Welcome to the latest issue of the Steptoe Employment Law Update.
The Employment Law Updates are aimed at providing information on
recent developments in UK employment law. It is our desire to
provide you with not only an update of the law, but also a
practical insight in managing workplace issues on a proactive
To achieve our objectives and to continuously improve the Updates, it is important that we receive feedback from you. Please e-mail any comments or suggestions you may have to email@example.com. We look forward to hearing from you.
1. Statutory benefit increases
Standard rates for statutory maternity pay, paternity pay and adoption pay will increase with effect from 7 April 2013 to £136.78. Statutory sick pay will increase with effect from 6 April 2013 to £86.70.
2. Compensation limits
Annual rises for compensation limits have been announced for all dismissals which take effect from 1 February 2013. The cap on a week's pay rises to £450 and the maximum unfair dismissal basic award rises to £13,500. The maximum compensatory award rises to £74,200.
3. Key UK employment issues for 2013
The Government has put in place ambitious plans for growth in 2013 to create the most competitive tax system in the G20, to make the UK the best place in Europe to start finance and grow a business, to encourage investment and exports as a route to a more balanced economy and to create a more educated workforce that is the most flexible in Europe. As a result, consultation on compensation, changes to parental leave, collective redundancies, tribunal reform, income tax, whistleblowing and diversity are all likely to become law during 2013. To view resumé, please click here.
The Private Members' Internships (Advertising and Regulation) Bill 2012-13 was introduced on 5 December 2012. It will prohibit the advertising of long term unpaid internships and regulate the conditions of employment for paid internships.
It was agreed that this bill will be second read, and that is due to occur on 1 February 2013.
5. Sickness benefits
From December 2012, people on sickness benefits are to be offered work experience to help them back into a job. Short periods of work experience at an appropriate employer will help people with limited employment history get a flavour of the workplace environment, gain new skills and boost their confidence.
People who fail to carry out any agreed work related activity without good reason may face sanctions.
Source: Department of Work and Pensions.
6. Fuel Rates and Car Allowances
HMRC has published new advisory fuel rates for company cars with effect from 1 December 2012. The rates are to be used only where employers either reimburse employees for business travel in their company cars or require employees to repay the cost of fuel used for private travel. The next review will be 1 March 2013.
Car allowance payments
Cheshire Employer and Skills Development Ltd (formerly Total People Ltd) v HMRC  EWCH Civ 1429
Total has won a long running dispute with HMRC regarding its reclaim of NIC's for the last 6 years on car allowance payments. The Court of Appeal reaffirmed the conclusion of the First Tier Tribunal that allowances designed to do no more than compensate employees for business travel are not earnings and therefore should not have been taxed as earnings. Total operated a scheme whereby staff either claimed 40p per business mile if they drove below 2,500 business miles per annum or they received an annual sum paid monthly to cover car running costs plus a 12p or 13p per mile payment. The question was whether those lump sums were earnings subject to NIC. The judgment did not consider whether or not the car allowances were relevant motoring expenses under the Social Security (Contributions) Regulations.
Key point: The decision could lead to a flood of claims for NIC refunds. Companies should consider revisiting their car policies and car allowance documentation going forward whether or not a claim for refund is made.
7. Religious beliefs and Article 9 of the European Convention on Human Rights
The judgments have now been delivered from the European Court of Human Rights in the combined appeals of Ladele and Macfarlane v United Kingdom  ECHR 737 and Eweida and Chaplin v UK  ECH 738. These are claims that UK domestic law failed adequately to protect their right to manifest their religion, in Ms Ladele's case her refusal to carry out civil partnership ceremonies, Mr Macfarlane's refusal to provide psycho-sexual counselling to same sex couples and Ms Eweida and Ms Chaplin for wearing crosses at work. It was held that the State had breached Ms Eweida's Article 9 rights when she was denied the right to wear her cross at work but not Ms Chaplin's rights who was a nurse where the protection of health and safety on the hospital ward was more important.
Ms Ladele and Mr Macfarlane's Article 9 rights were also found not to have been breached. The 3 unsuccessful parties may appeal further.
Ms Eweida was awarded £2,000 non pecuniary damages and £30,000 for her costs and expenses.
Key point: The decision does not change the general law on discrimination on the grounds of religion or belief.
8. When is a contract terminated?
Geys v Société Générale, London Branch  UKSC 63
By a majority decision, the Supreme Court agreed with the High
Court's decision that an employee's contract continued
until the date he received his employer's unequivocal notice
that it was exercising its contractual right to terminate summarily
his employment by making a payment in lieu of notice.
Mr Geys was told at a meeting in November 2007 that his employment was to end with a PILON being made in December 2007 for his 3 months' notice. He reserved his position but only received his payslip for the PILON in January 2008. When did the dismissal take effect? The date was important as his termination payment was just under €8m if he was terminated in 2007, or €12.5m if he was terminated in 2008. If it was in 2007, then his dismissal was when the Bank paid approximately £32,000 into his bank account without more. Or it was in 2008 when the Bank wrote to Mr Geys finally saying that it had given notice to terminate and that his PILON had been credited to his bank which letter Mr Geys did not see until 6 January.
The High Court decided the terminated date was 6 January 2008 as did the Supreme Court. He was terminated on 6 January 2008 when he received the Bank's letter of 4 January in which the Bank confirmed that the contractual right to terminate under paragraph 8.3 of the Handbook by the PILON had been validly exercised.
The majority of the Supreme Court held that it was "an obviously necessary incident of the employment relationship that the parties notified the other in clear and unambiguous terms that the right to bring the contract to an end is being exercised and how and when it is intended to operate". Simply making the PILON was not sufficient to bring the contract to an end. If the Bank have given Mr Geys a cheque for his PILON when it met him on 29 November 2007 and told him that he was being dismissed with immediate effect, his dismissal would have taken effect on that date.
Key point: Employers need to ensure that when they are making a PILON they notify the employee that a PILON is being made to them in exercise of the contractual right to terminate the employment with immediate effect. In Mr Gey's case his effective date of termination for the purpose of any unfair dismissal claim was 29 November 2007, although for contractual purposes the date of termination was 6 January 2008. To achieve greater certainty, summary dismissal should be clearly communicated in person so employees know their employment is being terminated in this way.
