is it possible to extend the time limit for proceedings against a former director?

In IT Human Resources PLC v Land the question for the High Court was whether an employer was out of time for bringing proceedings for infringement of copyright against a former director.

David Land was employed by and was a founding director of IT Human Resources PLC (ITHR). The Company is a recruitment agency, specialising in personnel who provide IT services. Mr Land created some software called Interact. Nationwide Technology Recruitment Limited was another IT staff recruitment agency. Mr Land was not a director of that Company but he did work for it from time to time over a number of years. Nationwide was dissolved in 2011.

ITHR maintained that it owned the copyright in the Interact source code and database schema. Mr Land accepted that ITHR owned the sources code but not the database schema. ITHR claimed that he infringed the copyright by making the software available to Nationwide. Mr Land accepted that he had provided the software to Nationwide, but not on as many occasions as was alleged. He also accepted that, without permission from ITHR, his actions would have been in breach of copyright. However he maintained that he had permission, given orally by ITHR, on all occasions that he provided the software to Nationwide.

Mr Justice Morgan decided that if the database schema were part of the source code then they were owned by ITHR. If not, they were nonetheless part of the Interact system and the relevant agreement provided for the software in the system to be owned by ITHR. Consequently, either way, ITHR owned all the relevant rights.

It was found that Mr Land had provided copyright material to Nationwide on a number of occasions between 2000 and 2002. These acts amounted to copyright infringement. There may have been further infringements from mid-2002 to April or May 2003. the reason for uncertainty is that further functionality was added to the software from mid-2002. In the event Mr Justice Morgan concluded that the infringements continued until April/May 2003. There was a further infringement on 12 December 2006 when a backup of the database was made. He also found that Mr Land knew that it was not in the interests of ITHR to provide Interact to Nationwide.It followed that he was acting in breach of his fiduciary duties as a director of ITHR.

In general the time limit for commencing proceedings for copyright infringement (and most other causes of action) is six years from the accrual of the cause of action.
On that basis all the alleged infringements bar the 2006 backup would be out of time since the claim form in the proceedings was issued on 3 October 2011.


is it discriminatory not to offer a suitable vacancy to a woman selected for redundancy while on maternity leave?

The case of Wainwright v Sefton Borough Council was initially heard by Employment Judge Robinson in the Employment Tribunals in Liverpool in September 2013. His judgment was that Mrs Wainwight’s claims of automatic unfair dismissal, breach of regulation 10 of the Maternity and Paternal Leave Regulations 1999 (right to be offered suitable alternative jobs) and direct sex discrimination all succeeded.

In November 2010 the Authority was planning redundancies (as it is again now). The process continued into 2012/13. Mrs Wainwright had worked for the Authority since 2001, latterly as Head of Overview and Scrutiny. From July 2012 to July 2013 she was off work on her third period of maternity leave. As part of the restructure a new post was created – Democratic Services Manager. This combined Mrs Wainwright’s existing role with the post of Head of Member Services, held by  a Mr Steve Pierce. Both were placed at risk of redundancy and both were interviewed for the new post in December 2012. It was decided that Mr Pierce was the better candidate and he was offered the new job. As a result, in January 2013, Mrs Wainwright was given three months’ notice of redundancy, which took effect on 15 April 2013.

The new post was a suitable alternative vacancy but it appeared that there were no others at the time. The Council maintained that Mrs Wainwright was not entitled to special treatment under Regulation 10 until the decision was taken about who was the best candidate for the Democratic Services Manager role. However the Tribunal took the view that the right to be offered the vacancy arose when the redundancy situation affecting her job became known and was extinguished either when the appointment took effect or when the maternity leave ended. The Tribunal also took the view that the Regulation 10 right was absolute – where there is a suitable vacancy it has to be offered to the employee on maternity leave. Failure to do so made the resulting dismissal automatically unfair and was direct sex discrimination. Judge Robinson’s reasoning was based on him holding that Mrs Wainwright’s job was no longer available when she was put at risk in July 2012.

On appeal, there were two main grounds.

– Breach of Regulation 10 was not direct discrimination. Instead, Regulation requires more favourable treatment whereas there can be no direct discrimination unless there is unfavourable treatment.
– It was an error to conclude that Regulation 10 applied before the interviews for the Democratic Services Manager role.


