limits to the extent of protection of confidential information

There are many cases concerning the alleged infringement of employers’ proprietary information, particularly following the termination of an employee’s employment. The classic counterpoint is between the protection of confidential information to which an employee has had access in the course of employment and need to avoid interference in commerce by restraint of trade unless protection is clearly required.
The case of Vestergaard Frandsen A/S and others v Bestnet Europe Ltd and others is significant because it is a decision of the Supreme Court and reveals what might an emerging trend that the balance may be tipping back towards former employees after years of findings very largely in favour of employers.
Vestergaard is a Danish company engaged in the manufacture of insecticidal mosquito nets. It sought to protect its trade secrets against Bestnet, a company set up by two of its former employees and a third party who had also worked for them on a self-employed basis. The three were Mrs Sig, who had worked for them in sales, a chemical engineer, and a biologist, Dr Skovgard, who had been involved in developing the crucial techniques. Mrs Sig was required, pursuant to her contract of employment to:
keep absolutely confidential all information relating to the employment and any knowledge gained in the course of the employment and which inherently should not be disclosed to any third party. The absolute duty of confidentiality also applies after [Mrs Sig] has terminated the employment…
Mr Larsen (the chemical engineer) was subject to contractual terms that prevented him from competing with Vestergaard for 12 months following the termination of his employment and to respect the confidentiality of Vestergaard’s trade secrets. Dr Skovmand (the consultant biologist) had no formal service contract.
In 2004 Mr Larsen and Mrs Sig set up a new business – Intection – in competition with Vestergaard. Mrs Sig and Mr Larsen both resigned from Vestergaard and Dr Skovlund agreed to work with them. They looked for manufacturers of their ‘new’ product, Netprotect, and told prospective manufacturers that any agreement would include confidentiality clauses. Vestergaard brought proceedings in Denmark alleging breach of trade secrets and the day before the hearing Mrs Sig resigned as a director of Intection, which then ceased trading. However Mr Larsen and Mrs Sig moved the business to England through a new company, Bestnet Europe Limited, according to the judge “with the express intention of trying to avoid the consequences of the Danish litigation”. Mrs Sig and Mr Larsen provided their services to Bestnet through a limited company, 3T Europe Limited and Dr Skovmand worked directly for the company.
Unsurprisingly in 2007 Vestergaard commenced proceedings based in misuse of their confidential information.


snooping on employees

If you are an urban dweller in the UK, according to research carried out for The Times, you should expect to be photographed as many as 300 times a day. Combine that with the numerous profiles maintained by advertisers and others based on your internet browsing behaviour and goodness knows what information held by the NSA and it is reasonable to assume that what limited rights to privacy used to be enjoyed have eroded almost out of existence.
However, the right to private life is enshrined in the European Convention on Human Rights (ECHR) and applies equally to employment law claims as it does in other areas of law. The case of City And County Of Swansea v Gayle led to consideration of how the right to private life sits alongside the right of an employer to supervise its employees. Swansea Council employed an enquiry agent to keep tabs on an employee they suspected of playing squash during his working hours, and dismissed him when presented with evidence that he was to be seen at his local leisure centre instead of at work on Thursday afternoons. He made a number of claims, most of which failed because of his downright dishonesty. However, the Employment Tribunal found that he had been unfairly dismissed, on the basis that his right to privacy had been infringed, but without awarding any actual compensation.
The Employment Tribunal took the view that the employer had taken its investigations too far so that, once unauthorised absence was established, covert surveillance was disproportionate and unjustified. There had been a breach of Article 8 ECHR and the employer had not paid sufficient attention to its obligations under the Data Protection Act.
On appeal to the Employment Appeal Tribunal EAT President Langstaff disagreed with the Employment Tribunal on just about every point made concerning the finding of unfair dismissal:


new employment tribunal rules

On Monday 29 July, new employment tribunal rules came into force, and the new tribunal fees regime is now upon us.
The rules have universally been greeted as a model of clarity, which just goes to show what can be done when you get your drafting done by experts who have a deep understanding of both law and practice.
Among the most significant changes:

– Cases are now looked at by an employment judge at an early stage to weed out hopelessly weak claims (and defences);
– There is just one type of preliminary hearing at which tribunals will be able to deal with any kind of prehearing issue;
– Tribunals are allowed to assess costs themselves instead of having to send larger claims to the county court;
– The need to apply for claims to be dismissed when withdrawn by the claimant has been removed;
– Claims will be rejected if the appropriate fee has not been paid (or remission application made); and
– Respondents are allowed to make applications for extra time to respond to a claim after the initial 28 day time limit has expired, and they have an opportunity to present reasons why a default judgment should not be given.

There are new claim forms and response forms and these must be used with effect from 29 July. The online claim form is preceded with a declaration that the claimant is either applying for a fee remission or agrees to pay the fee. In typically confusing fashion claimants are asked to confirm that they will pay the fee even if they are applying for a remission – more haste less speed!


redundancy and “keeping it real”

You might think that Contract Bottling Ltd v Cave is just an example of the phenomenon of "bumping", and is based on somewhat unusual facts which are unlikely to be replicated, but it is noteworthy as an illustration of how not to go about selecting employees for redundancy. When a new owner rescued Contract Bottling from financial dire straits, he set about reducing excessive costs. He hired an outside consultant to do this. It was clear that the office was overstaffed. The decision was made to put all ten office based employees into the same pool for selection from accounts manager to stock controllers via the sales team. The thinking was that they would all be selected according to the same matrix, and if those that remained after that had the wrong skills, well, then they would be retrained. As odd as it was, there was nothing wrong with this decision. However, the tribunal had a lot of compelling criticisms of how the process was approached:

– A redundancy selection matrix already in place and in the staff handbook was abandoned;
– The criteria used were, without exception, subjective;
– The assessment was carried out by someone who knew nothing of the employees;
– The company either could not, or would not, explain how the scoring had been done;
– No meaningful consultation took place; and
– The same person did the initial scoring and dealt with appeals against selection.


making costs orders against the impecunious

In April I reported on the first of two appeals by Ms A A Vaughan, which related to the admissibility of covert recordings in Tribunal proceedings. Following the dismissal of all her claims Ms Vaughan brought a second appeal, this time against a costs order of between £60,000 to £87,000 (depending on how the cost assessments went) against her. Ms Vaughan was successful in her last appeal but not with regard to costs. The order was made after her discrimination and whistleblowing claims were dismissed and she appealed on multiple (and diffuse) grounds, including that:

Her employers had never given her any warning that they would apply for costs, or applied for an order that she pay a deposit to be allowed to carry on with the case;
The employer had made a settlement offer, and had shown bad faith in negotiations;
No proper consideration had been given to the fact she was unrepresented or that she had a disability;
The costs order was punitive rather than compensatory; and
Her lack of means had not properly been considered – she was unemployed and she could not pay anything immediately.

Judgment on the costs issue was reserved and has now been published. All of the grounds put forward by Ms Vaughan failed. Although no one doubted that the she genuinely believed in her case, it was misconceived in the sense it had no reasonable prospect of success. The Employment Appeal Tribunal found that although there was some scope to argue that the tribunal had not expressly dealt with all her arguments in its written reasons, it was undoubtedly right that the claims had no reasonable prospect of success and so the tribunal had a discretion to make a costs order.


Police applicant who forgot her conviction for theft

Rachida Sobhi is employed as a police community support officer (PCSO) with the Metropolitan Police. In 2008 she applied to become a police constable. In the course of her application she had her fingerprints taken and this led to the discovery that she has a conviction for theft from a former employer dating back to 1991. Her application consequently failed and she received a disciplinary reprimand (to remain on her record for five years) for failing to disclose the conviction in connection with both her applications to be a PCSO and a PC.
In 2009 she made a further application to become a PC. Her application was again rejected, this time because of the reprimand on file. The probability is that her previous conviction (now known) would have resulted in her application being unsuccessful in any event.
In 2010 Ms Sobhi brought an employment tribunal claim alleging discrimination on the grounds of sex, sexual orientation, religion or beliefs, age and disability. It is the claim of disability discrimination that was recently considered by the Employment Appeal Tribunal and that has caused something of a furore in the national press. The primary question for the EAT was whether Ms Sobhi was at the relevant time a disabled person. According to the Disability Discrimination Act (subsequently replaced by the Equality Act 2010 but relevant in this case) a disability in respect of which protection is available must constitute “a physical or mental impairment which has a substantial and log-term adverse effect on…ability to carry out normal day-to-day activities”. In this case Ms Sobhi claimed, with supporting medical evidence, to suffer from dissociative amnesia. This was claimed to have caused her to have gaps in her memory of events which occurred in 1991 so that she might not have recalled her conviction.


is there a point at which an employer can say “no more” and dismiss?