9. Lap dancer not an employee
Stringfellow Restaurants Ltd v Quashie  All ER 229
The Appeal Tribunal in this case held that Ms Quashie who was a lap dancer at Stringfellows was an employee and there was a contract on the nights she danced because she was required to provide her work personally and the club was obliged to provide her with work. Stringfellows had a degree of control over her because she was subject to the disciplinary regime of fines. However, this was overturned by the Court of Appeal who found that she had not been engaged under a contract of employment because of the manner in which she had been paid by which it was clear that Stringfellows had been under no obligation to pay her anything at all.
Ms Quashie negotiated her own fees with clients and took the risk of being out of pocket on a particular night as she took cash or vouchers from customers attending the club and was paid for each dance. Although Stringfellows took a commission from the earnings she received she was also obliged to pay a daily fee to the club and fees for other services.
This was an arrangement whereby Ms Quashie paid Stringfellows to be provided with an opportunity to earn money by dancing for their customers. The Court was therefore entitled to find that the lack of obligation to pay had precluded the establishment of any employment contract. The contract that she did have required her to accept that she was self-employed which was not a sham.
Key point: Unless there is sufficient mutuality of obligation, employment status for unfair dismissal purposes will not be established.
10. Criminal record checks
The Home Office has announced a new service whereby employees and volunteers requiring criminal records checks will be able to make one application and have access to an online certificate check rather than have to make new applications for each job they apply for. The service will be free for volunteers. The new system will be launched by the disclosure and barring services on 1 March 2013.
11.Statutory Residence Test
HMRC has published draft guidance on how the draft Statutory Residence Test legislation published on 18 December 2012 is intended to operate. The matter is still subject to the Finance Bill 2013 receiving Royal Assent. Changes are expected to come into effect for the 2013-14 tax year. Comments on the guidance are invited by 6 February 2013. HMRC have also published a separate draft guidance note on overseas work day relief and comments are also invited by 6 February 2013.
There are several examples of how a person will be deemed resident in the UK for the tax year either automatically or by the sufficient ties test. To view the guidance, please click here.
12. Volunteers not covered by discrimination law
X v Mid Sussex Citizens Advice Bureau  UK SC 59
X volunteered with the Mid Sussex CAB for 4 or 5 hours a week. She had signed a volunteer agreement which stated that it was not a contract of employment or legally binding. When the CAB asked her to cease her volunteer work she brought a claim under the Disability Discrimination Act 1995 (replaced by the Equality Act 2010 on 1 October 2010). At first instance the Employment Judge decided that the Tribunal had no jurisdiction to hear her claim. In turn, the EAT and the Court of Appeal agreed that she had not been in employment within the meaning of the Disability Discrimination Act 1995 and there was no legally binding contract between her and the CAB nor was she obliged to provide any services. Neither was she was not on a work placement nor covered by the Framework Directive. She appealed to the Supreme Court who dismissed her appeal. The Supreme Court's view was similar to the views of the Court of Appeal. She was not in employment, nor an office holder and by the legislative history of the Framework Directive it was not intended that protection be offered to those undertaking unpaid voluntary work.
Key point: Some volunteers may have protection for example those working in a charity shop or interns, but the existence of a contract is an irreducible minimum requirement. Without a contract there is no protection. The Supreme Court's decision would have been the same had she brought a claim under the Equality Act 2010.
13. Equal Pay
Haq and others v Audit Commission  All ER 59
The Court of Appeal in this case dismissed the employees' equal pay claims. They were found not to have been discriminated against by their employer when the employees' pay was preserved after roles had been downgraded in a restructure. Although the policy had been applied consistently to men and women the effect was to benefit the male comparators because before the restructure men had performed the more senior roles and had reached a higher point on the employer's pay scale.
The Audit Commission's indirect discrimination was objectively justified because the pay protection policy was a proportionate means of achieving a legitimate aim. Those aims being avoiding loss of skills and experience and preventing the comparators from suffering a reduction in pay. If the more senior men had been made redundant to avoid the equal pay difficulties this would have amounted to direct sex discrimination against the men. It was also unworkable to freeze the pay of those on higher pay points. On that basis, protecting the pay was clearly justified.
Key point: The Courts and Tribunal will adopt a tough approach to pay differentials which are not transparent or clearly explicable. Pay protection can amount to a valid material factor defence but each case will depend on its own facts.
14. Equality Advisory and Support Service
A new Equality Advisory and Support Service was launched in November 2012. This replaces the EHRC's helpline function by providing information, advice and support on discrimination and human rights issues to England, Scotland and Wales. ACAS and the Citizens Advice Bureau will be able to refer more complex cases to the EASS for further tailored advice. It does not however provide legal advice or representation.
15. Race Discrimination – Time Limits
Okoro & Anor v Taylor Woodrow Construction & Ors  AER 23
The Appellants in this case, A and H were engaged through employment agencies to work at Taylor Woodrow sites on the Docklands Light Railway. A and H turned up for work on 7 April 2008 but there was no work available. Taylor Woodrow believed there had a mix up with the bookings but an altercation broke out and A and H were banned from any of Taylor Woodrow's sites in respect of the Docklands Light Railway project. When they turned up the next day they were informed of the ban. Another agency sent them to the same site on 18 August 2008 and they were again told they were banned. They did not work there again. Both claimed that the decision to ban them was racially motivated and they brought claims alleging race discrimination on 6 August 2008.
The issue before the Tribunal was whether they were entitled to pursue a claim presented more than 3 months from the imposition of the ban. The Court held that time began to run from the date of the ban and there was no continuing relationship. The subsequent statements when the ban, which had already been imposed, had been reiterated on 18 April 2008 was the latest date on which time could have begun to run so the claims were out of time.
Key point: The ban was not a continuing act.
16. Freedom of Association
Redfern v United Kingdom  ECHR 1878
The European Court of Human Rights has held that the United Kingdom was in breach of Article 11 of the European Convention on Human Rights by failing to take reasonable and appropriate measures to protect employees who had less than one year's service from dismissal on the grounds of political opinion and affiliation.
Mr Redfern was a mini bus driver who was dismissed in June 2004 after he was elected as a British National Party councillor, for alleged health and safety risks. His employer argued that his continued employment would cause anxiety for passengers and their carers in a predominantly Asian area in Bradford where he had worked since December 2008 and damage their reputation. Mr Redfern did not have the necessary continuous employment to bring an ordinary unfair dismissal claim and alleged that his dismissal constituted less favourable treatment on racial grounds since the BNP was at that time a whites only party and was therefore constituted indirect discrimination.
The Court of Appeal in 2006 held that his complaint was discrimination on political grounds which fell outside the scope of the UK's anti-discrimination laws. When he was refused leave to appeal he lodged a successful claim at the European Court of Human Rights by alleging his dismissal had disproportionately interfered with his right to freedom of assembly and association and freedom of expression under Articles 11 and 10 respectively.
