Employment Review - January 2018


Welcome to the January edition of Freeths Employment Review.

This month we report on a recent case on "qualifying disclosures" for whistleblowing purposes, an interesting case where an employer gave an employee a false reason for dismissal, useful further guidance from the EAT on protected conversations and a case concerning an employer's liability for a rogue employee's disclosure of personal data. We also look at the latest developments in the line of gig economy cases on worker status.

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Whistleblowing: Public Interest Test

In Parsons v Airplus International Ltd, the EAT considered which disclosures are "qualifying disclosures" for whistleblowing purposes.

Ms Parsons (P) was employed as a Legal and Compliance Officer by Airplus International Ltd. Despite being a qualified, non-practising barrister, P had no compliance qualifications or experience. She raised concerns to her employer about her own personal liability if her employer was found to be in breach of its legal obligations.

She was dismissed following complaints by her colleagues about her rude and disrespectful manner, and concerns by the employer's management team that she alleged non-compliance on the company's part without fully informing herself of the facts and/or law. P subsequently brought a claim for unfair dismissal for having made protected disclosures.

The EAT confirmed that the disclosures made by P were not qualifying disclosures because they had been made solely in P's self-interest and were not a matter of public interest. P only raised the concerns because she was worried about her own personal liability. Further, whilst the tribunal had been right to state that a disclosure made in the claimant's self-interest could also be a matter of public interest, based on the current set of facts that was not the case here.

Confirming the decision in Chesterton v Nurmohamed (previous update accessible here), this case highlights that whilst disclosures made in a worker's own self-interest will not preclude them from also being in the public interest, disclosures made purely in self-interest will not be protected under the whistleblowing provisions.If the dismissal of a whistle-blower is for a reason unconnected with a disclosure, the employer should ensure that its decision, and the reasons for the dismissal, are properly documented in order to defend any future claims that the dismissal was due to a protected disclosure.

False reason for dismissal was a breach of trust and confidence

It is often tempting for an employee to seek to soften the blow when dismissing an employee by giving them a reason for their dismissal that appears more palatable than the true reason. This is particularly common in cases where there are performance concerns.

The recent case of Rawlinson v Brightside Group Ltd has highlighted one of the dangers of this practice. In Rawlinson the EAT held that an employee who resigned during his notice period when told that he was being dismissed due to a reorganisation, when in fact the real reason was his performance, had been constructively wrongfully dismissed. Mr Rawlinson was therefore entitled to damages relating to the notice period he had not worked.The EAT concluded that the employer's motive for misleading Mr Rawlinson as to the reason for his dismissal was with a view to keeping the relationship alive for the notice period and this deception amounted to a breach of the implied term of trust and confidence. The EAT held that Mr Rawlinson, despite not being aware at the deception at the time he resigned, was able to point to his employer's breach of trust and confidence to justify his refusal to perform the employment contract regardless of the reason why he had resigned.

Whilst this case related to a claim for notice pay, employers who give false reasons for a dismissal could also get into difficulty in the event of a claim for discrimination. By providing a false reason at the point of dismissal, an employer may struggle to convince an employment tribunal of the true reason for dismissal if the reason relied on at the tribunal is inconsistent with the reason given to the employee at the time. This could potentially open the door for a tribunal to conclude that there was an underlying discriminatory reason for the dismissal.

Pre-termination negotiations admissible to determine effective date of termination

The EAT has held in Basra v BJSS Ltd that an employment tribunal had made an error when excluding evidence of pre-termination negotiations under s.111A of the Employment Rights Act 1996 when determining the effective date of termination ("EDT"). The EAT stated that the exclusion of evidence under s.111A only applies to negotiations that take place before the EDT and therefore the exclusion cannot be invoked for the purposes of determining an unfair dismissal claim until the EDT has been determined.

BJSS raised concerns with Mr Basra regarding his performance at a meeting on 29 February 2016 following complaints from customers and suggested he could resign. BJSS Ltd then sent two letters on 1 March. One letter invited Mr Basra to a disciplinary hearing and the other, which was marked as being "without prejudice and subject to contract", offered three months' net salary in return for Mr Basra's employment ending immediately and him accepting and signing a settlement agreement by 7 March 2016. Mr Basra responded by email on 3 March disputing BJSS's version of events but going on to state "I accept bjss's 3 month notice offer subject to contract and without prejudice; today will be the last day at bjss." Mr Basra did not ultimately sign a settlement agreement after instructing solicitors who informed BJSS that Mr Basra had been signed off with stress and would not attend the disciplinary hearing. BJSS replied by letter on 15 March stating that Mr Basra's employment had terminated by agreement on 3 March. When Mr Basra presented a claim for unfair dismissal both the EDT and manner of his dismissal were in dispute.

The employment tribunal concluded that Mr Basra had not been dismissed and so his unfair dismissal claim failed. The tribunal reached this conclusion by considering Mr Basra's email of 3 March but not BJSS's offer on the basis that the offer was inadmissible under s. 111A as a pre-termination negotiation. The EAT allowed an appeal against this conclusion on the basis that the tribunal was not in a position to say what evidence should be excluded until the EDT is determined. In this case there was a clear dispute and had the EDT been determined to be 15 March then Mr Basra's email of 3 March may also have been excluded.The EAT went on to state that where the EDT is agreed but there is a dispute as to the nature of termination (e.g. was the claimant dismissed or did they resign) then evidence of pre-termination negotiations can be excluded. Therefore, where an employee claims constructive dismissal following settlement negotiations, the employee will not be able to rely on matters arising during negotiations unless there has been improper behaviour by the employer during the negotiations.

