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Employment Law News

 

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Legal advice on the proposed redundancy of a disabled employee was not a cloak for discrimination and was legally privileged

In the case of Curless v Shell International Ltd, the Court of Appeal considered whether advice on the proposed redundancy of a disabled employee amounted to advice on how to cloak discrimination.  If it did, the next question would be whether legal privilege over that advice was lost, making it disclosable in the employee’s disability discrimination claim.

What does the law say?

Legal advice privilege arises in respect of confidential communications between a client and a lawyer (including in-house lawyers) where the dominant purpose of the communication is the giving or obtaining of legal advice on the client’s rights, liabilities and options.  If legal advice privilege applies then the communication does not have to be disclosed to an opponent (or to a Court or Tribunal) in the course of a relevant legal dispute.

However, it’s possible for privilege to be lost in certain circumstances.  Under the “iniquity principle” privilege will not apply to communications created as part of a dishonest plan to conceal or further a crime, fraud or equivalent conduct.  This means that such material will be disclosable in a relevant legal dispute.

If a claim before an Employment Tribunal refers to material which is privileged the Tribunal is entitled to strike out all or part of that claim.  In this case, the Tribunal was asked to strike out part of a claim on this basis, which prompted an examination of whether the communications were, in fact, privileged.

What happened in this case?

Mr Curless was disabled and worked as a lawyer for Shell International Ltd (Shell).  Shell was concerned with his performance and took various steps to address the issue.  Mr Curless was unhappy with this and in 2015 he brought a disability discrimination claim against them.  In early 2016 he also raised a grievance alleging disability discrimination.  Later in 2016, Shell commenced a group wide reorganisation under which Mr Curless was ultimately made redundant.  He went on to bring claims against Shell, including for disability discrimination and victimisation.

He sought to rely on a copy of an email that had been sent to him anonymously.  The email was from an in-house lawyer at Shell to another lawyer who had been seconded to the business.  Mr Curless said the email contained advice on how the reorganisation could be used as a pretext for his dismissal and, as such, was advice on how to commit victimisation.  He said this interpretation of the email was supported by the fact that, at around the same time, he had overheard a conversation in a City of London pub in which a professional-looking woman had said she was dealing with a matter concerning a senior lawyer at Shell who had brought a disability discrimination complaint and that there was now a chance to manage him out in the context of a reorganisation.

Shell applied to strike out the parts of the claims relating to the pub conversation and the email on the grounds that these communications were privileged.

What was decided?

The Employment Tribunal agreed with Shell and struck out the parts of the claim concerning the pub conversation and the email on the grounds that both were privileged.  However, this decision was overturned by the EAT.  In the EAT’s view, the email went further than simply warning of the risk of claims arising out of making a disabled employee redundant.  Instead, it set out advice on how to discriminate unlawfully and how to hide that discrimination under the cloak of the redundancy exercise.  As such, there was a strong case to say the advice was iniquitous and, therefore, not privileged.  They also decided that no legal advice privilege attached to the pub conversation.  Shell appealed to the Court of Appeal.

The Court of Appeal agreed with Shell and said that the email was legally privileged. The Court viewed the email as recording legal advice on whether, and how, Mr Curless could be made redundant (on either a voluntary or compulsory basis) within the reorganisation and the associated risks.  It highlighted the risk that he might argue that his redundancy was unfair and discriminatory and also the risk of an impasse if he remained employed.  The Court regarded this as the kind of conventional advice that lawyers give to their clients “day in, day out” where redundancy is considered for an underperforming employee.  It was not advice to act in an underhand way.

Nor was the Court prepared to view the email through the prism of the pub conversation.  Not only did the date of the email precede the pub conversation, there was no evidence that the woman in the pub had even seen the email or of the basis on which she made the alleged statements. The Court concluded that the content of the email could not be tainted “by a conversation involving gossip from someone else after the event”.

What are the learning points?