Key point: Political beliefs had previously been excluded from protection under anti-discrimination legislation. Since Mr Redfern's dismissal in 2010, under the Equality Act 2010 protected belief has been amended to include any philosophical belief so a Claimant may be able to argue that membership of a political party such as the BNP qualifies as philosophical belief. Members of extremist parties may be encouraged to bring claims under the philosophical provisions of the Equality Act 2010, if they are similarly affected but not on the simple ground of their political opinions.
17. Age Discrimination - discussion about retirement
Quick v Cornwall Council and another ET/1701914/2011
In this case the Tribunal considered claims of unfair dismissal and discrimination brought by Mrs Quick, a headmistress of a primary school in West Cornwall. Her claims were based in part on conversation and comments about her potential retirement.
She had been ill between July 2007 and February 2008 due to a depressive illness and then resumed her full responsibilities. She had a further depressive illness from the end of 2009 and went on sick leave on 4 January 2010 from which she never returned to her teaching duties. At a disciplinary hearing on 19 July 2011 the governors of the school decided to dismiss Mrs Quick with notice. The reasons relied on were serious misconduct and an irretrievable breakdown in trust between the parties. Her appeal was unsuccessful and Mrs Quick then complained to an Employment Tribunal of unfair dismissal as well as age discrimination, bullying and harassment.
This was the first time she had raised any allegations of age discrimination. Her claims were unsuccessful. She had made a false complaint herself which was deemed to be gross misconduct and that was a sufficient reason the Tribunal held for her to be dismissed. The Tribunal dismissed her claims of age discrimination as she was intending to retire and the discussions were around sensible succession planning.
Key point: Discussion of possible retirement in context is not per se less favourable treatment because it cannot be imposed and it could be very favourable to an employee.
18. Religious Discrimination – Sunday working
Mba v London Borough of Merton  UKEAT/0332/12
M was a care worker in a children's home. Although she had a contract under which she could be required to work on Sundays her employer for 2 years did not require her to do so as she wished not to work on a Sunday because of her Christian beliefs. However after 2 years she was rota'd to work on Sundays and when she did not work she was disciplined and given a final written warning. Her appeal against that warning was rejected and she then resigned. Her case was heard under the Employment Equality (Religion or Belief) Regulations 2003. The Tribunal found that Merton's aim of ensuring balance of staff on each shift was legitimate and the provision, criterion or practice that Christians would be required to work on a Sunday was a proportionate means of achieving that aim. M had not been indirectly discriminated against. M appealed against the Tribunal's decision but she was unsuccessful. Merton had to establish a legitimate aim and the Tribunal had not erred in concluding that it had justified the PCP relevant to that aim. Although M had resigned as a result of the PCP this did not establish a claim that she had been discriminated against on the grounds of religion or belief.
Key point: The case cannot be relied on to assert that all employees would be required to work on Sundays.
19. Diversity – how to keep diversity progress on track guide for employers
CIPD have produced a guide for employers on diversity November 2012. The report draws from the practical experiences and learning of leading diversity specialist belonging to the CIPD and personal insights gained from building diversity and inclusion into the delivery of the Olympic and Paralympic games in 2012. The guidance is written by Dianah Worman, a Public Policy Adviser, Diversity, CIPD and the personal study was provided by Stephen Frist, CIPD Vice President Diversity and Head of Diversity and Inclusion for LOCOG.
Seven practical tips are given for delivering systemic diversity inclusion.
- Don't go for window dressing and superficial initiatives as a quick fix
- Always be authentic
- Scale up
- Build relationships based on values
- Deliver relentlessly
- Review and adapt
- Be brave
To view Guide, please click here.
20. Equality Monitoring
The Department for Transport has published a report featuring an analysis of staff diversity, for staff in post between April 2011 and March 2012. The analysis looks at staff in post, cessations, grievances and discipline, training, sickness absence, performance and recruitment to enable the DfT to examine trends, key issues and explore future action as well as monitoring progress against objectives. The report is a useful review of how to carry out equality monitoring and identify the findings. More detailed individual agency equality monitoring reports will enable the DfT to identify areas of good practice and those in need of improvement. One goal is to improve declaration rates and also address issues of underrepresentation. To view the Report, please click here.
21. Bank Bonuses
Attrill & others v Dresdner Kleinwort Limited & Commerzbank
In May 2012 104 London based bankers won their claim against the Bank for unpaid bonuses. They will now be disappointed to learn that the Court of Appeal had given Commerzbank leave to challenge the finding that the promises made about bonuses amounted to a binding contractual commitment. The appeal hearing will take place later this year.
22. Demotion for Facebook comments
Smith v Trafford Housing Trust  EWHC 3221 Chancery
Mr Smith worked for the Trust as a Housing Manager and was a
practising Christian. Whilst at home he made a comment on his
Facebook page about the proposal to allow civil partnerships of
same sex couples to take place in religious settings in England and
Wales. Two of his work colleagues who were also Facebook
friends responded to his post and another colleague who was not a
Facebook friend complained about it to the Trust's Equality and
Mr Smith was suspended over breaches of Trust rules. The Trust decided he had breached the rules and should be dismissed but because of his long service he was demoted to a non-managerial position with a 40% reduction in pay to be phased in over a 12 month period instead. He was also given a final written warning for gross misconduct. Although he appealed his demotion he was unsuccessful. Mr Smith then brought proceedings in the High Court arguing that since he had not been guilty of any misconduct the Trust acted in breach of contract in demoting him and substantially reducing his pay. The High Court agreed. Mr Smith had used Facebook for personal and social uses rather than work related purposes. His views were moderate and no one would reasonably think worse of the Trust for having employed him as a manager or that what he had written about gay marriage was posted on the Trust's behalf. Facebook had not acquired a sufficiently work related context in this case to attract the application of the Trust's disciplinary policies. His postings were not misconduct.
However as Mr Smith had agreed to work in a different capacity with a greatly reduced salary under a new contract it was a case of wrongful dismissal but he was only entitled to damages of £98, the difference between earnings in the two jobs for the 12 week notice period. As he had not filed an unfair dismissal claim, the financial compensation awarded was very limited.
Key point: Employees in similar situations may be able to bring claims for unfair dismissal and reinstatement. Action taken in response to an employee's misuse of social media has to be carefully considered. Whether it is a breach of an employer's disciplinary rules or not must be construed objectively. Employers should make clear whether conduct outside work may be deemed to be a breach of any social media policy.
