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The pitfalls of recovering stolen confidential documents disclosed in litigation

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The Court of Appeal has allowed a party’s disclosure in Tribunal proceedings to be used in subsequent proceedings even though the party seeking to rely on these documents erroneously forgot to ask the permission of the Tribunal to do so.

IG Index dismissed one of its employees, Mr Cloete. Mr Cloete then brought a claim for unfair dismissal against IG. As part of those proceedings, Mr Cloete disclosed various documents including a USB stick which contained copies of some of IG’s highly confidential documents.

After the Tribunal proceedings, IG issued separate proceedings against Mr Cloete and asked the court to grant an order that its documents or copies of them be delivered to it. Mr Cloete attempted to have these proceedings struck out as an abuse of process under the Civil Procedure Rules (which do not allow documents which are disclosed as part of proceedings to be used for any other purpose, including subsequent proceedings). The policy reason for this is that disclosure in litigation is an invasion of privacy which should be matched by a limitation on the use of the documents disclosed.

The Civil Procedure Rules allow an exception to the above rule when the court in the original proceedings gives permission for the disclosed documents to be used in subsequent proceedings. However, on this occasion, IG failed to ask for permission from the Tribunal to use the documents in subsequent proceedings (probably because it had mistakenly thought that it did not need to because the documents were copies of its own documents). Despite this, the Court of Appeal held that IG was allowed to use the documents in subsequent proceedings against Mr Cloete and refused to strike out IG’s claim against Mr Cloete. The Court of Appeal considered that it had an obligation to deal with cases justly, and, on balance, had IG sought permission from the Tribunal to use the documents in subsequent proceedings at the correct time, it seemed unlikely that this would not have been granted.

This is a useful point to bear in mind should it emerge in proceedings that an employee has taken confidential documents. Although on this occasion IG was able to rely on the documents disclosed, parties should always seek permission from the original court if further proceedings will be necessary.

IG Index Ltd v Cloete [2014] EWCA Civ 1128

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Employer failed to make reasonable adjustments to redeploy disabled employee being made redundant

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The Employment Appeal Tribunal has held that an employer failed to make reasonable adjustments to redeploy one of its disabled employees who was at risk of redundancy and could not attend interviews. The EAT held that the employer should have made reasonable adjustments and offered an alternative way of assessing the employee’s suitability for redeployment roles, even though the employee had been unresponsive when HR suggested alternative roles.

Mr Charles worked at the London Borough of Southwark as an environmental enforcement officer. In March 2011, Southwark informed Mr Charles that he was being made redundant. The Council had certain posts which it had ring-fenced for redeployment opportunities. On 10 May 2011, the Council informed Mr Charles that his employment was due to terminate on 3 August 2011. Three days later, Mr Charles’ GP signed him off work for a period of three months because Mr Charles suffered from “sleep paralysis agitans” which meant that he woke up at night paralysed and he also suffered from depression.

Employees in Mr Charles’ pool were invited to interview for a Noise Support Officer post. Mr Charles did not express an interest in an interview. The Council referred Mr Charles to its occupational health provider, Atos. On 25 May 2011, Atos advised that no adjustments were required. Later, on 17 June 2011, Atos advised that Mr Charles could not attend administrative meetings.

On 4 August 2011, the Council informed Mr Charles that his termination date had been pushed back to 26 August 2011. HR at the Council then made several attempts to contact Mr Charles in relation to the Noise Support Officer role. Although Mr Charles did ask some questions in relation to the role, he did not reply to repeated requests from HR to confirm whether or not he would be interested in it and, if so, when he would be fit to attend an interview. HR also emailed Mr Charles other role details and called him but did not receive a response. On 25 August 2011, the Council sent a letter to Mr Charles confirming his employment would terminate the following day in the absence of an expression of interest in an alternative role.

Mr Charles brought a claim for discrimination on the grounds of disability, namely the failure of Southwark to make reasonable adjustments when considering redeployment opportunities.

The EAT held that the Council’s practice of requiring those at risk of redundancy in the redeployment pool to attend interviews was a practice which put Mr Charles at a considerable disadvantage as a result of his disability (which prevented him from attending interviews for alternative roles). The EAT held that Mr Charles should not have been subjected to a formal interview process and that the Council should have assessed his suitability for redeployment through alternative means.

London Borough of Southwark v Charles UKEAT/0008/14

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Government launches consultation on loopholes in ban on exclusivity clauses in zero hours contracts

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After the controversy surrounding zero hours contracts, the Government is proposing to ban employers from using exclusivity clauses in them. On 25 August 2014, the Government launched a consultation to examine the potential loopholes employers could use to get around its proposed changes to the Small Business, Enterprise and Employment Bill.

Given that zero-hours contracts are likely to be different depending on the sector in which they are being used, the Government has also announced that it would like sector-specific codes of practice on the fair use of zero hours contracts and would like unions and business representatives to work together (with Government support) to develop these.

The consultation will close on 3 November 2014.