Mitchell, costs and the trickle down to SMEs

So, Andrew Mitchell’s mission to seek redress for having been falsely accused of using the word “pleb” came to an ignominious conclusion yesterday when Mr Justice Mitting found that his behaviour was “childish” and that he did use the politically charged word. It mattered not that he admitted that his exchange with PC Toby Rowland was littered with expletives, but describing him as a “member of the common people”, derived from the Roman plebeians, was evidently beyond the pale. Foreign commentators have been thoroughly bemused by the entire process and why it has achieved such prominence – “what’s the problem?”.

The political ramifications are for others to deal with elsewhere. Of more relevance here is the costs fall-out. National newspapers have estimated Mitchell’s costs liability in a range from £1.5m to £3m. In fact, it turns out that Mitchell’s solicitors, Slater and Gordon, were representing him on a “no win no fee” basis so they will certainly be sharing a good deal of the pain. In such cases it is usual to insure against the potential liability for your opponent’s costs if you are unsuccessful by taking out an “after the event” policy. If an insurer was prepared to take on the risk in Mitchell’s case it would be reasonable to assume that the premium would have been eye-watering but not as bad as the uninsured outcome.

So what has all this got to do with SMEs? The answer is spiralling legal costs across the board. Although it is not an employment case Mr Justice Edwards-Stuart in the High Court case of Laing Construction v Healthcare Support (Newcastle) and Newcastle Upon Tyne NHS Foundation Trust in a judgment issued on 21 November called into question what he considered to be excessive costs incurred in a procedural hearing concerning interpretation of a document which took place over two days in July. Both the Claimant and Defendants were successful in part. Mr Justice Edwards-Stuart said that “the amount of the parties’ costs of preparing for this hearing were somewhat startling.


Sports Direct backs down (but not out) over zero hours contracts

As I have pointed out in another of this month’s articles there seems to be common consent on the part of politicians that there is a need to crack down on the exploitation of employees through zero hours contracts, particularly when those contracts demand exclusivity.

Sports Direct is one of the highest profile users of zero hours contracts, no doubt because nearly 90% of its staff are employed under them.

Earlier this week details emerged of a claim brought by Zahera Gabriel-Abrahem,  a former Sports Direct worker who was employed on a zero hours contract. She brought a claim on the basis that the terms of the zero hours contracts used by Sports Direct discriminated against part time workers because they were treated less favourably than full time workers.

Back in August 2013 I attempted to establish just what is a zero hours contract since they are not legally defined. While most understand that the main characteristic is that the employer is not obliged to provide a set number of hours’ work or, for that matter, any work, there are often other drawbacks for employees lurking within the contract terms. This is the issue that was highlighted by Ms Gabriel-Abrahem. She had suffered panic attacks brought on by the lack of job and financial security that resulted from the zero hours terms. In doing so she was supported by 5000 members of the campaign group 38 Degrees who assisted with legal costs, while 125,000 people emailed the chief executive and head of retail at Sports Direct, urging them to switch to guaranteed hours contracts.

A month before the employment tribunal claim was due to be heard, Sports Direct has agreed terms for settlement of the claim. Those terms include requirements for Sports Direct to make clear in job adverts, contracts and staff rooms that it does not guarantee work, sick pay or holiday pay. However, Sports Direct have made clear that the settlement has been made without any admission of liability and, significantly, they will carry on using zero hours contracts.

However, that is not the end of the story for Sports Direct.


shared parental leave update

Last May I mentioned that shared parental leave is on its way and now it is almost upon us. Many employers have commented that the arrangements seem to be very complicated so it is timely that both the Government and ACAS have published detailed and helpful guidance.

Shared parental leave is to be introduced from next April in respect of babies due (or due to be adopted) on or after 5 April but notices requesting leave could therefore be served as early as next January. It is therefore important for all employers to understand the scheme now and to make appropriate arrangements to accommodate the new procedures.

Detailed information is available in the ACAS Good Practice Guide. However, in summary, the key features are as follows.

We have new terminology: SPL – Shared Parental Leave, ShPP – Statutory Shared Parental Pay, Continuous Leave –  a period of leave in one block, e.g. four weeks, Discontinuous Leave – a period of leave arranged around when an employee will return to work, e.g. working every other week for three months and SPLIT day – a Shared Parental Leave In Touch Day.

SPL does not arise unless the mother reduces her maternity or adoption leave of 52 weeks. If she does then this opens up the possibility of her and/or her partner opting in to SPL and taking any remaining weeks as SPL. This means that the partner could commence SPL while the mother is still on maternity leave. For example a mother might choose to reduce the maternity leave period by 10 weeks, thereby reducing the overall period to 42 weeks. That means that 10 weeks could be used by the partner as SPL while the mother is still on maternity leave.