Wrexham Golf Club v Ingham  UKEAT0190/12
Mr Ingham was not unfairly dismissed for redundancy when he was not pooled with other bar staff who took on his responsibilities. Mr Ingham was employed by the golf club as a resident club steward. In October 2010 the club decided that the role of steward was no longer required and that the bar and catering work should become one operation and his activities shared among other members of staff. No other employees were considered for redundancy and he was dismissed after a period of consultation. The Tribunal found his dismissal was unfair because consideration had not been given to the possibility of establishing a wider pool from which the redundancies could be made, given the overlap of work carried out by other bar staff. The club appealed and was successful. It asserted that because it did not consider establishing a pool, the decision to select Mr Ingham for redundancy was necessarily outside the range of reasonable responses. Mr Ingham was the only person in the role that it wanted to remove and whilst this role may have overlapped with other bar staff it was a discrete role and it was therefore not unreasonable to consider him only for redundancy.
There is no legal obligation under the Employment Rights Act 1996 for employers to establish a selection pool. The only relevant statutory principle in claims for unfair dismissal based on the choice of the redundancy selection pool is the reasonableness of the decision to dismiss for redundancy. The EAT felt unable to decide on the available findings whether Mr Ingham's decision was fair or unfair and ordered the case to be remitted to the Tribunal for determination in accordance with the correct approach to the range of reasonable responses test.
Key point: Failure to consider establishing a redundancy selection pool will not necessarily render a dismissal unfair but employers would be well advised to consult with employee representatives or the union where possible about the proposed selection pool or lack thereof.
Mitchells of Lancaster (Brewers) Ltd v Tattershall  UKEAT/0605/11
Mr Tattershall was the property manager of Mitchells, a small brewing and hotel company. He reported to the board of directors and one of its five senior management team (SMT). In 2010 Mitchells was in financial difficulties and decided to have compulsory redundancies in its head office and to dismiss one member of its senior management team. At a board meeting the directors decided to select the member of the SMT "whose post could be abolished with the minimum detrimental impact on the business". The board selected Mr Tattershall, on that basis. In the board's view he was the person whose dismissal would have the least negative impact on Mitchell's efforts to improve its commercial position.
Mr Tattershall claimed unfair dismissal and was successful. Mitchells appealed but was unsuccessful.
Key point: An employer's selection for redundancy could be reasonable even where there is only one selection criterion, the assessment of which depended on the good faith of those making the assessment.
SG Petch Ltd v English-Stewart  UKEAT/0213/12
This is an unusual decision. Miss English-Stewart was a part-time marketing manager. She was told at the end of her year's maternity leave that she was redundant when she was due to return to work. Although she was offered alternative employment she brought sex discrimination and unfair dismissal claims before an Employment Tribunal and was successful.
Petch had not employed a maternity cover for her but her work had been done by the 3 remaining members of her marketing department so when she was due to return it was decided that only 3 employees were by then required. However she was the only one singled out for redundancy. The Tribunal held that she had been dismissed because of her maternity leave and therefore had been discriminated against. The dismissal was also automatically unfair. On appeal the EAT held that the reason for her dismissal was redundancy and rejected her claim for maternity discrimination.
The EAT remitted the question of whether all members of the marketing team held similar positions to Miss English-Stewart for the same Tribunal to determine and if they did, then Miss English-Stewart's dismissal was automatically unfair.
There may well be a genuine redundancy situation for unfair dismissal purposes but there could equally be direct discrimination if the employee is selected for redundancy because of having taken maternity leave.
Key point: If an employer is influenced by the fact that the employee had been on maternity leave, the dismissal for redundancy would be automatically unfair provided the circumstances constituting redundancy applied equally to one or more employees whose positions were similar to that of the redundant employee.
Concurrent issues about capability and conduct
Fish v Glen Golf Club  UKEATS/0057/11/BI
Mr Fish was the club secretary of the North Berwick Golf Club. Serious loss of membership occurred and the club was making financial losses through to 2008. A restructuring was considered with redundancies contemplated by a management consultant brought into the club in order to reduce the salary bill. A report recommended replacing the role of club secretary.
Mr Fish was given notice of termination on 11 April 2008. His was one of four redundancies at the time although he was sent details of new positions including the post of office manager, he did not apply for any. When he appealed against his dismissal and was unsuccessful he brought a claim for unfair dismissal.
He believed that the reason for his termination was not to do with his redundancy but because of his capability or conduct. There were such references in the Report which contained negative comments about Mr Fish as an individual. However, it was still the club's case that the club's overheads were vastly exceeding its income and the best way to cut the costs would be to eliminate certain high paid positions of employment from the management structure. Mr Fish argued that the Tribunal's decision was perverse but he was unsuccessful. The criticisms were of his background but these were not the real reason for his dismissal. The Employment Tribunal was entitled, held the EAT, to find on weighing the evidence that the principal reason for his dismissal was the redundancy. The Tribunal's decision was not perverse. To be perverse, the Tribunal had to reach a conclusion which is "wholly impermissible, flies in the face of reason or compounds all logic".
Key point: Clear evidence is required to succeed on a perversity case against a Tribunal's decision as perversity is a very high hurdle to surmount.
Absence of consultation
Ashby v JJB Sports plc  UKEAT/0114/12
Mr Ashby had been employed for 10 years by JJB Sports and by 2010 was associate director. JJB experienced sharp declines in its revenue from 2008 and was on the brink of administration. On the appointment of a new Chief Executive in March 2010 a shake up of the business was planned with the HR role which had formerly been done by Mr Ashby going elsewhere. He was not consulted about the new structure but was informed of it at a meeting in July 2010 when he was dismissed for redundancy. When he asked if he could fill the new HR role he was then told somebody had been appointed already. The Tribunal held that his dismissal was fair. This case fell within the narrow category of cases in which consultation would have been utterly futile.
The external candidate appointed to the HR role was head and shoulders above Mr Ashby and lack of consultation was explained by the fact that JJB needed to move with speed.
He appealed on several grounds including perversity but was unsuccessful. The EAT held that the Tribunal had been entitled to come to its conclusion on the facts. JJB was taking highly sensitive commercial decisions for the future of the company involving reorganisation at high level and accordingly it was not unreasonable for JJB not to tell Mr Ashby of its plans. These were exceptional circumstances. The case is not so different from any other substantial reorganisation which has been implemented in the last three years and resulted in moving employees from very senior posts. Mr Ashby deserves to feel very dissatisfied with this result.
