Personal liability of company directors

The conventional view of the liability of a limited company is that any corporate losses will not exceed the amount invested in it, i.e. as represented but limited to the value of its shares. In other words, shareholders’ personal assets are not at risk if the company fails. The company is a separate legal entity so it carries its own losses.

However, company directors (who are often also shareholders) owe a duty of care to the company, its shareholders, employees and creditors. As a result, a director can become liable for his or her own PAYE and NI payments, for income tax due on any cash taken from the company, any personal guarantees and/or indemnities provided to company creditors, and any liabilities resulting from wrongful trading (trading when the company was insolvent and had no prospect of avoiding liquidation), misfeasance (e.g. acquiring a company asset for less than it was worth) and fraudulent trading (e.g. fraudulently obtaining credit in the company’s name).

In last November’s newsletter I reported a case in which company directors were held to be liable for a £2m award in a whistleblowing case. This is because in such cases, as with discrimination claims, individuals can be named as co-respondents along with the limited company.

We now have another example of how directors can be held liable in respect of the actions of a company in the High Court case of Antuzis & others v DJ Houghton Catching Services & others.

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Can a long-term sickness employee become practically unsackable?

The Employment Appeal Tribunal (EAT) have recently held an employee to hold ‘an implied right not to be dismissed’ when on long-term sick leave.

Naturally, this has caused many employees great concern
because long-term sickness absence, in itself, is usually fair reason to
consider dismissal.  Whilst there can be
various factors at play, including any potential disability of the employee,
the principle of an individual having to be present at work to fulfil their job
role (and employment) remains.

So what happened in the recent case of ICTS (UK) Limited v Mr A Visram to cause such concern?

Well, let’s set the scene briefly, Mr Visram was
contractually entitled to sickness benefit payments (termed ‘Long Term
Disability Benefits’) during any period of continuous sickness absence from
employment whilst he remained an employee. 
But, for various reasons, the insurer and employer didn’t wish to pay
them and, in doing so, Mr Visram was dismissed on grounds of sickness absence
and so ended his entitlement to contractual Long Term Disability Benefits payments
by the insurer (as the policy required his continued employment).

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More sexual harassment claims in law firms

While many firms are very forward looking, it is apparent that the old “Mad Men” culture is hanging on in several locations, not least in law firms, even if in isolated pockets.

A couple of weeks ago, Lloyds of London announced a zero-tolerance approach to sexual harassment after it had been called “a meat market” and “institutionally sexist”. In response to recent allegations of harassment, Lloyds has announced that it will impose lifetime bans on anyone found guilty of “inappropriate behaviour”, as well as banning daytime drinking, again with a complete ban from the market for those who breach the rules.

Judging by recent reports, it seems that several law firms could benefit from considering what steps should be taken to contain the actions of their owners and employees

In Harrison v Riaa Barker Gillette LLP, a case heard over 11 days in late 2017 and early 2018 but in respect of which the judgment wasn’t published until late March 2019, the employment tribunal was asked to consider complaints sex discrimination, victimisation and harassment brought by Ms Harrison, formerly a partner and head of employment with the Respondent, a commercial and private client law firm based in the West End.

Ms Harrison joined the firm in December 2012 and was at the time the only female partner. She described ” a male dominated environment where inappropriate sexist and sometimes racist behaviour was tolerated, and on occasions laughed at”, with partners engaging in puerile banter.

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Government consultation on confidentiality clauses

On 4 March the Government published its consultation on “measures to prevent [the] misuse [of confidentiality clauses] in situations of workplace harassment or discrimination.

The consultation is widely regarded as being a direct response to the stories published late last year concerning the use of such clauses by Sir Philip Green’s companies, as highlighted in The Daily Telegraph once he was named in Parliament and the injunction against the paper was subsequently lifted. Just this week, The Sun has published a very concerning video of Sir Philip appearing to behave in a very familiar manner (choosing my words carefully!) with a member of staff who seems to be none too pleased with his attention.

The executive summary confirms the Government’s commitment to upholding and upgrading workers’ rights. Whether you accept that commitment will more than likely depend on your political view. However, the summary makes clear that “harassment or discrimination of any sort cannot be tolerated in the workplace”. It is acknowledged that confidentiality clauses have a “right and proper place” in the context of employment law, both in terms of employment contracts and settlement agreements. Existing limitations are noted, including the bar on preventing protected disclosures (i.e. whistleblowing) and the requirement for independent advice in connection with settlement agreements.