In a more extreme example a mother must take at least two weeks as maternity leave following the birth of a child (four weeks for manual work in a factory environment). She might choose to convert all her remaining maternity leave to SPL in which case both she and her partner could take nearly six months each as SPL at the same time. Alternatively the mother might return to work after three months and thereby give the partner nearly nine months’ SPL.

To qualify a mother must have a partner and have curtailed or given notice to reduce her maternity or adoption leave or her pay or allowance (if not eligible for maternity or adoption leave). A parent intending to take SPL must be an employee, share primary responsibility for the child, have properly notified the employer of the entitlement and to have provided the necessary declarations and evidence. In addition he or she must satisfy the continuity of employment test (at least 26 weeks at the end of the 15th week before the child’s due/match date) and the employment and earnings test (in the 66 weeks prior to the due/match date worked for at least 26 weeks and earned an average of £30 per week in any 13 weeks.


bogged down with rules in the search for justice

The civil courts have been beset over the last year or so with numerous technical challenges based on claims that parties have failed to follow the court rules to the letter.

They have resulted from the decision taken by senior judges, particularly the resultingly unpopular Lord Jackson, to clamp down on failure to comply with directions. As with most things in life, rigid adherence to rules without any flexibility or discretion is unlikely to result in uniform fairness, particularly when the rules themselves are far from perfect.

I have already made clear my views about the compulsory ACAS early conciliation procedure introduced earlier this year. We now have the first reported case of a claim being struck out as a result of failure to comply with the procedure, albeit with a rather more sensible and equitable outcome than has been seen in many cases in the civil courts.

Miss Thomas wished to proceed with a whistleblowing claim against her employer, Nationwide Building Society. Her ET1 claim form was presented by her solicitors to the employment tribunal on 8 August 2014. The disclosure, made on 28 March 2014, was that her colleagues had cheated in an assessment required under new mortgage rules with the assistance of one of Nationwide’s managers. The claim was accepted.

In its ET3 (response) Nationwide, as well as defending the claim on the merits, contended that the claim was out of time and that the claim should in any event have been rejected as a result of failure to use the ACAS early conciliation procedure.

Miss Thomas’ solicitors accepted that their client should have used the early conciliation procedure but sought a stay to allow (now not so early) conciliation, effectively to remedy the breach. Subsequently they accepted that the claim had to be rejected as defective. However they contacted ACAS and obtained an early conciliation reference number. When submitting the ET1 her solicitors should have confirmed that the procedure had been followed. Instead they ticked a box declaring that the procedure did not apply because ACAS was not empowered to conciliate on all or part of her claim. That was clearly wrong.

Accordingly Employment Judge Clarke, sitting in Cardiff, confirmed that the claim was rejected on the basis that the ET1 did not comply with the Rules of Procedure.

However Judge Clarke then went on immediately to consider whether the order he had just made rejecting the claim should be revoked. Miss Thomas’ solicitors claimed that since ACAS had been contacted and a reference number obtained the defect had been rectified. On the other hand Nationwide’s solicitor said that post-claim conciliation cannot be early conciliation and if the claim was allowed to proceed then this would drive a coach and horses through the new procedure.

Judge Clarke took the view that if the rejection was revoked then that would cure the “early” conciliation point because it would still be pre-claim. Once the defect was rectified the claim would be treated as being presented on the date of rectification. There would therefore be no need for a fresh claim form since it would, in effect, simply be re-dated.


more bad behaviour – this time in an “exemplary” legal services department

Last month it was bad behaviour in the Met. This month (subject to an appeal) it is very bad behaviour in, of all places, the in-house legal department of a county council.

Essex Legal Services has been put forward as a model of a forward looking legal services department. It is an award winner and has been accredited under the Law Society’s Lexcel scheme since 1999, recognising excellence in the provision of legal services. Its clients include other councils, probation trusts, fire and police authorities, schools and academies.

County solicitor Phillip Thomson has been the high profile figurehead of the department and seen as key to its success. He is the president of Lawyers in Local Government.

However a very different picture has emerged at a recent employment tribunal hearing. Evelyne Jarrett, who is black and was a solicitor and team manager at the Council, was made redundant in 2012. She brought employment tribunal proceedings claiming unfair dismissal and race discrimination. There was a fully contested hearing and a reserved judgment was delivered on 19 September. In the judgment Mr Thomson’s credibility as a witness was called into question.

The findings made by the Tribunal are remarkable, all the more so since they are in respect of a public sector local authority employer.

Mr Thomson did make inappropriate references to Hitler, that good practices could be learnt from his management techniques. This aspect to the allegation is upheld.