Key point: The case was decided on the facts and it would be premature for employers to rely on it in order to dispense with consultation in redundancy cases for senior positions, even if the circumstances are urgent and the business is facing potential insolvency.
Short term insourcing
London Borough of Islington v Bannon and another  UKEAT/0221/12
Islington contracted out the provision of its independent visitors for children in care service to a charity CSV which employed Mrs Bannon. Its contract with Islington expired on 31 March 2011 and discussions with another contractor to take on the project was unsuccessful. From 1 April 2011 Islington then had to run the service as best it could and from September 2011 a new provider took over the recruitment and matching aspects of the service which had previously been provided by CSV.
Mrs Bannon was dismissed by CSV in March 2011 and claimed there had been a service provision change. Therefore her dismissal was automatically unfair by reason of the transfer. The Tribunal agreed. Islington took over the service that had previously been provided by CSV and an insourcing had occurred. Nobody other than Islington was responsible for carrying out the activities. Islington appealed.
On appeal the EAT upheld the finding that there had been a service provision change. The activities carried out by Islington from 1 April 2011 were fundamentally or essentially the same as those carried out by CSV. It is not a TUPE requirement the activities have to be identical. Although without staff and resources Islington could not provide a comprehensive service, nevertheless that did not preclude a service provision change.
Key point: The fact that the transferee is not carrying out the service to the same standard is immaterial. If it remains responsible for the service provision in its entirety there will be a service provision change for TUPE purposes.
Tamang v Act Security Limited  UKEAT/0046/12/BA
The two claimants were security guards employed by Reliance at a site at Wembley. The site was leased by its owner to Euro in April 2010. In June 2010 they were told they would no longer be working for Reliance but for Act who had taken over the site. They brought a case against Act and/or Euro as the transferees of a service provision change under TUPE. They also brought a claim against Reliance for failure to consult under TUPE. They then had made a compromise with Reliance which was organised by ACAS. They wanted to maintain their proceedings against Act and Euro but the Judge decided against them on the basis there had been a compromise of all the claims they had against Reliance, Act and Euro. They appealed and were successful. A settlement agreement with one employer does not automatically bar off claims against other potential parties. The settlement agreement reached with Reliance through ACAS did not include the other parties Act and Euro.
Key point: The case shows the importance for all parties in a TUPE transfer to be signed up to a settlement agreement if finality is required. The judge had miscategorised the compromise agreement. An order was made that the Claimants make contact with ACAS to see if a compromise could be reached with the remaining parties in the case and to report back to the Tribunal.
Single specific event or task of short duration exclusion
Liddell's Coaches v Cook and others  UKEATS/0025/12
There is no service provision change for TUPE purposes where the transferring activities are in connection with either a single specific event or a task of short term duration. In this first case concerning Regulation 3 of TUPE, an Employment Tribunal was entitled to conclude that TUPE did not apply to a service contract to provide transport for school children during a limited period when they had to be driven to other schools in the area while their own school was being rebuilt. Typical transport contracts would be for 3-5 years and therefore since the contract was for only 1 year it could be properly characterised as short term for the purpose of Regulation 3. Therefore it was excluded from TUPE whether or not the contact could be described as in connection with a single specific event. The BIS Guidance on TUPE indicates that both a single specific event and task must be of short term duration.
Mr Cook was a coach driver for Liddells. Liddells were awarded only one of the retained contracts which expired at the end of 2010/11. Three other contracts were awarded to another company A. When Liddells terminated Mr Cook's employment in July 2011 he asserted that his employment had transferred to the other company, A, but A denied liability for Mr Cook's employment and Mr Cook brought a claim to an Employment Tribunal, where it was held there was no service provision change and liability for his dismissal rested with Liddells. He appealed but was unsuccessful. Mr Cook had not transferred to A. Liddell remained liable. The contract taken on by A was in relation to a single specific event of short term duration. C was awarded unfair dismissal compensation of approximately £3,900 payable by Liddells.
Key point: The contract relating to activities carried out in relation to a single specific event will be excluded from TUPE protection no matter how long it might take to complete those activities.
BT plc v Adamson and others  UKEAT/0282/12
Mr Adamson and others in this case were employed by ATOS to provide IT services to part of the NHS. When BT took over that service he and others were dismissed. They brought a number of claims including unfair dismissal against ATOS and BT. At a pre-hearing review it was established that TUPE applied and ATOS were dismissed from the action. At the full hearing it was held that the dismissals were by reason of redundancy because during the due diligence exercise BT had established that Mr Adamson and his colleagues were surplus to BT's requirements.
The employees were entitled nevertheless to compensation for loss of pension on the basis of their pension arrangements before the TUPE transfer despite the fact that provisions relating to occupational pension schemes do not transfer under TUPE. Although BT did not need to honour the existing pension arrangements they had given evidence that BT "honour packages previously employed", unwittingly or not. The EAT upheld the Tribunal's decision that BT would have honoured the pension terms of Mr Adamson and others if they had remained employed on terms no less favourable than those they had received while employed by ATOS. BT had to pay both an enhanced contractual redundancy package and compensation for loss of pension rights.
Key point: If the transferee does not need employees to do the kind of work they have performed for the transferor post transfer, the solution is for the transferor to dismiss the employees beforehand.
25. Email disclosure
Fairstar Heavy Transport NV v Adkins and another  EWHC 2952
Fairstar employed Mr Adkins as its CEO via his Jersey registered service company called Claranet Limited so he was not a direct employee of Fairstar. In July 2012 when Fairstar was taken over in a hostile bid Mr Adkins' contract was terminated. In a subsequent piece of litigation Fairstar needed access to certain emails held by Mr Adkins dating from his time as CEO which Fairstar did not have a copy of because they were generally not copied to Fairstar. Fairstar applied to the court for inspection of the emails which Mr Adkins resisted. The court dismissed Fairstar's application holding there was no property in the contents of the emails. Adequate protection was already afforded against the misuse of contents of emails under existing laws relating to confidentiality. Fairstar was not therefore able to inspect the emails held by Mr Adkins on the grounds of ownership. Because of the exclusive jurisdiction clause that all disputes had to be determined by the Dutch Court, Fairstar was unable to seek other grounds or relief.
Key point: There is no proprietary right to see emails. Satisfactory protection against the misuse of information contained in the emails is provided either by confidential information or by contract or the law of copyright.