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White, heterosexual, male candidate discriminated against, when applying to Cheshire Police

Equality and diversity issues are very much to the fore in modern life. Routine behaviour which would have been acceptable just a few years ago, e.g. “characterised as banter”, is now out of the question, and there is a far greater awareness of equality and diversity in all aspects of life, not just in the workplace.

Last December I highlighted an example of a situation in which ostensibly laudable diversity objectives were taken too far and it now appears that Cheshire Police has fallen into the same trap, this time in the context of recruitment procedures.

Matthew Furlong was keen to join the police force, following in the steps of his father, a detective inspector. In 2017 he applied to join Cheshire Police. At his interview he says that he was told that “it was refreshing to meet someone as well prepared as yourself” and that he “could not have done much more”. He duly passed the interview and assessment stage.

As observed in the Tribunal judgment, Mr Furlong is a white heterosexual male without a disability. In November 2017, notwithstanding his successful interview and assessment, he was told that his application had been unsuccessful. Cheshire Police claimed that they had applied positive action measures pursuant to section 159 of the Equality Act 2010. Mr Furlong maintained that Cheshire Police treated successful candidates with protected characteristics more favourably than he was treated, but unlawfully because they were not as well qualified as he was and because there was a policy of treating persons with protected characteristics more favourably in connection with recruitment than others who did not have such characteristics. The result, he contended, was that this approach was not a proportionate means of achieving a legitimate aim.

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The phenomenon of the ‘work nemesis’

Some people have one, some don’t. No, it’s not a riddle for a shadow, it’s a phenomenon known as the ‘work nemesis‘.

Some people reading this blog will know exactly what I’m on
about and some won’t have the first idea. 
That’s fairly usual, as the existence of this phenomenon largely depends
on where you work and who you work with. 
Just to clarify, however, a ‘work nemesis’ is an individual who you
simply can’t gel with (or, to just more direct terminology, a people who you
can’t stand and/or dislike and/or are insanely competitive with).

You know in life sometimes you meet someone and, however
hard you try, you just can’t find a way to like them or enjoy spending time
with them?  That’s what we’re on about
here.  It’s the person who blanks you in
the kitchen but immediately strikes up a glowing conversation with the next
person who walks in, the person who (in your eyes) sends horrifically rude
emails or the person who, out of nowhere, takes sole credit for your idea in a
meeting.

Why is this relevant?  Well, naturally, taken too far, relationships between two warring individuals can affect their performance and that of the surrounding team.  So let’s explore a hypothetical scenario and see how it plays out in terms of employment law.

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Was Maurizio Sarri smoked like a Kepa during the League Cup Final? – Refusing to obey reasonable management instructions

First, a confession. I’m a big football fan and regularly post legal blogs trying to link football to employment law. Sometimes there is an obvious link (i.e. a football manager being sacked) and sometimes the link is more tenuous (i.e. a previous blog many moons ago in which I tried to link a Luis Suarez blog to an employment law situation!)

However, during the recent League Cup Final (yes, I refuse to refer
to the tournament by the sponsor’s name), there was a golden employment-related
opportunity.  Yes, naturally, I’m talking
about Kepa Arrizabalaga’s refusal to accept his substitution from the game in
the 119th minute. 

In fact, the opportunity was perhaps so obvious that I
woke up on Monday morning to a LinkedIn post wondering how long it would be
until I posted a blog on the topic.  So
here it is.

In fact, the opportunity was perhaps so obvious that I
woke up on Monday morning to a LinkedIn post wondering how long it would be
until I posted a blog on the topic.  So
here it is.

Rather than my usual method of substituting the real-life
situation for a fictional one (i.e. in the Luis Suarez example above, I created
a fictional employee in a factory who bit a colleague), I’ll explore the actual
situation at Chelsea and their options.

Kepa Arrizabalaga (who I’ll call “Kepa” for the rest of
the blog) no doubt has a contract at the club to represent the club to his full
ability.  This would involve training,
keeping fit, playing games he is picked for and, as per all employees,
the implied duty of ‘obeying reasonable management instructions’.  Naturally, it doesn’t take a law degree to
conclude that Kepa’s refusal to obey his manager’s decision to be substituted
from a Cup Final is a likely failure of his Contract of Employment with the
club, both in terms of a complete, literal failure to obey reasonable
management instructions from his Manager and, also, bringing the club into
disrepute and/or failing to represent the club in good faith.

