Compensation for post-termination losses, even though lawfully expelled from partnership

The status of professional partners in the context of employment law has exercised the courts on many occasions. Are they employees, workers, or employers or, in some cases, none of the above. Is there a difference between self-employed salaried partners and employed salaried partners? From an employment perspective, probably not. Of course, the employment rights available vary from none to most, depending on which type of employment status (if any) applies.

The same issue arises in the case of members of an LLP (or limited liability partnership), who are often referred to as partners. One such member was a solicitor who worked for Wilsons Solicitors LLP and whose claim was recently considered by the Court of Appeal.

Mr Wilson became a member of the LLP in May 2008. He held the post of managing partner, as well as being the firm’s COLP (Compliance Officer for Legal Practice) and COFA (Compliance Officer for Finance and Administration).

In July 2014 the board of the LLP received a complaint of bullying made against the senior partner, Mr Nisbet. Mr Wilson investigated the complaint, reported his findings to the board and produced a report on 7 October 2014. On 21 October the board was supposed to meet to discuss the report. However, a majority of the members refused to attend the meeting. Instead, the following month, they demanded that Mr Wilson should resign. They then voted to remove him from his post. They also removed him from the posts of COLP and COFA before he was able to submit his report.

In January 2015 Mr Wilson wrote to the other members and claimed that they had repudiated the terms of the members’ agreement by their actions and he accepted the repudiatory breaches. He gave one month’s notice of his intention to leave the membership of the LLP on the basis that their actions had made continued membership intolerable.

Team poaching and springboard injunctions

Springboard injunctions are often granted in circumstances in which senior or key sales employees leave to work for a competitor. The name derives from the case of Bullivant v Ellis (1987) in which Mr Justice Falconer stated that the purpose of the injunction was “to prevent the defendants from taking unfair advantage of the springboard which…they must have built up by their misuse of the information in the card index”.

Most such injunctions are sought with a view to preventing misuse of confidential information (such as customer connections and contacts), serious breaches of contract or other unlawful conduct. Unsurprisingly, in the vast majority of cases the application for an injunction will be based on alleged breaches of post-termination covenants, such as those which are stipulated by non-compete and similar clauses.

However, there are limited instances in which an injunction may be obtained, even in the event that there are no such contractual provisions. In Willis v Jardine Lloyd Thompson, in a refreshingly brief judgment, the Court of Appeal disagreed with the decision of His Honour Judge Seymour to refuse to grant an interim injunction. He took the view that there was no point in granting an injunction because, in effect, the horse had bolted with the defection of a large number of employees to a competitor.

Willis is a major international insurance broker. It has a highly respected Fine Art, Jewellery and Specie Gifts Division and is the world leader in this sector with sales amounting to tens of millions of dollars each year. In a witness statement made by Willis’ CEO of Market Services, David Thomas, on 13 April 2015 he stated that some 30 employees from the department had left in the last 10 days. 22 left on Maundy Thursday, four left on 9 April, three on 10 April and two on the 13th. Those leaving included almost all the senior management team and key sales staff. Some 30 more junior staff were left. It turned out that they had all left to join a direct competitor, Jardine Lloyd Thompson (JLT). Mr Thomas thought that there would be a second wave of resignations and that this was as part of a coordinated attack. It was suspected that the underlying strategy was to weaken the department by the mass defections, thereby enabling JLT to acquire the whole department at a discounted price. 

Holiday pay doesn’t include voluntary overtime, does it?

I rarely report decisions of the Northern Ireland courts because they are not binding in England and Wales. However, this is the second consecutive month in which a Northern Irish decision is worthy of comment, this time from the Court of Appeal in Patterson v Castlereagh Borough Council.

Mr Patterson, a lead claimant for the purposes of a multiple claim, alleged that there was an unlawful deduction from his wages because he was no longer paid holiday pay relating to casual work as a recreation assistant in addition to his post as an assistant plant engineer. His claim was amended to allege that his holiday pay did not take into account the voluntary overtime he worked in his full time post.

His claim relating to his casual work was successful and this was not challenged. Consequently his appeal was limited to the voluntary overtime aspect. In this case Mr Patterson was asked to work overtime by his employer and could choose whether or not to do so because it was not a contractual obligation. Hence its classification as voluntary. There was a technical point concerning whether Mr Patterson had established the earnings he received pursuant to the voluntary overtime but both parties agreed that the point of principle should be determined.

Assuming that the earnings were established evidence submitted for the appeal suggested that they would have amounted an average additional pay of £60 per week. Having considered the relevant sections of the Working Time Directive the Court went on to consider the relevant case law. In British Airways plc v Williams (2012) the Supreme Court considered whether, for the purposes of calculating holiday pay, a pilot’s remuneration should be treated as basic pay or whether it should be based on “normal remuneration”, i.e. including payments “intrinsically linked” to the performance of the employee’s duties. Having referred the question to the European Court of Justice the answer was that it should be based on normal remuneration.

In Lock v British Gas (2014) that principle was extended to include commission payments and in Bear Scotland Limited and Others (2015) employees were successful in having included in the holiday calculation overtime which they were required to work, but which the employer was not obliged to offer.

dismissal following excessive mileage claims – how much investigation is required?