26. Duty of fidelity during garden leave
Imam-Sadeque v Bluebay Asset Management  EWHC 3511
In this case Mr Imam-Sadeque was found not to be entitled to a bonus as this was unvested on termination and he was not a good leaver. He would have been a good leaver under the terms of his compromise agreement had he complied with his obligations while on garden leave. During that period of garden leave he assisted a rival to set up in competition with his employer Bluebay by disclosing confidential information and helped to recruit his colleagues for Bluebay.
The Court held that his duty of fidelity was not reduced in scope during his garden leave period. The Court also found that a clause in a compromise agreement which gave him good leaver status and entitlement to a bonus provided he complied with his various obligations could not be a penalty. The clause did not forfeit a benefit it conferred a conditional benefit which was never accrued because he failed to comply with the condition. In any case the penalty doctrine did not apply to a clause forfeiting contingent rights.
The funds that Mr Imam-Sadeque forfeited were worth approximately £1.7m. He had left because he was not promoted in July 2011 but he had agreed to remain on garden leave until 31 December 2011 when he started as head of sales at the new employer. His duty of fidelity to Bluebay required him not to provide any assistance to his new employer in setting up and launching the business except by agreeing to join them and cooperating in any necessary legal administrative and regulatory arrangements. His duty of fidelity also required him to tell Bluebay if his new employer intended to launch a start up competitive business. By failing to do so he was in serious breach of his duties to Bluebay. He also forwarded a copy of his compromise agreement to his new employer which was a serious breach of his contract of employment and the compromise agreement.
Key point: An express provision that an employee would remain bound by the terms of his employment during garden leave is an important protection particularly given the extent of an employee's duty of fidelity during garden leave is open to argument. The use of a compromise agreement to reinforce the obligations of the employment agreement is also important. Employers will find the judgment helpful when assessing the question of potential penalties and the forfeiture of bonuses or share plans for bad leavers.
27. Health and Safety
The Health and Safety Executive has launched the Health and Safety Toolbox which is an online guidance to give small businesses easy access to official advice about health and safety. The guidance was developed by the Health and Safety Executive with the support of businesses. To view Toolbox, please click here.
28. Human Rights
Article 8 Unfair Dismissal
Turner v East Midlands Trains  EWCA 1470
In this case Miss Turner, a train conductor was dismissed for alleged ticket irregularities. Although she denied the allegations the case against her had been based on statistics and inferences. When she was dismissed she issued proceedings for unfair dismissal. She submitted that there had been inadequate investigation of the matter which, if properly explored might have demonstrated that the statistics were unreliable and that her dismissal had engaged her rights under Article 8 of the European Convention on Human Rights - the right to respect for private and family life - so the investigation had not satisfied the stricter procedural requirements which Article 8 required.
The Tribunal held that the statistics had been indicative of repetitive pilfering and had been atypical of dishonesty in the workplace. Accordingly her dismissal had not been outside the band of reasonable responses and that Article 8 had not been engaged. However even if Article 8 had been engaged it opined the traditional band of reasonable responses test was itself compatible with Article 8.
Miss Turner appealed to the Employment Appeal Tribunal which refused her permission to appeal which decision she appealed. The test was whether a reasonable employer would have acted as her employer East Midlands Trains had. The Court of Appeal held that it is always expected of a reasonable employer where the allegations of misconduct and the consequences to the employee if they were proved were particularly serious, where Article 8 interests are engaged, that matters bearing upon the culpability of the employee had to be investigated with full appreciation of the potentially adverse consequences to the employee. Here the domestic test of fairness had not fallen short of the procedural safeguards required by Article 8 of the Convention.
Key point: The "band of reasonable responses" test allowed for a heightened standard to be adopted where those consequences were particularly grave satisfies any Article 8 requirement.
Disclosure of caution in criminal record check
MM v United Kingdom application 24029/07
In this case the Court of Human Rights considered whether arrangements in Northern Ireland for the retention and disclosure of criminal record information breached Article 8 - the right to respect for private and family life. It held that the operation of arrangements in Northern Ireland did breach M's right for respect for private and family life.
M had been cautioned in 2000 for child abduction after she disappeared with her grandson for two days during a family crisis. M was formally cautioned after the incident and told that the caution would remain on her record for 5 years. However from 2006 the practice changed so the details of adult cautions were retained for the rest of the person's life. She was rejected for jobs over 6 years later when the caution was disclosed in criminal record checks. The Court held that in view of the extent to which the existing arrangements, for the retention and disclosure of criminal record information interfered with data subjects right to private lives the interference could not be said to be in accordance with the law.
The Court held that public information could fall within the scope of "private life" where it is systematically collected and stored in files held by the authorities especially where the information concerns a person's distant past. The retention and disclosure of M's caution was not in accordance with the law.
Key point: Employers will prefer employees with clean records so an adverse criminal record certificate would represent a job applicant with difficulty. When the Protection of Freedoms Act 2012 comes into force an enhanced CRB certificate and any relevant police information will only be sent to the individual applicant. This will provide the applicant with the opportunity to review and challenge any of this information before it is released to an employer or potential employer.
29. Fixed term contracts
Valenza and others v Autorita Garante della Concorrenza e del Mercato  All ER 299
In this case the ECJ held that an Italian law under which a public authority's fixed term employees who became permanent civil servants were put at the bottom of their pay scale irrespective of their prior service on fixed term contracts contravened the Fixed Term Work Directive. A claimant could bring a claim of less favourable treatment while he was still a fixed term worker and afterwards too.
Key point: UK employers need to ensure that when considering service related terms and conditions of employment any prior employment on a fixed term contract is taken into account unless they can objectively justify not doing so, under the Fixed Term Worker (Prevention of Less Favourable Treatment) Regulations 2002. Blanket rules whereby as here all prior service in all circumstances was to be disregarded will rarely be held to be proportionate.
Age discrimination and Retirement
Hudson v Department of Work and Pensions  AER 79
Under the first Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 anyone employed under a succession of fixed term contracts will become a permanent employee after 4 years "unless employment on a fixed term contract is objectively justified". There is a further exception for employees on training/work experience schemes arranged by the Government or funded by the EU.
Miss Hudson began a fixed term contract under such a scheme with the Department of Work and Pensions in 2006. It was extended several times until she became a Support Officer in 2009. This was also a fixed term contract but not under the training scheme. In 2010 she argued that having worked for more than 4 years under fixed term contracts she was a permanent employee and the exclusion did not apply to her as she was no longer working under a training scheme at that stage. The Court of Appeal disagreed. She was not deemed to be a permanent employee. No time worked under a relevant training scheme will count towards establishing the four year period.
Key point: These schemes are designed to incentivise employers and to assist employees to seek or obtain work.
