefully unlikely) event of any EU citizen experiencing abuse or harassment in the workplace, employers must be ready to respond under their anti-harassment policies. Employers may want to check that they already cover nationality as well as race.

Interestingly, UK equality legislation goes further than the EU minimum requirements in explicitly preventing nationality discrimination in the workplace. This is one of a number of instances where UK law actually provides more rights than the EU minimum and illustrates that, although the United Kingdom may dismantle some EU-derived employment rights following a no-deal Brexit, there are still likely to be areas of employment law where it goes further than the European Union.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide

Share this page:

Employment Law the facts…

Employment law regulates the relationship between employers and their employees. It covers every aspect of employment from the hiring process through to the exit process, ensuring every individual is treated fairly.

Employment law is potentially full of pitfalls. Getting it right means keeping up with developments and really thinking about your policies before carefully implementing them. Getting it wrong can be extremely expensive.

There are seven areas of employment law likely to affect you. Here are the main things to be aware of in each area.

1) Recruitment

If you recruit the right people, you’ll have fewer problems to deal with later. We all make instant judgments about people and may even decide about a candidate’s suitability before they’ve said a word. Train interviewers to be aware of, and avoid, unconscious bias: ask standardised questions to give each candidate an equal chance. You must also check they have the right to work in the UK. Use probationary periods effectively and have regular reviews, if there are early signs the employee is likely to be unsuitable you can usually dismiss without risk.

2) Hours, leave and pay

You must adhere to the Working Time Regulations regarding working hours, rest breaks and paid annual leave. Ensure employees are paid at least the minimum wage, with everyone receiving a wage slip, and you must operate PAYE for tax and National Insurance contributions.

3) Employee rights

All employees should receive a statement setting out the main terms and conditions of their employment. Plus, certain ‘rights’ will be implied. There must be a relationship of ‘trust and confidence’ between employer and employees; a reasonable amount of privacy, the right to belong (or not) to a trade union, and the entitlement to ‘blow the whistle’ on employer wrongdoing; employers must provide a secure, safe and healthy working environment, and most employees are entitled to keep their jobs if the business changes hands. Everyone has the right to ask for (but not necessarily get) flexible working after being with an employer for 26 weeks.

4) Discrimination

Underpinned by the Equality Act 2010, it’s crucial that employers get this right as they are legally responsible for discrimination and harassment by their staff. Discrimination can be direct (e.g. not employing somebody because they are gay) or indirect (applying a policy equally to everyone that disadvantages one group, e.g. irregular shifts for women who may be carers). Harassment is often dismissed as ‘just banter’, but it’s not the intention that’s the issue, it’s how it was perceived. To prevent discrimination or harassment, employers need a workplace policy, should train their staff about what is and isn’t acceptable, and take prompt action against anyone who oversteps the mark. .

5) Disciplinary and grievance

You need to have disciplinary and grievance procedures that follow the ACAS Code of Practice in place. If you’re going to dismiss someone, you’ll need a good reason and it must not be unlawful or unfair (genuine redundancy can be grounds for dismissal). You don’t necessarily have to go through the rigmarole of a series of verbal and written warnings – you can go straight to a final written warning or dismissal in serious cases.

6) Sickness

Tackling illness in the workplace can be tricky – particularly if the employee has a disability and is protected under discrimination legislation. We’ve all come across an employee who seems to have a sickness bug on Monday mornings (short, intermittent illness) or those who are off for over a month (long-term sickness). All employees should be asked to attend a back-to- work interview after any period of illness: the key thing here is, where necessary, to offer adjustments that ease people gently back into work. Not all illnesses incapacitate a person so much that they need to stay in bed, or remain at home – this is particularly true of conditions such as stress or depression.

7) Working parents

When an employee is expecting a baby or is a new parent, they have extra rights at work. An employee and their partner could be entitled to: paid time off for ante-natal care, maternity leave and pay, paternity leave and pay, shared parental leave and pay, adoption leave and pay, and unpaid time off to care for a child. These rights apply to same-sex relationships as well as opposite-sex relationships. Employees can also have a few days’ ‘unexpected emergency leave’ for domestic emergencies

Original piece written by Irwin Mitchel

Share this page:

The exemption from disclosure for confidential employment references….

