Employees, Confidential Information and Data Protection

June 3rd, 2016 by Christopher Knight

Employment lawyers have tended to see data protection as an employee weapon; in particular the strategic fishing expedition subject access request as a precursor to High Court or Tribunal claims. But there is at least one angle from which the DPA can be used as a weapon of attack by employers against former employees. Where an employee leaves their employer and takes a client list with him, not only will he be in breach of the usual restrictive covenants he is likely to have, but he may also have committed a criminal offence under section 55 DPA. Read more »


The Scope of Section 94: Anything Goes

February 9th, 2012 by Christopher Knight

Ever since the judgment of Lord Hoffmann in Lawson v Serco Ltd [2006] UKHL 3; [2006] ICR 250, the territorial scope of the protection from unfair dismissal contained in s.94(1) of the Employment Rights Act 1996 has been a matter of some debate. Lord Hoffmann famously drew distinctions between those who worked in GB and those who worked abroad (the latter being outside the scope of s.94); peripatetic employees who were based in GB (within the scope); and expatriate employees who are posted abroad for a GB company or who work in an enclave abroad, such as an embassy, who are also caught by s.94.

The difficulty, as tribunals quickly found, is where the facts of a case do not meet any of those categories. What then? This was the issue before the Supreme Court in Ravat v Halliburton Manufacturing and Services Ltd [2012] UKSC 1. Lord Hoffmann, in Lawson at [40], had suggested that his categories were not exclusive, but that other cases would need “equally strong connections”. Lord Hope, in Ravat at [25], noted the complaint of the tribunal below that little appellate guidance had been provided and rather optimistically suggested that the judgment of Lady Hale in Duncombe v Secretary of State for Children, Schools and Families (No 2) [2011] UKSC 36; [2011] ICR 1213 had provided clarity when she said, at [8], that one need not torture cases to fit the existing categories.

If Duncombe was of little use in providing tribunals with assistance, it is unfortunately the case that the judgment of Lord Hope in Ravat will not be much more helpful. The Court has provided a new test: “whether the connection between the circumstances of the employment and Great Britain and with British employment law was sufficiently strong to enable it to be said that it would be appropriate for the employee to have a claim for unfair dismissal in Great Britain”: at [29].

Tribunals might be forgiven for thinking that they have simply been swapped one vague test – strong connections equal to those of an expatriate posted abroad or in an enclave – for an even vaguer one. The Supreme Court has, in effect, abandoned the field. Indeed, Lord Hope expressly disavows it being a test at all, stating that it is a question of fact for the tribunal. The question of law is simply whether s.94(1) applies or not. One suspects that there is going to be a fairly regular flow of appeals to the EAT to work out whether or not particular factors relied on by the tribunal are appropriate to take into account at all, let alone the weighting which should be given to particular factors over others.

What factors might be relevant? Following Ravat, it seems as though more or less anything is in play. Being paid in £sterling into a GB account, with tax and NI deducted is relevant. Being designated as a commuter worker (in Ravat’s case, to Libya), with travel costs paid by the employer is relevant. Being part of the GB pay structure, HR control and pension scheme is relevant. Working in Libya for a German company and being dismissed by a manager in Cairo are also relevant, although apparently outweighed in Ravat. Rather more debatably, the location of the employee’s home is apparently also relevant, despite this being an unusual factor to take into account in an employment analysis, as is whether the employee is a British national, despite the protection of s.94 never having been restricted by nationality.

Moreover, the proper law of the employment contract and assurances given the employer about the application of UK law are also relevant: at [32]-[33]. This is a quite startling proposition, on two bases. The first, which Lord Hope acknowledged, is that parties cannot estop a matter of jurisdiction. The second, which the Court completely ignored, is that s.204 of the 1996 Act expressly provides that “For the purposes of this Act it is immaterial whether the law which (apart from this Act) governs any person’s employment is the law of the United Kingdom, or of a part of the United Kingdom, or not.” This must surely remove choice of law (of any sort) from the analysis altogether. Although Lord Hope asserted that parties cannot contract in (or out) of the jurisdiction of the tribunal, this is precisely the effect of the Ravat judgment.