EC v Hungary
Was the reduction in the compulsory retirement age for judges from 70 to 62 justified age retirement? No.
Although the aims of the amendment were legitimate it was not gradually staggered so the interests of those forced to retire early had not been considered. Although the vacation of posts would have allowed young lawyers to be accelerated to the posts, this would not provide a truly balanced age structure in the medium or long term.
31. Dismissal for ill health whilst receiving permanent health insurance benefits
Lloyd v BCQ Ltd  AER 343
Mr Lloyd was employed by BCQ from 1978 and suffered a back injury in 2007. He went off on long term sick leave in August 2007 and remained absent until his dismissal for ill health in May 2011. He was provided with permanent health insurance although there is no reference to this in his contract of employment.
In 2010 he brought proceedings for disability discrimination but the Tribunal decided he was not disabled. During 2010 he had attended a board meeting and indicated that his back problem gave him concern that he would ever return to work. He was signed off sick for 6 months from April 2010 and then another 6 months from October 2010 to April 2011. BCQ submitted a PHI claim on his behalf and negotiated a cash settlement cancellation of cover for him in August 2010 when there was no indication when he might return to work in the New Year, M would meet with the HR Director of BCQ in November 2010 who told him that dismissal was an option and he thought his PHI cover would continue until he reached the age of 60 on 21 December 2011.
On 25 November 2010 BCQ wrote to him dismissing him with 6 months' notice and that his PHI payments would continue until his 60th birthday which was due to him as a lump sum at the end of his notice period on 31 May 2011. When Mr Lloyd appealed unsuccessfully against dismissal he brought several claims in the Tribunal including a claim for breach of contract in relation to PHI.
He relied on the Aspden v Webb case that there was an implied term that his employment would not be terminated while he was in receipt of PHI benefits. The Tribunal found that he had been fairly dismissed for ill health and that the procedure adopted by BCQ had been perfectly reasonable. The entire agreement clause in his contract of employment made it clear that he did not have a contractual benefit to PHI cover and the existence of the express right to terminate in cases of incapacity meant that there was no implied term to the contrary. The Aspden case is confined to its facts. Mr Lloyd had suffered no loss as his PHI cover would continue until his 60th birthday. His dismissal was for good cause because his absence from work and the lack of prospect of his returning to work.
Key point: The employee did not have an express contractual entitlement clause for PHI benefits. Terms will rarely be implied that an employee would not be terminated for ill health whilst in receipt of PHI benefits when an express term governs the particular situation namely the right to terminate for incapacity. The case also illustrates the benefits of an entire agreement clause.
32. Continuity of employment
Welton v Deluxe Retail Limited  UKEAT0266
To qualify for certain statutory rights and it is necessary for an employee to have acquired a minimum period of continuous employment. An employee's continuous employment will be broken by any week which does not count towards continuity. In this case the EAT had to consider whether Mr Welton who started a new job for the same employer more than one week after termination of his original contract of employment could claim that the two periods of employment were continuous.
Mr Welton worked for Deluxe in Sheffield from 5 January 2009 to
23 February 2010 when the store closed. During the week
commencing 28 February he accepted an offer to work at Deluxe's
Blackpool store and started there on 8 March. There was more
than a week's gap between the end of his last working week in
Sheffield and his starting at the Blackpool store. His
employment then was terminated by Deluxe on 11 December 2010 and he
brought unfair dismissal proceedings against Deluxe. As a
preliminary issue the Tribunal considered whether he had 12
months' continuous employment. He would do so if his
employment at the Blackpool store was continuous with his
employment in Sheffield.
The Tribunal found against him and he appealed. The President of the EAT sitting alone allowed his appeal and held that he had sufficient continuous employment because Mr Welton had accepted Deluxe's offer as employment in the Blackpool store in the week commencing 28 February. This meant that there was no week during the whole of which his relations with his employer were not governed by a contract of employment. The President's conclusion was based on the premise that a contract can exist without there being any performance under it by Mr Welton until he physically started work on 7 March.
Even if there had been no contract of employment until he had started work in Blackpool, continuity would have been preserved between the two contracts as he had been absent on account of a temporary cessation of work. Mr Welton did not however succeed in his argument that his absence between 23 February and 8 March was due to an "arrangement" that continuity should be preserved as such an arrangement must be made before or at the same time as the absence and cannot be made retrospectively.
Key point: Rules on continuity of employment are not straightforward so the decision is helpful. The contract of employment can arise on the acceptance of job offer before any work actually begins under the contract in certain contexts. The consequences of continuity of employment needs to be considered on the particular facts of a case where there are two periods of employment with the same employer.
33. Compromise Agreement – indemnity as to costs
Coulson v News Group Newspapers Ltd  EWCA Civ 1547
The Court of Appeal has allowed Mr Coulson to apply an indemnity against his former employer in respect of his legal costs. That indemnity however would only apply to his costs which arose out of proceedings about how he had gone about the performance of his job and not out of some act having nothing to do with his performing the job. The clause in his compromise agreement which set out the indemnity was very wide and went beyond the indemnity in his employment contract. Mr Coulson's agreement with News Group had been entered into a month after a News of the World reporter and a private investigator were jailed after pleading guilty to unlawfully conspiring to intercept communications and therefore it was held by the Court of Appeal that it could not have been outside the contemplation of the parties that the indemnity would not apply where someone had to defend himself against a criminal charge. To restrict the indemnity only to the performance of the lawful responsibilities of the job was unrealistic.
Key point: The decision reiterates the need for accurate drafting of terms under which an employer provides indemnification for costs incurred in relation to any future proceedings. Where such an indemnification is necessary, both parties should clarify the circumstances in which they think the indemnity may be called on and possibly apply a cap to the maximum financial exposure.
34. Refusal to employ union members
Miller and others v Interserve Industrial Services Ltd UKEAT/0244/12
Mr Miller and others who were members of Unite had a history of acting as shop stewards and they had been involved in organising industrial action which had affected the employees of Interserve. Interserve was party to a collective agreement with Unite which provided that Interserve should try and place shop stewards into projects and that where possible shop stewards should be selected from their workforce. In March 2010 C who was a Unite official telephoned Mr Jenkins an Operations Manager with Interserve and the decision maker then proposed that Mr Miller and others for employment on a project. C made it clear that he viewed the collective agreement as giving the Union the right to nominate its members for recruitment and that Mr Jenkins should recruit Mr Miller and others on that basis.
