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Articles Employment 13th May 2019

Employment Law Review – May 2019

Welcome to our May Employment Law Review. In this bulletin we look at: workplace parties and to what extent employers are liable for injuries stemming from the festivities; when a director can be personally liable for breaches of an employee’s employment contract and how unexplained unreasonable behaviour can give rise to unconscious bias. We will also look at when employees are working on “time work” and how this impacts on their pay.

 

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Employer not liable for alcohol related accident at a Christmas party

Recently there have been cases, such as Bellman v Northampton Recruitment Limited, where employers have been held liable for the conduct of their staff at company organised parties. However, the recent case of Shelbourne v Cancer Research UK (CRUK) appears to buck this trend, although there are some key points to note from the way CRUK managed the party.

CRUK held a Christmas party, which involved alcohol, at its Cambridge research institute. CRUK undertook a risk assessment and the main focus of this assessment was ensuring that alcohol infused partygoers did not return to the laboratories after the party started – providing two extra security staff members. CRUK’s risk assessment also considered trip and other hazards.

At the party, the Claimant, Mrs Selbourne, was dancing with a visiting scientist who was not directly employed by CRUK. The visiting scientist had been drinking and when he attempted to pick up the Claimant, he dropped her and she suffered a serious back injury. The Claimant sued CRUK.

At first instance the County Court rejected the Claimant’s claim both on the grounds of negligence and whether CRUK was vicariously liable for the visiting scientist’s conduct. The Claimant appealed to the High Court.

On the issue of negligence the court upheld the County Court’s decision. There was no denying that CRUK owed a duty of care to the Claimant, its employee. The issue was the extent of this duty. The court held that CRUK did not have to put in place the stringent measures the Claimant suggested (including that all attendees sign a written declaration stating they would not behave inappropriately): the court found that this set the bar unreasonably high for employers. In any event, CRUK had clearly carried out a risk assessment which took into account that alcohol would be consumed: additional security staff were hired and entrance to the laboratories was restricted. Therefore, there was no breach in the duty of care – CRUK had sufficiently addressed the risk in the circumstances.

Moving to the issue of vicarious liability, the Claimant sought to establish that the nature of the visiting scientist’s job included interacting with fellow alcohol-infused partygoers in order to enhance employees’ morale and that CRUK should therefore be liable for his actions. The court concluded this to be the wrong approach, stating that this view “overstates the position of the employer and, conversely, seriously understates the motivation and autonomy of those attending the party.”

The Freeths View:

There is a lot to be learned from this case. It is important to note that this case does not provide a blanket protection against liability to employers holding parties for employees. In Bellman v Northampton Recruitment Limited the company was held to be vicariously liable for an assault by its director on an employee at an “after-party” following a work event, for which the company was paying. The Court of Appeal Judge in this case emphasised the fact that vicarious liability cases depend heavily on their facts.

This brings us in turn to the facts of this case. If an employer is going to hold a party it is important to conduct a thorough risk assessment, as CRUK did, including the potential risks the consumption of alcohol may create and clearly demonstrating attempts to mitigate those risks.

 

Can a director be personally liable for breaches of employees’ employment contracts?

Directors are not usually personally liable for a breach of contract whilst they are acting in good faith on behalf of the company. However, a recent case, Antuzis v DJ Houghton, highlighted the fact that directors can be liable to third parties, including their employees. Liability may occur where the breach of contract has a statutory element: the statutory breach can be interpreted as representing a failure on behalf of the directors to comply with their statutory duties to the company.

In this case, three Lithuanian nationals were employed by the first Defendant, the company, as chicken catchers and worked at a variety of farms catching chickens to be sent off for slaughter. The Claimants worked long hours, were paid less than the minimum wage prescribed under the Agricultural Wages Act, were frequently not paid the sums owed on payslips (which were often incorrect in any event) and often had payments unlawfully withheld as punishments for alleged misdemeanours. The Claimant’s wages were also unlawfully reduced in respect of rent to the Defendant company which was in excess of the maximum permitted under legislation.