This case was unusual in that the legal advice in question had mysteriously fallen into the hands of the claimant.  Of course, this will be rare, but legal advisers (including in-house lawyers) should take great care with both the substance and form of their advice, particularly where discrimination is in play.

Even if the Court in Curless had found that the advice had been designed to cloak discrimination, it is not clear whether they would have agreed with the EAT and found that it fell within the iniquity exception.  The Court declined to rule on this point, noting that it was an important argument but would have to be decided in another case.   Therefore, the risk remains that advice of that nature would be viewed as iniquitous and the “smoking gun” would be disclosable.

Curless v Shell International Ltd

If you would like to discuss any of the issues raised in this article, please contact Amanda Steadman or your usual BDBF contact.

 

 

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Employment Law News

 

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Stricter controls on the way for non-disclosure agreements in the employment context

It’s hard to believe that the #MeToo movement took off little more than two years ago.  Not only has the movement empowered victims to speak up against harassment and encouraged employers to reflect on their approach to dealing with such allegations, it has driven the Government to focus on what it can do about the practice of using non-disclosure agreements (NDAs) to hush up complaints.  In this briefing we consider the status of the various legislative proposals on the table, the latest guidance and the next steps for employers.

Government consultation on use of NDAs  – proposed new legislation

Earlier this year, the Government consulted on proposals to improve the regulation of NDAs in cases of workplace harassment or discrimination.  That consultation received 582 responses, the majority of which supported the protection of vulnerable workers from the improper use of NDAs by employers.  In July 2019, the Government responded to the consultation confirming that it would introduce new laws to provide that:

• NDAs cannot be used to prevent disclosures to the police, regulated health and care professionals and/or legal professionals;
• the limitations of NDAs are clearly set out in both employment contracts and settlement agreements;
• individuals signing up to NDAs in settlement agreements must receive independent legal advice on the nature and limitations of the clause; and
• NDAs that do not meet the legal requirements would be subject to enforcement measures.An offending clause in an employment contract would give rise to a claim for compensation and an offending clause in a settlement agreement would be void.

The fly in the ointment is that the Government committed to introducing these reforms “when Parliamentary time allows”.  Unsurprisingly, given the preoccupation with Brexit, these new laws have not yet seen the light of day.  It remains to be seen which parties will commit to introduce any or all of these reforms in their manifestos for the forthcoming General Election (and when they would be introduced).

Women and Equalities Select Committee report on use of NDAs – further proposals for reform

Despite this uncertainty, the Government has recently gone on to make further commitments for reform in this area. In June 2019, the Women and Equalities Select Committee (WESC) published a report on the use of NDAs in harassment and discrimination cases.  Gareth Brahams of this firm gave evidence to the WESC as part of its inquiry into this issue – you can read his evidence here.

The WESC report made 45 recommendations to Government concerning the regulation of NDAs and other related matters.  In October 2019, the Government published its response to the WESC report.  Notably, the response sets out further commitments to:

• consult on whether to require employers to provide a basic factual reference about a worker (on the basis that a failure to provide a reference can be problematic for victims of harassment or discrimination);
• consider whether to require employers to investigate all harassment and discrimination complaints, even where a settlement is reached;*
• consider whether to require employers to appoint a director or equivalent to oversee the anti-discrimination and harassment policies and the use of NDAs in relevant cases;*
• consider the adverse effects on individuals of publishing employment tribunal judgments online (e.g. blacklisting) and what, if any, safeguards could be adopted; and
• consider extending the time limit for bringing claims in the employment tribunal from 3 months to 6 months in cases involving sexual harassment or pregnancy or maternity discrimination.*

*Note that these proposals are already under consideration as part of a separate consultation on sexual harassment, pregnancy and maternity discrimination which closed in October 2019.

New guidance for employers on the use of NDAs

Another key commitment emerging from the Government’s responses to both the consultation and the WESC report was the publication of new guidance for employers and their advisers on the drafting and use of NDAs.   The Government identified various stakeholders who would be responsible for discharging this commitment, including the Equality and Human Rights Commission (EHRC), ACAS and the Solicitors Regulation Authority (SRA).