The General Data Protection Regulation (GDPR) and the Data Protection Act 2018 (DPA), which implemented many of its provisions, are now over a year old.  The aim of the GDPR was to increase the protection of individuals’ personal data.  Employees are better informed than ever of their data protection rights, with employers receiving an increased number of subject access requests from their employees.

Interesting, however, under the DPA, individuals are not entitled access to a confidential employment reference written about them; neither from the author of the reference i.e. the ex-employer, nor from the recipient of the reference i.e. the new or prospective employer.  In order for ex-employers to refuse disclosure (should they wish to do so), the reference should clearly state that it is confidential, intended for the attention of the recipient only and that the author does not give permission for it to be disclosed to the subject.

Under the previous Data Protection Act 1998, the exemption relating to confidential references applied only where the employee made the request to the employer that provided the reference. The employee could therefore access the reference by making a request to the employer that received the reference instead. This provision (which was considered an anomaly) was removed by the DPA.

The author of a reference owes a duty of care to both the subject of the reference and the reference recipient.  Caselaw has established that where a reference is given, the reference must in substance be true, accurate and fair, and must not give a misleading impression.  Most job offers are conditional upon receipt of satisfactory employment references.  Clearly, an unfavourable reference can harm an individual’s future employment prospects and result in the prospective employer withdrawing an offer or dismissing an employee during their probationary period. This means that the balance in the employer’s favour may be disproportionate in cases where a reference is open to challenge due to being factually incorrect, or generally giving a misleading impression. Of course, where the individual is not permitted access to a reference, they are unable to challenge its contents.  Where the individual has evidence that the ex-employer had provided a negligent reference, they could bring a claim in the county court and request that the court orders disclosure of the reference.

This statutory exemption could mean that the UK is in breach of Article 8 of the European Convention of Human Rights in respect of an individual’s qualified right to a private life, as it is questionable whether the exemption which permits the reference to be withheld is proportionate to the individual’s right to fairness and transparency regarding their personal data. It is possible that at some point, the UK courts will receive a challenge to the legislation on this basis.  However, as the law currently stands, employers can continue to rely on this exemption, which means that any request for access to personal data contained in an employment reference which is clearly stated to be confidential, is exempt from disclosure.

Share this page:

Latest market news: High demand for staff but low candidate Availability

 Key points from the March Survey:

  • Permanent placements continue to rise;
  • Growth of demand for staff remains high, but candidate availability drops lower;
  • Starting salaries increase to greatest extent for five months.

Growth in permanent placements…

Although the rate of expansion has softened from February’s three-year record high, the growth in permanent placements remains sharp. Permanent placements vacancies continue to rise at a slightly faster pace than that for temporary job roles.

Candidate availability...

The availability of permanent workers has fallen for the fifty-seventh consecutive month in March. Key permanent staff skills reported in short supply includes in particular Accountants, Engineers, HGV Drivers and Web Developers.

Pay pressures…

The rate of inflation in salaries for newly-placed permanent staff has accelerated for the second month running in March. Evidence suggested that the higher salaries are attributed to strong demand for staff alongside competition for scarce numbers of candidates with the required skills for the roles. Data published by the Office for National Statistics shows improved earnings growth in its latest report. Alongside a softer increase in living costs, this suggests that the pressure on real wages may be coming to an end.

Commentary:

Permanent placements are growing month on month as demand for staff remains high. More people are entering employment, but it doesn’t make up for the shortfall of candidates for many roles, from cyber security and aerospace through to sewing machinists and drivers.

As a result, employers are increasing starting pay to draw candidates away from current roles into new positions. 

Candidates planning to move jobs have a strong chance of getting a pay rise. With inflation outstripping pay growth for over a year now, high pay offers will be tempting, as the pressure on starting salaries still isn’t translating into pay rises for staff who stay put. Employers need to look at other means to keep staff, such as creating a good workplace culture and offering progression opportunities.

 

Share this page:

Permanent placements rise to greatest extent since August

Key Points from the November Survey:

  • Permanent placements rise at a quicker pace;
  • Availability of candidates continues to decline sharply;
  • High demand for staff leads to further increases in pay;
  • The unemployment rate remains low.