Rajendra Shrestha worked for Genesis Housing Association Limited as a floating support worker. His job required him to visit clients at their home addresses. In order to reclaim his expenses he was required to complete an online claim form, providing the reading from his car’s odometer (rounded up to the next mile) at the start and end of each qualifying journey.

An audit covering three months in 2011 led to a disciplinary procedure. Mr Shrestha was founded to have fraudulently exaggerated his claims and he was dismissed for gross misconduct. Claims for unfair and wrongful dismissal were dismissed by an employment tribunal in April 2013. An appeal to the Employment Appeal Tribunal was dismissed without a hearing in October 2013 and, undeterred, Mr Shrestha appealed to the Court of Appeal. The appeal hearing took place on 5 February.

In its judgment the Court of Appeal found that in 2011 Mr Shrestha sought payment of an essential car user allowance worth £1000 per year. The allowance was available to those employees who routinely exceeded qualifying mileage of 2500 per financial year. The request raised suspicion because Mr Shestha’s mileage had not previously reached the limit. The resulting audit compared mileages claimed with those shown by AA route finder for the same journeys. The mileages claimed were consistently much higher than the AA figures. As an example the claim for July 2011 was 197 miles whereas the route finder equivalent was 99 miles. Mr Shrestha attributed the discrepancy to difficulty in parking, one way road systems and road works causing closures or diversions.

At his disciplinary hearing Mr Shrestha pointed out that there are differences between AA and RAC figures for the same journey. However both were lower than the amount claimed. It was acknowledged that the employer considered a range of sample journeys rather than each and every one claimed.

yet another TUPE update

To add to the panoply of TUPE cases, we have four useful decisions this month which illustrate the impact of the Regulations. Three out of the four, Enterprise, Pannu and Hunter, all deal with the scope of the rules applying TUPE to service provision changes (SPCs), which, as all our regular readers know, are not a matter of European law, but our very own wonderful invention. The cases consider situations where there is a change in the nature of the activity, the situation where the same services are provided but for a different client, and what amounts to a provision of a service, rather than the supply of goods.

In Enterprise Management Services Ltd v Connect-Up Ltd, the Employment Appeal Tribunal considered the break-up of a contract for the provision of IT support services to Leeds schools. Enterprise provided the services as a preferred supplier, under a contract which left schools free to go elsewhere if they so wished – which some did, to two other providers. At the end of the contract suppliers were invited to tender for a new contract which excluded about 15% of the work covered by the previous arrangement. Those tendering included Connect-Up, who were already providing IT support to some schools. The new contract also allowed schools to choose from a number of suppliers, and over half opted for Connect-Up. Employees dismissed by Enterprise when they lost the contract were found not to have transferred to Connect-up as the major provider of IT services after the new contract came into force for two reasons:

employee references – the potential minefield that is the requirement to be true, accurate and fair

Many employers are wary of giving references, fearing they will end up in a no win situation. They may find themselves at the wrong end of a claim either by a new employer complaining that a reference was misleading, or by a former employee complaining that they have not got a job because the reference given was not true, accurate and fair. They are probably right to be wary – there is no universal obligation to give a reference, but if an employer does choose to give one, it is undoubtedly true that care needs to be taken when writing a reference.
Where an employee leaves during the course of a disciplinary or performance procedure, it would be misleading to prospective employers to fail to mention this, but what of the position where misconduct or a professional failing is discovered after the employee has left?
The Court of Appeal considered this in the case of Jackson v Liverpool City Council, where after a social worker had left his job at the Council, a number of issues were raised by clients which suggested record keeping failings on his part. When he later applied for a further job and a reference was requested, the Council gave a reference indicating that had he not left, he would have been subject to a form of performance management, but that the issue had not been investigated. The reference met the requirements of being both true and accurate – but was it fair?

principles for uplifting compensation and calculating loss of earnings

The general purpose of damages and compensation in civil cases in UK law is (so far as money can do so) to put the winner of a case as nearly as possible in the position he would have been if he had not been wronged. Hence compensation is generally unlimited, although there are, of course, statutory limits in certain cases, such as the cap on the compensatory award that an employment tribunal can order in unfair dismissal cases (currently £68,400).

The Court of Appeal has recently given new guidance on how courts and tribunals should approach two particular issues which can arise in the calculation of compensation in employment cases

the sad case of Baby P and Sharon Shoesmith

Newspaper coverage of the Court of Appeal’s ruling on 27 May in the Sharon Shoesmith case is sensationalist to say the least. The position is misrepresented by headlines such as “Sharon Shoesmith, who was vilified after the death of the toddler Baby P, won her appeal yesterday that she was ‘unfairly and unlawfully’ sacked” (the Independent on 28 May), “‘I’m over the moon’: Baby P scandal boss Sharon Shoesmith set for £1m payout after court rules she was unlawfully dismissed” (the Daily Mail 28 May); or “On Friday, the Court of Appeal ruled she was unfairly sacked, and a leading employment lawyer said she could receive as much as £1 million if the decision is not overturned” (the Guardian on 28 May).

Newsletter – circumventing statutory compensation limits

Mr Edwards was a consultant surgeon working for the Chesterfield NHS Trust. He was dismissed for gross misconduct and subsequently was unable to find employment within the NHS. Rather than claiming unfair dismissal at an employment tribunal, where compensation is limited by statute (currently to an absolute maximum of £76,700), he brought a breach of…