The EHRC has now published its guidance on the use of confidentiality agreements in discrimination cases.  The guidance is non-statutory – this means that an Employment Tribunal or Court is not obliged to take it into account but it may be used as evidence in legal proceedings where relevant. The guidance usefully clarifies the law on the use of NDAs (as it currently stands) and offers wide-ranging recommendations of best practice in this area.  Employers should note the following key best practice points on the use and drafting of NDAs:

• avoid using NDAs as a matter of course – weigh up whether they are really needed on a case by case basis;
• where it is felt that an NDA is needed, stick to what is necessary and appropriate to the particular circumstances of the case – if in doubt seek legal advice on the wording;
• apply carve outs to the NDA to permit the worker to have discussions with various parties such as: regulators, the police, immediate family members and a potential employer;
• avoid using warranties which require the employee to promise that they are not aware of anything that would be a protected disclosure or a criminal offence as this could silence the employee from speaking out (and it is unlawful to prevent a worker from making protected disclosures or reporting criminal offences);
• where an NDA is used, there should be a mutual obligation on the employer to keep matters secret;
• ensure that the use of the NDA is signed off by a director (or equivalent) or other senior manager and not by someone implicated in the complaint itself or involved in the hearing of the complaint; and
• ensure workers are given time to read and reflect on any NDA and discuss it with their adviser if appropriate.

More generally, employers are advised to monitor discrimination complaints and the use of NDAs to help identify any systemic issues.  For large employers this means holding a central record of NDAs which is overseen by the board of directors (or equivalent).  Further, employers are advised to investigate all allegations of discrimination and harassment – even where there is a settlement – and take any reasonable steps to prevent the discrimination occurring again in future.  The EHRC notes that a failure to do this may make it harder for employers to defend future discrimination complaints.

Separately, ACAS has announced that it will publish its own guidance on the use of NDAs, although it is not known when.  The SRA has indicated that it will update its warning notice to solicitors (published in March 2018) to align with the forthcoming legislative reforms.  The Law Society has also committed to update its practice notice on the subject.  Once the legislative reforms are in place, the Government has said that it will run an awareness raising campaign for employers to highlight the changes and the new sources of guidance.

What action should employers take now?

As well as continuing to monitor developments in this area, employers should:

• ensure they have read and acted upon any guidance from a relevant regulator (for example, in-house lawyers will be expected to comply with the guidance issued by the SRA);
• update template employment contracts and settlement agreements with a view to being able to comply with the new legislative requirements in due course; and
• read the EHRC’s guidance and benchmark internal practices and procedures against it.

BDBF can help your business navigate these changes. If you would like to discuss how we can help, please contact Amanda Steadman or your usual BDBF contact.

 

 

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Employment Law News

 

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Dismissal was fair despite deletion of part of the investigation report which was favourable to the employee

Running a disciplinary investigation is a daunting prospect, particularly for a manager without experience of such processes.  It’s understandable that investigators may need support and guidance from HR or in-house legal.  But what degree of guidance is permissible?  Is it possible for such advice to prejudice the integrity of the process?  The case of Dronsfield v The University of Reading considers these issues and reminds us of the proper parameters of a disciplinary investigation.

What does the law say?

In order to dismiss an employee fairly for misconduct, an employer must have carried out a reasonable investigation into the allegations.  Investigators should produce a report summarising the factual findings of their investigation and give their views on whether the matter should proceed to a disciplinary hearing.  However, they should not stray into the territory of expressing views on the employee’s culpability or on the appropriate sanction – that is a matter for the disciplinary panel.

When preparing their report, it is legitimate for investigators to seek advice from HR and/or in-house legal on the relevant law and procedure, but the conclusions in the report should be their own.  This point was highlighted in the case of Ramphal v Department of Transport, where the EAT found that excessive intervention by HR in a disciplinary investigation could potentially render the dismissal unfair.

What happened in this case?