Staff Appointments Rise Further…

The growth in permanent placements has reached a three-month high across the UK. The rise has been attributed to an increased demand for staff and company expansion plans.

The number of permanent placements in the South, conversely, is increasing at a slower rate.

Vacancies…

Staff vacancies have continued to rise sharply. The rate of growth since October, however, has slackened slightly.

Across all sectors, the number of permanent staff vacancies has increased. In descending order, the sectors with the greatest number are:

  • Accounting/Finance;
  • IT and Computing;
  • Engineering;
  • Executive/Professional.

Staff Availability…

Across the UK the availability of candidates to fill permanent roles has continued to decline. The South has recorded the steepest decline in permanent labour supply. The key permanents staff skills reported to be in short supply include:

  • Accounting/Finance:
    • Audit, Estimators, Insurance, Paraplanners, Payroll.
  • Blue Collar:
    • HGV and LGV Drivers, Production and Distribution.
  • Construction:
    • Construction, conveyancing, Quantity Surveyors.
  • Engineering:
    • Aerospace, Engineers, Technicians.

Pay Pressures…

The average starting salaries for permanents jobs has continued to increase, resulting in a growth which has lasted for just over five-and-a-half years. The increase is salary has been attributed to low candidate availability combined with a strong demand for staff. The quickest rate of inflation has been recorded in the North.

Unemployment…

The unemployment rate and claimant count for the UK remains historically low.

The unemployment rate stands at the lowest level it has been since 1975. It is virtually identical for both men and women.

In October, approximately 806,000 people claimed out-of-work benefits. Although a rise by around 24,000 people compared to last year, the claimant count has remained close to its lowest level recorded in the early 1970s.

 

Share this page:

Legal News – Damages for breach of restrictive covenant

Employment law pic 2

In Morris-Garner v One Step, the defendants were the founding director of a company and her partner.  The company had been founded in 2002, but in 2006, in secret, the defendants incorporated another company. They then resigned from their positions with the original company and agreed to non-compete and non-solicit restrictive covenants.  The new company began trading in 2007, an​d in 2012 the original company sued for breach of the restrictive covenants.

The starting point with any restrictive covenant is that they are unenforceable as they restrain the employee’s right to trade.  However, if they are drafted no more widely than necessary for the purpose of protecting the employer’s trade secrets and confidential information, connections with clients or stability of the workforce, they may be enforceable.  The more senior the employee, the more likely are the courts to consider the covenant reasonable. We were reminded in March this year of courts’ unwillingness to enforce such terms (Bartholomews Agri Food v Michael Thornton); an interesting feature of that case was that even if the restrictive covenant had been reasonable when the employee resigned and started working for a competitor, it had been totally unreasonable when agreed 18 years previously at the start of his employment as a trainee in the field.  An action point from that is that the employer would be wise to review its contracts occasionally.
In Morris-Garner v One Step, the first defendant didn’t even argue in the High Court that the covenant was unenforceable.  Her partner did, claiming she was a mere employee – the court gave that short shrift, as it was clear that the reason for the agreement was that she was the first defendant’s civil partner and later her business partner.
The reason why this case is interesting, and useful for employers, is the remedy awarded by the court.  It would have been inherently difficult to identify any particular loss suffered by the company on account of the breaches of the restrictive covenants, so the court awarded what is called (after the principal case on the matter) “Wrotham Park damages”: the amount which the company might reasonably have demanded for releasing the defendants from the restrictive covenants before they began in competition.  Wrotham Park damages had been seen as a highly exceptional remedy.  This case has blown away that exceptionality requirement.
Employers should take care with restrictive covenant, especially in the drafting.  But as this case shows, employers need not forget about them entirely, and if breached there may be useful remedies.
Share this page:

Hidden Talent

Many small businesses who struggle to recruit the skills they need could source from an often overlooked source of talented employees…those with a disability..

In numbers

6 Million.

The number of people of working age in the UK who are disabled or have a health condition, according to the government’s Disability Confident campaign.

83%

The proportion of disabled people who acquire their disability while at work (disability confident)

520,000

The number of vacancies that small businesses can’t fill because of a lack of relevant skills (Centre for Economic and Business Research)

Source: www.businessdisabilityforum.org.uk

 

Share this page: