Employment Law Monthly Update July 2017

05/07/2017

We are pleased to provide you with the Herrington Carmichael LLP employment law update for July 2017. 

This is a key note summary of some of the main developments in employment law in the last month.

1. Are Employees Under Duty to Disclose Intention to Compete?

In MPT Group v Peel, the High Court confirmed that an employee’s duty of good faith does not extend to an obligation on employees to disclose their intention to lawfully compete with their employer.

MPT sought an injunction against two former employees, who had set up a business in direct competition with MPT’s business. MPT alleged that they had given false answers to direct questions about their future plans when they resigned. MPT argued that this was a breach of the duty of good faith. However, the High Court disagreed with MPT’s reasoning and stated that the two former employees were not under a duty to disclose their true intentions to MPT. Whilst the law prevents unlawful competition where there are enforceable covenants or contractual clauses, the judge was “reluctant to hold” that a departing employee is under a obligation to explain his own confidential plans to set up in lawful competition.

It is worth highlighting that the decision could have been different had the employees also been directors of the company as they would have owed a fiduciary duty to act in the best interests of their employer” or there had been particular express contractual provisions in place. 

2. AG opinion: workers must be provided with ‘adequate facility’ to take paid leave

In Sash Window Workshop v King, Mr King was a self-employed salesman, earning only commission, for 13 years. During that time he generally took either three or four weeks’ unpaid leave per year. Amongst other claims brought by Mr King, he argued that he was a “worker” and was therefore entitled to paid annual leave. This differs from other recent high profile holiday cases in that Mr King was not granted holiday at all rather than being underpaid for holiday taken.

The Court of Appeal referred various questions to the European Court of Justice (“ECJ”). The Advocate General has given an opinion that employers must provide an ‘adequate facility’ for workers to exercise the right to paid annual leave. Additionally, on termination, workers who have not been provided with an “adequate facility” to exercise the right to paid annual leave would be entitled to payment in lieu of all untaken annual leave, (i.e. in respect of the whole period of employment or up until the date on which an adequate facility was made available). 

If the ECJ follows this opinion this could have substantial consequences for employers. Particularly for the gig economy, where there is limited annual leave entitlements and individuals are increasingly ready to challenge their worker status.

3. Male employee succeeds in direct sex discrimination claim for failure to pay enhanced shared parental pay

In Ali v Capita Customer Management Ltd, an Employment Tribunal considered whether an employer's failure to pay enhanced shared parental pay was sex discrimination.

Mr Ali was employed by Capita Customer Management Ltd (“Capita”). Female employees were entitled to a 14 weeks’ basic pay followed by 25 weeks’ statutory maternity pay.  Whereas male employees were only entitled to 2 weeks’ paid ordinary paternity leave and up to 26 weeks’ paternity leave that “may or may not be paid”. When his daughter was born, Mr Ali wished to take additional paternity leave but Capita told him that he would only be paid Statutory Shared Parental Pay. He raised a grievance, which was rejected. He then issued a claim in the Employment Tribunal for direct and indirect sex discrimination. Mr Ali’s argument was that he should receive the same rights as a female employee taking maternity leave.

The Employment Tribunal only upheld his direct sex discrimination claim as it considered that denying him the full pay amounted to less favourable treatment because of his sex. The Tribunal considered that in this day and age, caring for a baby was no longer reserved to mothers. This case is a useful reminder for employers that when it comes to reviewing maternity or paternity leave policy, employers should be make sure that any enhanced benefits are provided equally.
Please note that this only an Employment Tribunal and is likely that it will be appealed.

4. Territorial jurisdiction for overseas employees working under a contract governed by UK law

In Green v Sig Trading Limited, the Employment Appeals Tribunal (“EAT”) confirmed that when determining whether an employee based abroad has the right to bring a claim for unfair dismissal in the UK, an objective assessment of whether the employee has a strong connection to the UK needs to be determined by the tribunal.

Mr Green had been employed by SIG Trading Ltd in Saudi Arabia under a contract governed by English Law. When he was made redundant, he brought a claim of unfair dismissal in the Employment Tribunal, which declined to hear the claim as it considered it did not have territorial jurisdiction. Mr Green appealed. The EAT held that the Employment Tribunal should have focused on Mr Green’s employer’s location as opposed to only his role or duties. The test applied was an objective one, assessing whether his connection to the UK was stronger than his connection to Saudi Arabia and this included an assessment of all relevant factors. The EAT stated that in essence, there was a binding contract between the parties governed by British Law and that decisions affecting his employment were taken in the UK.

When employing overseas employees, employers should not simply use their standard UK contract. Overseas employees may be able to bring unfair dismissal, discrimination and other statutory employment claims if their employment has a closer connection with Great Britain than the laws of any other country.

For further information or to discuss the issues raised by this update, please contact Herrington Carmichael’s Employment Department on 0118 977 4045 or employment@herrington-carmichael.com



This publication reflects the law at the date of publication and is written as a general guide only - it is not intended to contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.
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