HMRC no longer reviewing Family Investment Companies
Duty to make reasonable adjustments
An interesting case on reasonable adjustments was recently decided by the EAT. The Claimant was a receptionist at a veterinary practice which had gone through a period of considerable expansion over the years. She had been promoted, but then came under some pressure, together with suffering domestic issues with a house move and a seriously unwell mother. She went off sick with depression and never returned. A consultant psychiatrist recommended that she have a session with a clinical psychologist and a further six psychiatric sessions (at a cost of £750).
The Claimant was plainly disabled for the purposes of the legislation so the employer was under a duty to make reasonable adjustments to accommodate her. But was it a reasonable adjustment for the employer to take responsibility for the cost of the private medical treatment that was proposed? The Tribunal and the EAT both decided that it was. The case is a salutary lesson to employers. They should think very carefully about adjustments that are proposed, to see whether or not it may be reasonable for them to be adopted. Each case turns on its own facts, and one cannot say that as a result of this decision it is always reasonable to expect an employer to pick up the tab for private medical treatment. Into the mix in this case was undoubtedly the fact that the total cost (£750) was not large in the circumstances. There is also very helpful guidance produced by the Equality & Human Rights Commission (EHRC) which has a whole chapter devoted to the duty to make reasonable adjustments (Chapter 6) which should always be consulted in cases such as this.
Validity of Non-Solicitation Restrictive Covenants
Coppage and another v Safetynet Security Limited
In May 2010 Mr Coppage became a director of Safetynet Security Limited (Safetynet), where he had worked since July 2008. Upon his promotion he signed a new employment contract which contained a restrictive covenant to the effect that, for six months following the termination of his employment, he would not solicit, directly or indirectly, any individual or organisation that was a customer of Safetynet during his period of employment.
On 16 April 2012 Mr Coppage resigned and seemingly induced another, more junior, employee of Safetynet (Mr Hadley) to also resign, in response to a redundancy consultation process which had commenced at Safetynet. The following day Mr Coppage and Mr Hadley together set up “Freedom Solutions Limited” (Freedom) in competition with Safetynet. Telephone records showed that Mr Coppage made 135 calls and sent 175 texts to five customers of Safetynet between 12 April and 30 April 2012. All five of those customers became customers of Freedom.
Safetynet issued a claim for breach of the non-solicitation clause in Mr Coppage’s employment contract and/or breach of fiduciary duty. The Birmingham Mercantile Court found in Safetynet’s favour and ordered that damages of at least £50,000 be awarded. Mr Coppage appealed, arguing that the non-solicitation clause was unenforceable as an unreasonable restraint of trade because there was no restriction as to how recently he had dealt with the customers in question.
The Court of Appeal unanimously dismissed the appeal. It found that the clause in question was binding on Mr Coppage as it is plainly a non-solicitation clause in form and not a non-competition clause. It further considered the fact that the post-termination restraint was only six months, to be a powerful factor in the overall reasonableness of the clause. In addition, the Court recognised that restrictive covenant cases are highly sensitive to the particular facts of each case. In this case the fact that Mr Coppage was a key employee of Safetynet, who had been in contact with all of its customers since May 2010, showed that he had the power to influence all customers with whom he had come into contact, both current and past. It was therefore not necessary, in this particular case, to limit the restriction to customers which Mr Coppage had dealt with, or to customers of Safetynet within a certain retrospective period (such as the last six or twelve months of Mr Coppage’s employment).
The Court did not wish to make a decision on the question of breach of fiduciary duty and it found that the Mercantile Court had sufficient evidence to make an order for damages of at least £50,000.
This case will be welcomed by employers, however it clearly shows that court decisions regarding the validity of restrictive covenants are highly sensitive to their facts. It therefore acts as a useful reminder that when drafting restrictive covenants it is important to carefully consider the circumstances and role of the particular employee to which the restrictions will apply.
Third Party Harassment Law – Repealed
Section 40(2) of the Equality Act 2010 provides that employers will be liable for the harassment of their employees by third parties (such as clients, customers, suppliers, distributors, manufacturers etc.) where any such harassment occurred during the course of an employee’s employment, the employer failed to take such steps as were reasonably practicable to prevent the third party in question from harassing its employee, and the employer knew that on at least two other occasions, the employee had been harassed by a third party (not necessarily the same third party). A “third party” does not include the employer’s own employees.
Whilst case law demonstrates that Employment Tribunals ought not to be too ready to find an employer liable in such circumstances (particularly where, for example, employees work in care homes, schools and prisons where the risk of harassment cannot be easily eradicated), this duty imposes an additional burden on employers to guard against the behaviour and actions of others in the workplace.
However, from 1 October 2013, an employee will no longer be able to issue proceedings in the Employment Tribunal under section 40(2) of the Equality Act 2010. These provisions relating to third party harassment will be repealed by section 65 of the Enterprise and Regulatory Reform Act 2013. The Government has previously explained that these provisions are an example of unnecessary regulation introduced without any real or perceived need, and which hinder business growth and economic recovery. Further, the Government has said there is no evidence to suggest that these provisions "are serving a practical purpose or are an appropriate or proportionate m[eans] of dealing with the type of conduct” with which they were intended to deal.
This repeal will not leave employees unprotected from third party harassment. Employees will still be able to issue proceedings against their employers if they have been victims of third party harassment in the workplace. They could bring claims against their employers under general harassment provisions in the Equality Act 2010 and in the Protection from Harassment Act 1997 (including bringing claims for constructive dismissal and negligence, for example).
So employers will still need to guard against harassment in the workplace and would be well advised to:
This is by no means an exhaustive list of steps which an employer should take to guard against harassment by a third party, but it nonetheless provides a useful starting point.
Was the refusal of suitable alternative employment reasonable?
Devon Primary Care Trust v Readman (Court of Appeal)
The Employment Rights Act 1996 provides that a potentially redundant employee will lose their right to a statutory redundancy payment if they unreasonably refuse an offer of suitable alternative employment made by their employer.
The Court of Appeal has held that the Tribunal erred in finding that the refusal of suitable alternative employment by a potentially redundant employee was unreasonable. The Employment Appeal Tribunal (EAT) also erred in substituting its own decision that the refusal had been reasonable. Around four years from the initial decision of the Tribunal, the case has been remitted for a Tribunal to reconsider the question of the reasonableness of the refusal.
Mrs Readman had been employed as a nurse by the Trust or its predecessors since 1976. She had not worked in a hospital since 1985 and since that time her career path and qualifications were in community nursing. In 2007 an amalgamation of services meant that she was at risk of redundancy. There was an alternative position, at the same band 8A grade, but this was a hospital role rather than a community one. The Tribunal found that the only difference from her earlier employment was in the replacement of 45% of her duties as a community matron by 45% as a matron in a small hospital, and her “skill set” was transferable. The Tribunal held that she unreasonably refused this offer of suitable employment.
The central point which the Tribunal had failed to expressly determine was whether it was reasonable for the employee to refuse suitable alternative work in a hospital, after having decided to work in the community for so many years. The Tribunal also failed to address whether her preference for taking redundancy benefits (in order to emigrate to Canada) had clouded her assessment of the job offer.
The EAT had also relied on the reasonable responses test, which is usually used in unfair dismissal cases to make a judgment on the evidence as to whether the decision to dismiss falls within the band of reasonable responses a reasonable employer might have adopted. The Court of Appeal felt the use of this test was “misplaced”. In reaching its decision, the Court of Appeal stressed that the question of whether refusal of suitable alternative employment was reasonable would depend on the particular situation of the employee in question. There was no scope to apply a band of reasonable responses test.
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