Any positive reference in the workplace to Hitler has the potential to be highly offensive to any person of ethnic minority origins because of his responsibility for the murder of millions of such people and for pronouncements of belief in the superiority of people from one race over people from another, or any other.

There was a culture of attributing inappropriate nicknames: starting with Mr Thomson as “Piggy Eyes” (an apparent reference to the way he looks at women), the claimant referred to as “Evil Lyn” and Ms Isaacs as “Miss Tease” which she understandably found very offensive.


what do the main political parties have in mind for employment law?

With the countdown to next May’s general election well under way and the party conference season behind us, now is a good time to look at what (if anything) the main political parties have in their pre-manifestos or policy briefings concerning employment law.

Nothing to see here! Having reduced access to employment protection by reverting to the two years’ qualifying period for protection from unfair dismissal and introducing fees for employment tribunals, the only policy announcements of note concern proposals to curb industrial action and zero hours contracts. The proposals concerning industrial action appear pretty reasonable: (i) the ballot must have been recent (industrial action took place this month based on a ballot in 2011) and (ii) there should be a minimum 50% turnout. It seems to me that these requirements should not be unduly onerous to comply with and will result in industrial action having a greater impact on the basis that there is a genuinely significant mandate and that this has been obtained recently.

I have already covered the proposal to ban exclusivity in zero hours contracts and the Government is currently consulting about how to put in place suitable anti-avoidance measures. There seems to be a consensus that zero hours contracts have been used to conceal poor and exploitative working practices and I’ve written another article this month about Sports Direct and the need for openness.

Unsurprisingly, Labour has focused on inequalities in the workplace, including the need for diversity monitoring, specifically highlighting social background and equal pay for women. Public sector employers may be required to publish information concerning the social background of employees while companies with over 250 employees may be required to publish the average pay of male and female employees, regardless of whether any equal pay issues have been identified in the organisation.

There is also a plan to increase the minimum wage from the current £6.50 and hour to £8 an hour by 2020. As commentators have pointed out, although it’s a good headline, the increase is not in fact much more than would be required to keep in line with predicted inflation.

Labour intends to “do something” about Employment Tribunal fees but precisely what remains unclear. There have been suggestions of a sliding scale according to the wealth of the individual to scrapping fees completely. However there has also been an announcement that there will be wholesale reform of the employment tribunals system so the issue may be academic. What we do know is that Labour is determined that reform will ensure that “affordability is not a barrier to justice”.

There are also plans to increase the number of apprenticeship schemes with the aim that “as many young people will do apprenticeships as go to university”. Finally, in his conference speech, one part that Ed Miliband did remember was an extension of employment rights (or perhaps more accurately quasi-employment rights) to Britain’s five million self-employed. Now that would be a radical development and would undoubtedly keep employment lawyers very busy for years to come.


half of employment tribunal awards are not paid

Research in Scotland has revealed that nearly half of employment tribunal awards are not paid, while a further 13% of successful claimants receive only part of their award. This follows research carried out across the UK last year which showed that only 49% of successful claimants received payment in full, 16% received part payments with 36% receiving nothing at all. It seems that the situation in Scotland is worse because the methods available for enforcement of tribunal awards are unwieldy and not widely known.

According to a report in the Scottish Herald examples include a Sikh garage worker, Paramjit Singh, who was racially abused by his Muslim bosses. They called him a “lazy low-caste Sikh” and, with reference to his white British wife questioned how he “could stay with a white woman. They’re not clean and they don’t know how to live”. He was also forced to carry out demeaning work repeatedly. He was awarded over £18,000 but has recovered nothing. In August 2014 the Respondent, P K Imperial Retail Limited, made an application to Companies House to be struck off and a director resigned. The reality is that the prospects of Mr Singh recovering anything are negligible.

Recently, the Government decided against tightening the existing regime concerning the liquidation and/or administration of companies and the formation of new companies which often carry on the same business with the same owners from the same premises, but without any of the former liabilities, including tribunal awards. The rationale for this is that the “enterprise culture” should not be suppressed so that people who have lost their businesses through no fault of their own should not be deterred from starting over. I think that many would say that not paying tribunal awards is an unlikely indicator of a no-fault business failure.

In response the UK government has suggested giving powers to employment judges to require businesses deemed to be possible non-payers to be required to pay a deposit. Deeming a business a possible non-payer is a big call for an employment judge to make and one that is likely to prompt at least indignation from the business owners. What evidence would be relied on and what tests would be applied?