The approach in Ravat has imported by the back door an analysis which looks rather like a forum conveniens enquiry into deciding whether a case falls within s.94. Not only is this a method of statutory interpretation which is difficult to justify, but Lord Hoffmann himself expressly ruled out the application of a forum conveniens analysis to s.94 in Lawson at [24]. It is certainly true that the Ravat decision is employee-friendly – the majority of overseas worker cases will now most likely be caught by s.94 if a long enough list of factors can be produced – but it is open to question whether this is quite what Parliament had intended. Instead, the tribunals are left with a lengthy fact-finding exercise combined with a distinct lack of clarity as to what the relevant facts they should be finding are. From now on, when establishing the scope of s.94(1), anything, it seems, goes.

John Cavanagh QC appeared for Halliburton.


Edwards v Chesterfield – Orthodoxy and the Exclusion Area

December 19th, 2011 by Christopher Knight

The House of Lords in Johnson v Unisys Ltd [2001] UKHL 13; [2003] 1 AC 518 and Eastwood v Magnox Electric plc [2004] UKHL 35; [2005] 1 AC 503 made clear that an employee is not entitled to attempt to circumvent the statutory unfair dismissal regime and bring a claim at common law for damages where it is alleged that his dismissal breached the implied term of trust and confidence. Such a claim falls within what has become known as the Johnson exclusion area: to be adjudicated in the Employment Tribunals and not the ordinary courts.

The decision in Edwards v Chesterfield Royal Hospital NHS Foundation Trust & Botham v Ministry of Defence [2011] UKSC 58 extends the Johnson exclusion area to cases in which the breach relied upon is of the contractual disciplinary procedure. Only Lady Hale was unwilling to accept that Johnson extended beyond the implied term of trust and confidence to express contractual terms too.

Lord Dyson’s judgment for the majority, with which Lord Walker agreed and with which Lord Mance concurred, places Edwards squarely within the rationale of Johnson and Eastwood, relying heavily on the reasoning of Lord Hoffmann in the former at [60]-[66]. To allow an employee who has been dismissed to bring proceedings for breach of contract based upon a failure to follow contractual disciplinary procedures would be to undermine the carefully constructed statutory unfair dismissal regime. Neither Parliament nor the parties can be taken to have intended that such a failure, where it leads to dismissal, will give rise to a common law claim for damages. This does not mean that a breach of such an express term can never sound in contract – such as a claim for an injunction during the disciplinary process (a distinction which the dissenters ridiculed, but which Lord Dyson defended as being different because it did not cut across the statutory dismissal scheme) – but where it becomes inextricably linked with dismissal, the Tribunal’s jurisdiction takes over.

A dissenting judgment from Lord Kerr, with whom Lord Wilson agreed, challenged the refusal of the majority to separate out the fact of the dismissal and the loss which flows from the reasons for the dismissal. As a result, they would have permitted Mr Edwards’ claim (although not Mr Botham’s) because the reasons given for his dismissal were reached following a procedure which breached the contractually provided process. Lord Mance attacked this distinction in his concurring judgment, noting that not only were the reasons part and parcel of the dismissal itself, but if the minority were correct damages would have to be assessed on an entirely hypothetical basis which ignored the fact of dismissal, posing difficult problems of causation and quantum.

Lord Phillips agreed with the majority, and his judgment contains a number of references and oblique statements that appear to accept the reasoning of Lord Dyson. However, he based his agreement on a slightly different basis: namely that the damages sought were too remote from the contemplation of the parties and were precluded by Addis v Gramophone Co Ltd [1909] AC 488. Lady Hale’s response to that was that it seemed unlikely that where the breach was of an express contractual term the parties had not intended such a breach to mean anything.

What can one take from Edwards? Three things perhaps.

First, orthodoxy rules. The Johnson exclusion area is both upheld and widened to include express terms which encompass the fact of a dismissal. Only Lady Hale seemed to expressly wish to re-open Johnson and Eastwood and neither the Court nor the parties showed much appetite for that prospect. Lords Dyson, Mance and Phillips all took a fairly black-letter approach, with the latter focussing on characterising the issue in ordinary contractual language (Mance as causation, Phillips as remoteness).