The court in its judgement made clear reference to director’s duties under the Companies Act to “act in the best interests of the company” and “exercise reasonable care, skill and diligence.” It went on to confirm that, where a breach of contract had a statutory element and pointed to a failure of the directors to comply with the aforementioned duties, it could lead to the directors being personally liable. However, whether such breaches would have this effect would depend on a case by case basis.

In this instance the court found on the facts that neither of the directors, who were also Defendants in the proceedings, had acted honestly. They did not honestly believe they were paying the chicken catchers the minimum wage, paying holiday pay nor did they honestly believe they were entitled to withhold payments. The directors in acting dishonestly, had breached their statutory duties and were therefore not acting in good faith on behalf of the company. The directors were therefore personally liable to the Claimants for inducing the breaches of contract by the company.

The Freeths’ View:

It is clear that this is an extreme case but it does highlight the need for directors to understand their statutory duties and obligations in relation to the company. It also highlights the need for employers and those responsible for employees – whether a HR team in larger companies or directors directly in SMEs – to understand the statutory arrangements surrounding:

  • Minimum wage;
  • Holiday pay;
  • Wage deductions; and
  • Working time regulations.

 

When will unreasonable behaviour give rise to unconscious bias?

A recent case, Tywyn Primary School v Aplin, has highlighted the importance of having a fair and objective disciplinary process, particularly when the employee has a protected characteristic. It is a reminder that where an employee does have a protected characteristic it important to be sensitive to any potential personal bias of investigating and disciplinary officers which may affect the process and outcome of the disciplinary hearing.

Mr Aplin was an openly Gay primary school head teacher who had sex with two 17 year old boys after meeting them via a gay dating app. The police became aware of this encounter and the local authority set up at Professional Abuse Strategy Meeting (PASM). The PASM concluded that no criminal act had taken place, nor were there any child protection issues arising from Mr Aplin’s behaviour.

The School brought disciplinary proceedings. The investigating officer, Mr Gordon, was briefed by the local authority to investigate and consider the impact of Mr Aplin’s behaviour on the reputation of the school, their trust and confidence in Mr Aplin and his ability to fulfil his role. However, Mr Gordon’s investigation report focused on Mr Aplin as a child protection risk, despite the PASM concluding there were no child protection issues. On the basis of Mr Gordon’s investigation report, to which Mr Aplin never received access, the panel of members (school governors) dismissed Mr Aplin.

Mr Aplin appealed. The school proceeded on the basis that the effect of the appeal was to keep his contract alive until determination of the appeal. Mr Aplin again requested a copy of the investigation report and any other evidence the panel made their decision on, but again he did not receive copies of the evidence. Following this Mr Aplin resigned, claiming the flaws in the process had amounted to constructive dismissal.

Mr Aplin’s unfair constructive dismissal claim succeeded both in the Employment Tribunal (“ET”) and Employment Appeal Tribunal (“EAT”). On Mr Aplin’s discrimination claim the ET found that the way he had been treated gave rise to a reversal of the burden of proof. This meant it was for the school to prove that Mr Gordon’s actions had not been discriminatory. There was no reasonable and non-discriminatory explanation for Mr Gordon’s behaviour. Therefore, the ET found that Mr Aplin had been subject to sexual orientation discrimination. The school appealed and the EAT upheld the ET’s decision.

The Freeths’ View:

We learn from this case that unconscious bias will arise from unreasonable behaviour in a discrimination case where there is no explanation for this behaviour that is not discriminatory. It is important to note that this does not mean that the claimants have to prove the unreasonable behaviour was discriminatory, but rather that there is no reasonable and non-discriminatory explanation for the behaviour. In the above case there was no such reasonable explanation.