Data Protection: Employer vicariously liable for employee's disclosure of personal data

In Various Claimants v Wm Morrisons Supermarket Plc, the High Court considered whether an employer could be directly or vicariously liable for the criminal actions of a rogue employee who disclosed his co-workers' personal information on the internet.In early 2014, a rogue employee at Morrisons leaked the payroll data of almost 100,000 employees on a file sharing website and to a number of newspapers, including names, addresses, national insurance numbers, bank account details and salaries. Subsequently, over 5,500 employees whose data had been disclosed brought claims for compensation.

Whilst the employee, a senior IT auditor at Morrisons, was found guilty of criminal offences and given an 8 year prison sentence, the court had to decide whether the employer could be held directly or vicariously liable for the losses arising out of the data breach under the DPA and/ or in tort for misuse of private information.

The court held that Morrisons was not directly liable for the misuse as it had not breached its obligations under the DPA (save in one respect under Principle 7 which requires data controllers to take appropriate technical and organisational measures against unauthorised or unlawful processing of personal data, and against accidental loss, destruction of or damage to personal data, however, in this case, the breach did not cause any loss) and it had not otherwise misused the payroll data or acted in breach of confidence.

It was therefore not the employer who had caused the breach, nor did it authorise it or permit it by carelessness. The employee had been given access to the data as part of his role and had published it without authority from his home, on his personal computer and outside of working hours.

However, even though the court agreed that the employee's actions were solely designed to damage his employer's interests, the court decided that Morrisons was nonetheless vicariously liable for the misuse on the basis that the employee was ‘acting in the course of his employment' when he criminally disclosed the data online.

Employers can therefore be vicariously liable for an employee's misuse of personal data, even if they have done everything possible to prevent it and are not legally at fault.

The court also highlighted that an employer could be directly liable for a data breach if they failed to comply with Principle 7 of the DPA (detailed above) and the breach directly caused or contributed to the data breach. Employers must therefore ensure that they have the requisite control mechanisms in place and that these are applied appropriately.

As mentioned in our November and December bulletins, in response to rapid technological developments and growth in the collection and sharing of personal data, the General Data Protection Regulation (GDPR) comes into force in May this year. The GDPR will have a significant impact on employers as it introduces new and varied concepts to strengthen the existing data protection core principles, and far greater sanctions for data protection breaches.

Employers should therefore ensure that they have policies in place that clearly set out the Data Protection principles. In addition to ensuring that both the employer and employee understand the obligations placed on them by the GDPR, clear policies could also act as a deterrent to employees, by highlighting that a failure to comply could not only amount to gross misconduct resulting in summary dismissal from their employment, but they could also face further personal liability.

The High Court granted Morrisons leave to appeal against the finding of vicarious liability and we will therefore have to wait and see whether the judgment will be upheld.

Gig Economy: CAC panel decides to reject trade union recognition for Deliveroo riders

The Central Arbitration Committee (CAC), on receipt of an application for trade union recognition made by the Independent Workers' Union of Great Britain (IWGB), has decided that Deliveroo's riders are self-employed contractors, not workers.

The IWGB made a request to Deliveroo to recognise them for collective bargaining purposes. Deliveroo rejected the request on a number of grounds, including that the riders were not workers and were self-employed.In considering the application for statutory trade union recognition made by the IWGB, the CAC had to consider whether riders engaged by Deliveroo were workers. If not, then the application could not be accepted.Notably, Deliveroo had introduced a "new contract" in May 2017 which introduced a right to substitute. This allowed riders to nominate another courier to perform deliveries in their place, should they be unable to.Riders did not need to obtain Deliveroo's prior approval and the only limitation was that the substitute could not be a former Deliveroo driver whose supplier agreement had been terminated for serious breach of contract or, whilst acting as the driver's substitute, they had engaged in conduct which would have provided grounds for termination if they had been directly engaged by Deliveroo.

In its decision, the CAC decided that riders were not workers on the basis that, whilst the right of substitution was rarely exercised, the right had nonetheless been exercised occasionally and was therefore held to be a genuine and unfettered right. This meant that there was no requirement to perform the work personally and the worker test had not been satisfied.Whilst the CAC's decision does not change the legal position, and may not impact other gig economy cases (such as Uber) where a right of substitution is not given, it has shown the importance of assessing whether there is a right of substitution when assessing worker status.

However, the recent Taylor Review on Working Practices recommended, amongst other things, that the Government should clarify the statutory definition of worker, including express reference to substitution clauses. It suggested that whilst such a clause would not necessarily prevent an individual from being a worker, the tribunal could consider whether it is capable of being freely exercised in practice.

The Review also suggested replacing the existing worker status with a new status of "dependant contractor", with a different threshold test which places much greater weight on the principle of control, than on the requirement for personal service.


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