Dr Dronsfield taught Fine Art at the University of Reading.  Under the University’s rules, he could only be dismissed from his role on conduct grounds if he had engaged in conduct of an ‘immoral, scandalous or disgraceful nature incompatible with the duties of the office or employment’.  He began a sexual relationship with a vulnerable student, notably before he marked her dissertation and whilst he continued to supervise her.  This was contrary to the University’s guidance to academic staff.

A Professor and a member of HR were jointly appointed to investigate the matter.  An early draft of their investigation report said that, in their opinion, the misconduct was not ‘immoral, scandalous or disgraceful’.  The University’s in-house employment lawyer reviewed the draft report.  She recommended that they omit this statement and leave it to any subsequent disciplinary panel to judge whether the conduct reached the threshold for dismissal.  They accepted this advice and the finding did not appear in their final report.

Dr Dronsfield was ultimately dismissed for gross misconduct.  By the time of the internal appeal, Dr Dronsfield had seen the earlier draft of the investigation report.  He submitted that the investigators had been pressurised to change their findings and this was unfair.  However the independent appeal chair rejected this argument and upheld the dismissal.

What was decided?

Dr Dronsfield brought an unfair dismissal claim.  His principal argument was that the change to the investigation report meant that the dismissal was unfair.  Initially, the Employment Tribunal found the dismissal to be fair, but this was overturned by the EAT on the basis that the Tribunal had not adequately probed why the deletions had been made to the report.  The case was remitted to a new Tribunal.

However, the second Tribunal also found the dismissal to be fair.  It said it was reasonable for the University’s lawyer to advise the investigators to focus on whether there was a case to answer and to remove their opinions about Dr Dronsfield’s conduct.  In the Tribunal’s view, the amended report fairly set out the investigators’ position and did not paint a false or incomplete picture.  Dr Dronsfield appealed to the EAT again.

The EAT dismissed the appeal.  They concluded that the Tribunal had adequately addressed Dr Dronsfield’s arguments surrounding the changes to the report.  The Tribunal had found that the report had been amended on the advice of the lawyer that it should not include an opinion on culpability.  The investigators were genuinely persuaded that such decisions belonged to the disciplinary panel.  This amounted to a correction of the scope of the report and did not undermine the fairness of the dismissal process.

What are the learning points?

This decision reassures us that investigators are entitled to seek and act upon appropriate advice from HR and/or in-house legal surrounding the correct application of the law or internal procedures.  Acting upon such advice should not undermine the integrity of the process, provided that the report can still be described as the investigator’s own work.  Fairness will only be jeopardised when the advice suggests changing the substantive content of the findings, as was the case in Ramphal.

The decision also underlines the point that the proper role of the investigator is limited to gathering the facts and determining whether there is a case to answer.  Investigators need to take care to avoid encroaching on the role of the disciplinary panel.  For lay members of staff this distinction can be difficult to get grips with.  It is, therefore, advisable for employers to provide in-depth coaching to those in scope to act as investigators and as members of disciplinary panels.

Dronsfield v The University of Reading

If you would like to discuss any of the issues raised in this article, please contact Amanda Steadman or your usual BDBF contact.

 

 

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Employment Law News

 

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Are the days of the office romance numbered?

A recent survey by Totaljobs of almost 6,000 UK workers revealed that 66% of them had either dated, or considered dating, a colleague and 22% went on to meet their partners or spouses through work. Yet earlier this month, the CEO of McDonald’s, Steve Easterbrook, was dismissed after it came to light that he had a consensual romantic relationship with a colleague.   In this briefing we explain what went wrong for Mr Easterbrook and how employers might choose to approach the sensitive subject of romance at work.

What happened at McDonald’s?

McDonald’s had a ‘Business Conduct Standards Policy’ which provided that: “In order to avoid situations in which workplace conduct could negatively impact the work environment, employees who have a direct or indirect reporting relationship to each other are prohibited from dating or having a sexual relationship”.  The Policy went on to say that: “It is not appropriate to show favouritism or make business decisions based on emotions or friendships rather than on the best interests of the company”.  The Policy also required an employee who had entered into such a relationship, or who was contemplating doing so, to notify HR immediately.