The decision of the Employment Appeal Tribunal in Woodhouse v West North West Homes Leeds Ltd addresses the tricky question of whether there comes a point at which an employer can attempt to draw a line whan an employee raises a number of grievances and brings numerous claims.
In his introduction HHJ Hand QC points out that the scale of the task faced by the Leeds Employment Tribunal in this case should not be underestimated, with over 4000 pages of documents and oral evidence from twenty five witnesses. What led to such a great deal of evidence being considered? For once, it was not a plethora of irrelevant statements and other documents files by the lawyers “to be on the safe side”. Mr Woodhouse, in the course of his four years in employment with West North West raised no fewer than ten internal grievances, all alleging race discrimination. He also brought seven employment tribunal claims against his employer
In 2011 the employer decided to suspend and subsequently to dismiss Mr Woodhouse on the basis that, by his actions, he had demonstrated a loss of trust and confidence in the Company, so that there could not be a sustainable employment relationship going forward.
The employment tribunal rejected claims of race discrimination, harassment and victimisation brought by Mr Woodhouse on the grounds that grievances raised were shown to be without substance so that there could be no corresponding victimisation, the rejection of one grievance woujld inevitably lead to another, that the employer was no longer willing to run the risk of having to deal with damaging and time-consuming allegations, that Mr Woodhouse had become obsessed and, significantly, the decisions to suspend and dismiss were not taken on any racial grounds whatsoever.


interpretation of contractual rights

Employment law is underpinned by contract law, the bedrock of the relationship between employer and employee. It is therefore not surprising that in the last few months there have been a number of cases turning on the construction of contractual documents. In Hay & others v Gilgrove Ltd the construction of a 1974 collective agreement was at issue. Whilst the agreement had been terminated, the relevant terms relating to the share of ‘porterage’ (a charge made for the movement of goods at New Covent Garden Market) had been incorporated into the terms of employment of registered porters. They tried to argue that this entitled them to share porterage only between themselves and not with unregistered porters who were now entitled to work in the market. The Court of Appeal held that it was unrealistic to believe that the drafters of the agreement had intended to exclude porters who were legitimately intended to work in the Market and that the terms should be construed accordingly, entitling unregistered porters to share porterage.
The issue in O’Brien v London Borough of Haringey was whether Ms O’Brien’s visit to Gambia, where she contracted a contagious disease, was ‘in the course of the teacher’s employment’. If it was, then she was entitled to full sick pay under the terms of a collective agreement between teaching unions and employers. The circumstances surrounding her trip were unclear and the School argued that as she had not been expressly requested or authorised to go she was not entitled to sick pay. The Employment Appeal Tribunal’s approach was to examine surrounding clauses in the collective agreement. An earlier provision set out a wide range of activities perceived to be ‘in the course of employment’ and the Court saw no reason why the same criteria should not apply here, entitling Ms O’Brien to full sick pay.


Justice and Security Act 2013 and spooks

It is worth noting that the Justice and Security Act 2013 which received Royal Assent on 25 April 2013 will extend the used of closed material procedures (already allowed in employment tribunals) to other civil proceedings, where a party may be required to disclose “sensitive material” and it is in the interests of the ‘fair and effective administration of justice’.
The Act follows a security Green Paper presented by former Justice Minister Kenneth Clarke in 2011. As well as dealing with the extension of the closed material procedures the Act also provides a statutory footing for oversight of MI5, MI6 and GCHQ. It also contains a right for the government to prevent court orders being made for the disclosure of what it considers to be “sensitive information”.
It is a central tenet of our justice system that parties are able to see and challenge an opponent’s evidence as part of advancing one’s own case and
The Crime and Courts Act 2013, which received Royal Assent on the same day, will permit the filming of court proceedings, save that filming may be prohibited in the interests of justice or where it may cause unfair prejudice to a party.
Although not proceeding in an employment tribunal, a case currently in the Southwark Crown Court is providing a fascinating insight into what is alleged to go in within the confines of MI5. A woman under the codename 2363 is the former girlfriend of a spy who was her superior, given the pseudonym Mark Barton. The witnesses are giving evidence behind tall blue screens. He is alleged to have harassed her at work over a period of four months.
However it is alleged that they were watching Andy Murray playing at Wimbledon on an outdoor screen in Sloane Street and he became angry when Murray played badly. He is said to have abused her, saying that she “was nothing” and she was “lucky to be with him”. The prosecution claim that he used MI5’s email system to send her a series of desperate messages, including references to his “top secret work”.


to consult or not to consult…

It has been a busy month in terms of collective consultation disputes, serving to underline how tricky these obligations can sometimes be. First up is the reminder, in Shields Automotive Ltd v (1) Langdon (2) Brolly and AEI Cables Ltd v (1) GMB (2) Unite (3) Individual Claimants, that awards for breaches of the collective consultation obligations are intended to be punitive and not to compensate the employee for any loss or damage suffered. However, in AEI Cables the Employment Appeal Tribunal noted that failure to consult was because the Company would have otherwise unlawfully traded while insolvent yet only reduced the protective award from 90 days to 60 days. Given that the employer was between a rock and a hard place, this might be viewed as rather harshly ‘punitive’; although the Court did note that the employer could and should have ensured that at least some consultation took place in the limited time available. In Shields (an award for breach of the TUPE collective consultation duties) the ‘technical’ breaches included the scheduling of a meeting to vote in employee representatives at a time when an employee could not attend, and the unilateral selection of one employee representative over another where there was a tied vote.