Second, a slim majority of the Court wished to retain the clear distinction between the statutory unfair dismissal scheme and common law breach of contract, in favour of employers. The dissenting pair of Lords Kerr and Wilson, by finessing a difficult distinction between dismissal and the reasons for dismissal, were clearly in a much more pro-employee camp (as was Lady Hale, on a wider basis).

Third, the recovery of damages for the reasonable period in which the disciplinary process could properly have been carried out – stemming from the decision in Gunton v Richmond-upon-Thames LBC [1981] Ch 448 – remains very much open to question at the highest level. All of the majority judgments declined to approve that aspect of the Court of Appeal’s approach and reserved their view. The battleground will have to be returned to in due course.

Finally, a brief mention should be given to Lady Hale’s comment, at [110], that she was the only member of the Court to have been an employee. The relevance of this – even if it is true – is unclear. Presumably it was not meant to imply that only ex-employees can sit on employment cases? Let us hope not.


Employees, Shams and the Supreme Court

July 28th, 2011 by Christopher Knight

One of the most vexed questions Tribunals have to deal with on a regular basis is the characterisation of the claimant in front of them: are they an employee, a worker or are they self-employed? Interpreting the situation where the contractual documents have left the issue of status unanswered is one thing, but it is instinctively more difficult to go behind clear terms of an agreed contract. Where the business and the individual have agreed particular terms, such as the right to substitute performance or the right to decline offered work, why should the Tribunal rewrite that agreement?

The Supreme Court has answered that question very firmly. In Autoclenz Ltd v Belcher [2011] UKSC 41 Lord Clarke, giving the only judgment, stressed that the inequality of bargaining power in the employment context means that a purposive approach is necessary: at [33]-[35]. Employment contracts are different to ordinary commercial contracts, and the principles do not read across: at [21]. This conclusion will come as no surprise to watchers of the Court, because precisely the same refusal to apply ordinary contractual case law to the employment concept of the effective date of termination was seen in Gisda Cyf v Barrett [2010] UKSC 41; [2010] ICR 1475.

Practitioners faced with a potential ‘sham agreement’ case will still wish to focus their attention on the triumvirate of cases consisting of: Consistent Group Ltd v Kalwak [2007] IRLR 560, EAT; Firthglow Ltd (t/a Protectacoat) v Szilagyi [2009] EWCA Civ 98; [2009] ICR 835; and Autoclenz in the Court of Appeal [2009] EWCA Civ 1046; [2010] IRLR 70. The Supreme Court essentially quoted large parts of the Court of Appeal judgments in Autoclenz and added the words “I agree”. However, by virtue of status, Lord Clarke was able to formally approve the reasoning of Elias J in the EAT and disapprove that of Rimer LJ in the Court of Appeal in Kalwak, resolving a clear disagreement which Smith LJ had had to fudge in Protectacoat. All three of those earlier cases were expressly approved by Lord Clarke, along with their willingness to approach ‘sham clauses’ with a broader brush than simply applying the well-known decision in Snook v London and West Riding Investments Ltd [1967] 2 QB 786.

The question for the Tribunal is always what the true agreement between the parties was: at [29]. In order to discover this, the Tribunal must look to the realities of the situation and the actual legal obligations of the parties: at [30], [32]. The written agreement is just one of the circumstances of the case to be considered: at [35]. The Court agreed that the findings of the Tribunal meant that certain terms had been agreed, and those terms were indicative of a contract of employment rather than being a worker or self-employed. The prior suggestion of HMRC to the contrary was not a factor to be given any significant weight.

So where are we after Autoclenz in the Supreme Court? In terms of the development of the law, not a great deal further than after the Court of Appeal decision. No significant new reasoning appears out of the appeal. However, the law is clearer in that the highest court has given very clear approval to the line of reasoning in Kalwak, Protectacoat and Autoclenz. Employment contracts are not commercial contracts. A more inquisitive approach must be taken by the Tribunals to establish the true agreement between the parties, and whether the outcome of that agreement is the status of employee, worker or self-employment.

For those wishing to match this discussion with the relevant analysis in Tolley (2010), please refer to paragraphs 17.3 and 47.2c.