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Religious discrimination in faith schools

“Living in sin” – it was a phrase frequently heard not that many years ago but now, in a mark of changing times, is seldom if ever heard. However, the phrase, in its literal sense, has resurfaced in what some might consider to be a remarkable decision of the Employment Appeal Tribunal (EAT) in the case of Gan Menachem Hendon Limited v Ms Zelda de Groen.

Ms de Groen worked from 2012 to 2016 at the Gan Menachem Hendon nursery as a teacher. The nursery is linked with the ultra orthodox Chabad Lubavitch Hasidic movement. When attending a barbecue with her boyfriend, he revealed, in the presence of parents of children who attended the nursery and one of the nursery’s directors, that he and Ms de Groen were cohabiting. There followed a meeting between Ms de Groen, the headteacher Miriam Lieberman and the nursery’s managing director, Dina Toron. In the course of the meeting Ms de Groen was told that her private life was of no concern to the nursery. However, she was asked to confirm that she was no longer living with her boyfriend so that “concerned parents” could be notified accordingly. In other words she was asked to lie and refused to do so.

As if that was not enough Ms Lieberman and Ms Toron told Ms de Groen that cohabitation outside marriage was wrong, that having children outside of marriage was wrong and that, at the age of 23, Ms de Groen should be aware that “time was passing” for her to have children. They also suggested that if Ms de Groen had problems with the idea of marriage, she should seek counselling. Ms de Groen was very tearful and distressed. She felt that such a meeting should not have taken place and only continued in her employment because she loved working with the children. Two days later she asked for a written apology and confirmation that it would not happen again. She said that she had taken legal advice. Mrs Toron and Mrs Lieberman said that she was being threatening and aggressive at the meeting (the Tribunal found that she was not, but she was clear and firm). They did not apologise. Instead, they said that they should not have been so nice to her and that they had sufficient “ammunition” to deal with any claim that she might bring. They then cut the meeting short.

The following day Ms de Groen received a letter notifying her of the commencement of disciplinary proceedings.

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88 Year old’s Employment Tribunal Success

You are never old to have fun, to learn a new skill or to see new places, and Mrs Eileen Jolly has shown that one of those new places could be the inside of an Employment Tribunal after she demonstrated this month that you are never too old to bring a successful age discrimination claim against your employer.

Mrs Jolly, born in 1930 was employed in 1991 by the East Berkshire college of Nursing and Midwifery, which later become Royal Berkshire NHS Foundation Trust. Now, aged 88 she has successfully brought a claim against her employer for unfair dismissal as well as discrimination on the grounds of age and disability; and breach of contract.

Mrs Jolly was held to be disabled within the meaning of s.6 Equality Act 2010 by reason of her heart condition and arthritis. Despite this, Mrs Jolly had not taken a day off work in the past ten years, and even returned after suffering a cardiac arrest at work in 2004, where she was resuscitated by a surgeon.

Mrs Jolly’s complaints stem from her dismissal in January 2017, which the Trust maintains had nothing to do with her age, and rather was based solely on the grounds of culpability for her failure to adequately maintain a database of patients awaiting reconstructive surgery.

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Handling loss of ‘the fear’ within employment (whilst celebrating National Love Your Pet Day)

This is one of those blog posts with unusual beginnings and which, albeit hopefully in a good way, may be read differently by different people. In a nice roundabout way, albeit slightly coincidentally, we’re also celebrating today being ‘Love Your Pet Day’ through the dog-related theme!

Let’s just clarify what ‘the fear’ is before continuing.  Basically, ‘the fear’ is a largely 1990s-based phenomenon centring round a particular episode of FRIENDS in which Rachel loses the desire to continue in their current job but, without her acting to resign, lacks the determination to make
the decision to get another job.  In this way, ‘the fear’ is similar to the fear of failure that drives you to revise hard for exams or the fear of not being fit enough for a half-marathon which pushes you to go for a run even when you don’t feel like it and, obviously, losing ‘the fear’ to apply full efforts within a job can make a noticeable difference.

Now, naturally, all jobs and employers are different. You can work in the same role at two different places and have completely different experiences to the same extent that you can have two different job titles within the same employer and have polar opposite enjoyment levels. However, for the sake of the rest of this blog, let’s take a really general (and vague) view of this tricky situation for employees and employers alike.

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