BIS: Zero Hours employment contracts: tackling avoidance of the exclusivity ban

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Employment tribunal holds that an employee was not liable for PAYE under-deductions

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The employment tribunal has held that an employee was not liable for PAYE under-deductions because their employer had not taken reasonable care in complying with the PAYE Regulations. Instead the employer had delegated the matter to a payroll agent without liaising with them or making enquiries of them.

The PAYE Regulations provide that where an under-deduction is made, HMRC may, at the employer’s request, direct that the under-deductions are recovered from the employee where the employer has taken reasonable care and the under-deduction was in good faith.

In this case, under-deductions had been made from Mr Sparrey because his P45 did not state his income from his previous employer. However, Mr Sparrey had provided his employer, Adra Match, with payslips from his previous employer which had not been sent to Adra Match’s payroll agent. The payroll agent had not made an enquiry in this respect. HMRC corresponded with Adra Match and directed that the under-deductions be recovered from Mr Sparrey.

Mr Sparrey appealed against HMRC’s direction and the employment tribunal allowed his appeal. It held that it was not reasonable for Adra Match to have handed over all payroll matters to its agent without enquiring about them or liaising with them and given that Adra Match had information about Mr Sparrey’s previous pay position, its agents would have, had they enquired.

Sparrey v HMRC [2014] UKFTT 823

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High Court finds that assessment of bonus pool does involve contractual discretion

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The High Court has held that the calculation of a bonus pool by an employer bank involved an exercise of discretion and therefore the bank was under a duty, by virtue of an implied contractual term, to exercise its discretion honestly and in good faith and not arbitrarily, capriciously or irrationally.

The claimants, Brogden and Reid, were equity derivatives traders at Investec. They were both entitled to a contractual bonus based on a set percentage of the economic value added by the bank’s equity derivative business. For the bonus year 2010/11, Investec calculated the bonus pool for this bonus as nil, which the claimants disputed.

The claimants argued that when calculating their bonus pool, Investec were exercising their discretion and therefore were under an implied contractual duty to act honestly and in good faith and not arbitrarily, capriciously or irrationally. Investec argued that when calculating the bonus pool, the preparation of accounts involved questions of judgement about which reasonable people could differ and therefore it was not using its discretion and no such term could be implied.

The High Court ruled that an employer is exercising their discretion where: (i) a contract gives one party responsibility for assessing or judging a matter which materially affects the other party’s interests; (ii) the matter to be decided has ample scope for reasonable differences of opinion; and (iii) the decision will be binding upon the other party. Accordingly, the Court had a right to scrutinise the decisions the bank had taken. However, on the facts of this case, the judge held that Investec’s decision was reasonable and should stand. Therefore, the employees won the issue of principle but lost the case.

This case emphasises the need for employers to document the exercises of their discretion properly so that when it is questioned, as in this case, they can demonstrate the decisions were made rationally.

Brogden and another v Investec Bank plc [2014] EWHC 2785

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Employee’s previous breaches did not bar a constructive dismissal claim

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The Employment Appeal Tribunal has held that an employee’s previous breach of contract did not prevent him from bringing a claim for constructive dismissal against his former employer. However, the EAT noted that if the employer established that it could have fairly dismissed the employee had it known about his previous breach of contract, the employee’s compensation could be reduced by up to 100%.

The claimant, Mr Atkinson, was a director of resources at a housing association, CGA. In late 2010, the housing association discovered an overspend of £1.8 million in its budget and suspended Mr Atkinson whilst it conducted an investigation. During its investigation, the employer discovered that Mr Atkinson had been in a relationship with an employee at another housing association. In breach of the IT policy, which Mr Atkinson had written, he had sent her overtly sexual emails which had not been marked private. He had also assisted her application to his employer by telling her what to expect at interview and suggesting to a panel member that she should be hired without disclosing the nature of his relationship with her. These issues were added to the on-going disciplinary proceedings.

A disciplinary hearing took place on 9 March 2011. On 14 March 2011, Mr Atkinson resigned with immediate effect claiming that he had been constructively dismissed and entitled to resign because of the way in which the proceedings were being conducted by CGA. Mr Atkinson also claimed that CGA’s search of his emails had breached his right to respect for his private life under the European Convention of Human Rights.

The EAT held that even though Mr Atkinson was originally at fault, when CGA subsequently breached the employment contract, Mr Atkinson had been entitled to resign as a result. However, the EAT held that where a party at fault brought a successful claim for constructive dismissal, the tribunal would have to consider a reduction in compensation of up to 100 per cent for contributory fault. The EAT also considered CGA’s IT policy and held that there had not been an unjustified breach of Mr Atkinson’s private life and that he had no reasonable expectation that emails not marked private would not be taken into account in a disciplinary process.

This ruling means that when employees claim constructive dismissal it will generally be worth investigating whether prior to dismissal they have been up to no good as any prior misconduct could reduce any compensation. However, employers should be careful about investigating an employee in response to a discrimination claim as it could amount to victimisation. Although in this case there was no breach of Mr Atkinson’s right to a private life under the European Convention of Human Rights employers should make it clear in IT policies that employees’ emails may be monitored.

Atkinson v Community Gateway Association UKEAT/0457/12

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