Mr Jenkins did not employ Mr Miller and others on the project and when he and two other claimants who were also unsuccessful on another project they complained to an Employment Tribunal they had not been recruited because of their union membership. They were unsuccessful.
The Tribunal did not accept that Mr Jenkins' decision not to employ the claimants was because of their union membership. He had refused in response to what he perceived as bullying from C and he in turn was not going to be told who to employ. Mr Miller and others appealed but were unsuccessful. The EAT agreed with the Tribunal that the decision not to hire was motivated by pique at the pressure exerted by C on Mr Jenkins as opposed to the characteristics of the Claimants themselves. It was bad luck for the Claimants that they were caught in the cross-fire of a personal disagreement between the two but there was no law of unfair non-recruitment.
Key point: The case does not give employers the blanket right to refuse to employ candidates put forward by a trade union official.
35. Reinstatement and compensation
Arriva London Ltd v Eleftheriou  UKEAT/0272/12
E was a bus driver with Arriva in London and after an accident at home he was unable to drive. He had a period of absence while he was awaiting surgery but he was dismissed by his manager on 7 May 2010 on the basis that he was highly unlikely to return to work on 28 July as he originally intended to do. Arriva did not obtain medical evidence from a specialist and a Tribunal found that E's dismissal was accordingly unfair. At the time of the hearing in February 2012 E had fully recovered and had found another job driving buses since February 2011.
However the Tribunal was invited by Arriva to consider at the hearing whether E would have been dismissed in any event even if a specialist medical opinion had been obtained. The Tribunal held that it was 60% likely he would have been fairly dismissed following a fair dismissal procedure. The Tribunal then considered his request to be reinstated in light of the fact that his job with Arriva paid significantly better than the job he had obtained elsewhere. He was reinstated but his compensation was reduced to 40% of that which was otherwise due to him under Polkey.
Arriva considered the Tribunal had no jurisdiction to reduce the sums to be paid to E on an order for reinstatement and that had the Tribunal known that it had to make a full award of compensation it might not have ordered reinstatement. Arriva's appeal was unsuccessful. An order was made for E's reinstatement and he was compensated for his loss from dismissal to the date of the Tribunal plus an ongoing weekly compensation for his weekly loss from the date of the hearing until reinstatement. The Tribunal did not have jurisdiction to reduce E's compensation in the way it did.
Polkey is relevant to compensation not to reinstatement.
Key point: A Tribunal could order reinstatement even if there had been a finding that an employee would have been dismissed shortly after his actual dismissal.
36. Warnings and conduct dismissals
Wincanton Group plc v Stone and another  UKEAT/0011/12
Mr Stone was employed for 10 years as a driver for Wincanton and in 2009 received a first written warning for refusing to obey a reasonable management instruction. He appealed but was unsuccessful. During the currency of the first warning in April 2010 he committed breach of health and safety rules. While such an offence might normally attract a final written warning Wincanton decided to dismiss Mr Stone regarding the earlier warning as tipping the balance in favour of dismissal.
Another employee who had 3 years' service with Wincanton received a first written warning for the same thing as Mr Stone. He appealed but was unsuccessful. Later during the currency of that warning he was disqualified for drink driving and dismissed as the driving ban rendered him unfit for driving duty. Wincanton took into account the previous warning and although promised to look for other roles for him did not do so. Both brought claims for unfair dismissal. Both dismissals were found to be unfair. Wincanton appealed.
The EAT allowed Wincanton's appeal in relation to Mr Stone but dismissed the appeal in relation to Mr Gregory. The EAT gave some general guidance about how warnings should be weighed in the balance when Tribunals are assessing the fairness of a decision to dismiss. In Mr Gregory's case his dismissal was unfair because Wincanton had unusually agreed to look for alternative employment then failed to do so. Mr Stone's case was remitted so there is no decision yet in which it is held that it is fair for an employer to dismiss during the currency of a warning as opposed to a final written warning.
Key point: A final written warning always implies that further misconduct of whatever nature will be met with dismissal unless the terms of the contract provide otherwise or the circumstances are exceptional. The ACAS Code of Practice does not suggest that similarity is required between offences where the later misconduct is not in itself sufficient to justify dismissal.
37. Breach of copyright and misuse of confidential information jurisdiction
Alfa Laval Tumba AB and another v Separator Spares International Ltd and another  EWCA Civ 1569
In this case the Court of Appeal had to consider whether the English court had jurisdiction over two Polish parties, one of whom was an ex-employee whom Alfa wished to add as defendant in respect of claims for breach of copyright and misuse of confidential information. The Court of Appeal held that such claims were covered by Section 5 of the Brussels Regulations and requires claims against an employee to be brought in the courts of the employee's domicile. Consequently the employee could only be sued in Poland. Alfa had brought proceedings against two English parties who had started a business which competed with their business. Alfa applied to join a Polish company, SSIP and Mr Jasikowski as defendants. Mr Jasikowski was a former employee of one of the Claimants. He argued that he could only be sued in Poland. The Court of Appeal agreed.
Key point: The correct test is do the claims made against an employee relate to the individual's contract of employment? If they do then an employee can only be sued in his domicile. The Court did not consider it useful to join SSIP alone as a defendant as this would not avoid the risk of irreconcilable judgments.
38. Freedom to choose a lawyer
Brown-Quinn and another v Equity Syndicate Management Ltd and another  EWCA Civ 1633
The Court of Appeal held that insurers can rely on policy terms to restrict an insured's indemnity to certain prescribed rates of remuneration without breaching the insured's legal entitlement to the freedom to choose a lawyer.
At first instance the High Court in this case had granted a declaration that a before the event insurer was not entitled to decline the appointment of the insured's choice of solicitor on the basis that the solicitor's proposed rate of remuneration were in excess of those prescribed by the insurer. When an insured elects to instruct a firm of solicitors who charge more than the appropriate non panel rates the policyholder is only entitled to recover at the rates set out in the terms and conditions and will have to arrange to pay the difference to their chosen solicitors who charge a higher rate. The insurer is obliged to pay the prescribed rates and no more. There was no evidence that the alleged insufficiency remuneration was such as to render the insured's freedom of choice meaningless.
Key point: The decision is a good one for insurers in that the insurer will only be liable for legal fees up to the prescribed rate but this liability will not end where the appointed representative moves to another firm. Where an insurer prescribes low rates then the insured's freedom of choice may well be meaningless and a different outcome may result.
39. Social networking
ACAS have produced a research paper on "Work Places and Social Network – the implications". The guidance covers recruitment with reference to social media, ethical issues, formulating a policy and cyber bullying. To view the paper, please click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.