The Board of McDonald’s reviewed the matter and concluded that Mr Easterbrook had violated company policy and demonstrated poor judgement. In his departure email to colleagues, Mr Easterbrook held his hands up and said: “Given the values of the company, I agree with the Board that it is time for me to move on”.

Interestingly, the day after Mr Easterbrook’s departure, McDonald’s Chief People Officer, David Fairhurst, also left the business.  Although McDonald’s has declined to comment on the reasons for Mr Fairhurst’s departure, it has been suggested by Mr Fairhurst’s family that he was sacked because he knew about Mr Easterbrook’s romantic relationship and failed to do anything about it.

What are the risks arising out of personal relationships at work?

The Easterbrook affair took place in America.  Would it have been any different in the UK?  Of course, we have legislation prohibiting sexual harassment at work (where one party’s advances are unwanted by the other party).  A breach of those rules could well result in the instant dismissal of the perpetrator.  However, there are no specific employment laws prohibiting consensual relationships at work.

Nevertheless, romantic relationships at work can present difficulties for employers, notably the risk of a conflict of interest if one party has managerial responsibility for the other.  The more senior party could easily end up in a situation where his or her loyalties are divided between the company’s best interests and those of their partner, for example, when conducting an appraisal or pay review.  In this situation the manager is certainly under an obligation to disclose the potential conflict.

Such a situation could also prompt complaints of bias and favouritism and lead to decreased morale amongst other workers.  It is also quite likely to generate office gossip and could lead to other unpleasant behaviours such as cold-shouldering of one or both members of the couple.

There is also the risk of negative fallout if the relationship breaks down.  For example, if one party tries to pressurise the other into getting back together this could give rise to a sexual harassment claim.

How can an employer mitigate such risks?

An outright ban on personal relationships at work is probably unrealistic give the statistics cited at the beginning of this article.  Such a draconian step may also be unlawful since it is likely to represent an unjustifiable interference with an employee’s right to a private and family life.

A better approach would be to attempt to regulate the conduct of personal relationships at work by putting in a place a “Personal Relationships at Work” Policy.  Such a policy should set out the expected standards of behaviour and, if breached, can be used as a basis for disciplinary action.

What should such a policy cover?

• It should define what is meant by a “personal relationship” and clarify that this covers both formal relationships, such as spouses, civil partners or cohabitees, but also less formal relationships, such as boyfriends/girlfriends and more casual relationships. It could even cover platonic personal relationships.
• It should explain why the policy is necessary by highlighting risks including but not limited to: potential conflicts of interest; the risk of bias in managerial decisions; the risk of discrimination or harassment; the potential adverse effect on other staff members; and the potential negative impact of a relationship breakdown.
• It should set out guidelines for managers on how to deal with a personal relationship arising between team members. Managers should be required to notify HR of any issues connected to personal relationships between their team members.  They should also be reminded that no detrimental action should be taken against the couple just because they are in a relationship – this could be unfair and/or discriminatory.  They also need to treat both members of the couple equally, as a failure to do so could also be discriminatory.  However, managers should be required to assess whether the relationship is negatively affecting productivity and, if it is, take appropriate action.
• It should set out the behavioural standards expected from those entering into a personal relationship at work. For example, this should require the parties to conduct themselves in a professional manner in the workplace and ensure that rules on confidential information are not breached in the context of a personal relationship.
• Crucially, the policy should include a McDonald’s-style clause requiring a party who enters into a personal relationship with either their subordinate or manager (or any other member of staff where there is a potential conflict of interest) to disclose the fact to HR as soon as possible. The policy should also address how the company may respond to such a disclosure (e.g. moving one of the parties to a different role or putting in place other safeguards).

BDBF can help you prepare a Personal Relationships at Work Policy.  If you would like to discuss how we can help, please contact Amanda Steadman or your usual BDBF contact.

 

 

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