There are several key points for employers to take from this:

  1. Employers should always provide evidence in full to the person being investigated;
  2. The role of the investigating officer should have clear boundaries – and these should be monitored and adhered to;
  3. Employers must be sensitive to any potential personal bias of investigating and disciplinary officers and are liable to guard any employee disciplined from any such bias.

 

Discretionary bonuses can be varied so that the employee becomes entitled to that bonus

Employment contracts containing a discretionary bonus can be varied to create a bonus to which the employee is contractually entitled, according to the recent case of Bluestones Medical Recruitment Ltd v Swinnerton. However, a claim of deduction from wages under the Employment Rights Act (the “Act”) can only be made on this basis if there is clear evidence of the variation.

Mr Swinnerton worked in several junior roles, for which his contract of employment provided a discretionary bonus, to be made only at the inclination of the company. Mr Swinnerton was then promoted to General Manager, a position where it was intended he would be paid a guaranteed monthly bonus based on the company’s profits – it was expected that Mr Swinnerton would become a shareholder and this bonus would be provided to him in the form of dividends.

However, before Mr Swinnerton could become a shareholder he was suspended, then dismissed. During his suspension the company stopped paying his bonus. At first instance the Tribunal concluded this was an unlawful deduction of wages, based on the evidence – including emails, confirming that Mr Swinnerton was guaranteed to receive a monthly bonus based on the company’s profits. The company appealed and sought to argue that the bonus payments were to be loans in the absence of dividends, to be paid back once Mr Swinnerton became a shareholder and could lawfully receive those dividends.

The EAT concluded there wasn’t any doubt that a variation could occur as a matter of law, however in this instance it was unclear whether or not the bonus payments following Mr Swinnerton’s suspension were payments – which would be recoverable under the Act – or loans – which would not. The Employment Appeal Tribunal therefore referred the matter back to the Tribunal to decide this positon based on the facts.

The Freeths View:

This case demonstrates the importance of clarity when changing employees’ job roles. It is important to make any variations to an employment contract clearly and in writing. Best practice in this instance would be to have employees sign new employment contracts upon commencing a new role – particularly where the role, pay or benefits substantially differ to the employee’s previous role.

 

National Minimum Wage and on call working

There has been a further clarification of when national minimum wage (“NMW”) should be paid to workers in the recent case of Frudd v Partington Group. Employees can claim the NMW whilst doing “time work” (e.g. work for which they are paid per hour). However, in this case when employees are merely on call and only available to work (and are paid for the time they are called into work) they were not entitled to the NMW.

The claimants in this case were receptionists/wardens on a caravan site. They were expected to be on call after their shifts – which finished between 4.30pm and 8pm depending on the season. After their shifts had finished, but up until 10pm at night, the claimants would show round perspective customers, welcome late arrivals and undertake security checks. Following this they would be on call and only called out for emergencies – for which they were paid. The Claimants brought a claim to the Employment Tribunal (“ET”), claiming they should be paid the NMW whilst on call.

At first instance the ET found that up until 10pm, when the Claimants were still undertaking regular duties, they were working on “time work” and should be paid NMW. However, after 10pm the Claimants were merely “available for work” and when they did undertake work between 10pm and 8am this was compensated. The ET confirmed that the recent Mencap case did not apply as the claimants were not sleeping in but returning to their own home.

The Mencap case considered “sleep in workers” and whether or not workers who sleep at their places of work and are on call for emergencies are entitled to NMW or are merely “available for work.” The Court of Appeal concluded that sleep in workers are merely “available for work” and not entitled to the NMW. However, leave for appeal to the Supreme Court has been granted so we await this decision for further clarity.

Returning to Frudd v Partington Group, on appeal the Employment Appeal Tribunal upheld the ET’s original decision (above), merely referring the issue of work between 7am-8am back to the ET to be assessed on the facts.

The Freeths View:

This case is a reminder of the complexity of the NME provisions.  Cases do turn on their facts and, as is evident from the Mencap litigation, certainty is hard to achieve.


The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.

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