Gordons Legal Employment Update – 9 June 2017

Friday 9th June 2017

Territorial Jurisdiction

In Green v SIG Trading Limited, the Respondent, a limited company in the UK, employed the Claimant as the MD of its operations in Saudi Arabia. He resided in Lebanon and commuted to Saudia Arabia for two to four days at a time. He was reported to a manager in the UK and support services were based in the UK. He was paid in UK pound sterling and was registered with HMRC for tax purposes, although was tax exempt. His contract of employment stated that his contract would be governed by UK law and additionally contained clauses that said that he might be required to work in the UK, as well as restrictive covenants that applied to the UK and Ireland.

The Claimant was made redundant and brought claims in the Employment Tribunal. The decision of the Employment Tribunal was that it did not have jurisdiction to hear the Claimant’s claims. This was on the basis that he we was found to be an expatriate employee who had stronger connections to Saudi Arabia than the UK. The Claimant appealed.

The EAT held:

  • The Employment Tribunal had incorrectly focused upon the Claimant’s role and duties, rather than the fact that he worked for a UK business;
  • The correct test was an objective assessment as to whether the employee had a closer connection to the UK or Saudi Arabia, looking at the wider context;
  • The Employment Tribunal had disregarded that the parties had agreed that the Claimant’s contract would be governed by English law. It was not suggested that this term did not properly represent the intentions of the parties and it was wrong for the Tribunal to dismiss the Respondent’s subjective explanation for this (namely the Respondent giving him UK terms and conditions “for convenience”); and
  • As the Employment Tribunal had disregarded a material factor, its conclusion was unsafe and the appeal was upheld.

Comment: It should be noted that the governing law clause in a contract is just one of the factors that an Employment Tribunal should weight in the balance when determining whether the Employment Tribunal has the jurisdiction to hear statutory claims. It could be the case that if this factor is properly taken into account by the Tribunal, when the case is remitted, that the original decision will stand.
Positive Opiates Drug Test – It’s Safe to Dismiss Right?

A contributor to the Rip Off Britain TV programme said that he had been sacked from his job at a power station as a result of a routine drug test which showed opiates in his system. All he could think of was that the poppy seed bread he had eaten for breakfast could have been to blame (with opiates of course being found naturally in the poppy plant). Angela Rippon, presenter on the Rip Off Britain programme put this to the test by eating poppy seed bread and bagels. Angela’s opiate drug test came back positive!

Comment: Businesses are increasingly considering the use of drug testing, particularly for safety critical roles. False positives in tests are likely to be very rare and test results can usually be relied upon. However, if businesses are considering disciplining or dismissing an employee as a result of a drug test result, the possibility of a false positive is an important consideration, particularly when raised by an employee as part of their defence. A ‘reasonable’ investigation should be carried out in such circumstances to determine whether on the balance of probabilities, the employee took the drug as alleged.
Post-Termination Restrictions

In MPT Group Ltd v Peel & Others, the High Court suggested that the duty of fidelity or good faith does not include a duty on an employee to disclose truthfully an intention to compete lawfully in future.

By way of background, the Claimant brought proceedings against its former Technical Manager and former Technical Sales Manager, who resigned together and set up business in competition with the Claimant. The main claims were: breach of copyright; misuse of confidential information and a failure to answer questions truthfully as to their future intentions in breach of their contracts. The Claimant subsequently applied for an interim injunction or a further order prohibiting the defendants from soliciting, dealing or contracting with the Claimant’s customers and suppliers; an unlimited injunction to prevent disclosure or use of the Claimant’s confidential information and directions for a speedy trial of all issues of liability.

The High Court held:

  • It was far from satisfied that these employees were under a duty to disclose their true intentions to the Claimant;
  • The law will step in to prevent unfair competition or to hold employees to enforceable restrictive covenants or to protect confidential information; and
  • Subject to post-termination restrictions and confidentiality, employees are otherwise free to make their own way in the world.

The application for springboard relief was dismissed as the High Court held that the Claimant had not established that it was likely to establish sufficient misuse of its data to justify a springboard injunction at trial. However, the High Court held that the Claimant was entitled to limited injunctive relief until trial or further order to prevent the defendants from retaining, copying, using or divulging to any third party certain specified classes of documents.

Comment: Whilst this case states that employees are not under a duty to answer truthfully about their intentions to compete against their employers in future, it is worth noting that this decision was made without reference to any case law and it is possible that a different conclusion might have been reached if the employees were sufficiently senior.
Discrimination Arising from Disability

In the case of Charlesworth v Dransfields Engineering Services, Charlesworth (“C”) was the Branch Manager for the Respondent and he was absent from work between October and December 2014 whilst he had treatment for renal cancer. Prior to C’s absence the Respondent had considered cost savings and whilst C was away it was apparent that it could do without him. Following a redundancy process, C was dismissed. C claimed unfair dismissal, direct disability discrimination and discrimination arising from a disability.

The Employment Tribunal dismissed C’s claims. The Employment Tribunal’s reason for dismissing his claim for discrimination arising from a disability was on the basis that his absence was not an effective or operative cause of his dismissal. The Employment Tribunal did accept that there was a link between C’s absence through illness and the fact that he was dismissed, the link being that his absence afforded the Respondent an opportunity to review the way in which the work was dealt with. Despite this, the Employment Tribunal stated that C’s absence formed part of the context only and was not an operative cause.

On appeal, the EAT held that the Employment Tribunal had made no error of law. The EAT held that the words ‘arising in consequence of’ in Section 15 of the Equality Act 2010 may give some scope for a wider casual connection than the words ‘because of’, but considered that the difference, if any, would in most cases be small. The EAT concluded that the Employment Tribunal had correctly directed itself as to the causation test and permissibly concluded that C’s absence was merely the occasion on which the Respondent was able to identify its ability to manage without him, not the cause of his dismissal.

Comment: This case law does narrow the scope of “discrimination arising from disability” claims and means that employers can more robustly defend them in circumstances where the causal link is in doubt.
Company Car Fuel Rates

The Government has released new advisory fuel rates for employers with company car schemes, which apply to all journeys made on or after the 1 June 2017, although employers may choose to use the old rates until the end of June 2017 if they wish to do so.

The rates have remained the same with the exception of the rate for petrol cars with engine sizes over 2000cc which has decreased by 1p per mile.

A summary of the rates are as follows: