I'm a solicitor and the chief operating officer at Canter Levin & Berg. I was formerly head of the employment department. I maintain this website so if you have any suggestions, criticisms or recommendations please email me at martinmalone@canter-law.co.uk. Outside work my interests include national hunt horse racing, France and French wine and current affairs. I also design and maintain websites.

Don’t force someone to sign a settlement agreement

Lots of employers think that just getting someone to sign a settlement agreement solves a problem. Well, that’s a risky approach and, for the second time this month, has been demonstrated to be not necessarily the best idea. An area of employment that can be “problematic” is the financial services sector. This was well demonstrated…

Competing interests lead to more confusion concerning NDAs

On 21 July (oddly given that it was a Sunday) the Government announced what it described as “measures to prevent misuse of confidentiality clauses in situations of workplace harassment or discrimination. Frankly the press releases are light on detail. However, the four main changes are as follows:

  • Employers will have to make clear the limitations of a confidentiality clause, in plain English, within the settlement agreement and in the form of a written statement for the employee. In other words there will have to be a notice to the employee within the agreement which clearly explains what the clause does not cover.
  • Current legislation will be extended so that it will be a requirement for all individuals signing an NDA (whether or not contained within a settlement agreement) to obtain what is described as enhanced independent legal advice, presumably at the employer’s expense. This is potentially interesting because it raises the possibility that employees may need to obtain such advice at the commencement of or during employment, perhaps even before the commencement of employment. Much will depend on the definition of what constitutes a regulated NDA and that information, perhaps unsurprisingly, has not been published.
  • All NDAs must make clear that the restrictions will not prevent the employee from disclosing the otherwise protected information to the police, regulated care and health professionals, social workers and, interestingly, legal professionals. As matters stand, most settlement agreements include a confidentiality clause which provides that not only the terms but even the existence of the agreement must be kept confidential, save for immediate family members and relevant professional advisers (i.e. those advising the employee concerning the agreement).
  • Enforcement measures will introduced to deal with settlement agreements and written statements of employment particulars that do not comply with the regulations, including that non-compliant NDAs will be legally void.

Good news for employers seeking to enforce restrictive covenants

Five years ago I wrote an article for this blog which was entitled “Don’t rely on a court to fix a ‘defective’ restrictive covenant“. In doing so I was merely using a recent case to demonstrate the approach taken by courts to restrictive covenants in employment contracts, viz. that they have to be precise and correct in all respects, failing which they are likely to be struck out in their entirety. That’s why you often see a sub-clause at the end of series of restrictive covenants which states something along the lines that if any covenant or part thereof should be found to be unenforceable, that shall not invalidate the remainder: an attempt to pre-empt the likely outcome if the clauses are subjected to court scrutiny.

Restrictive covenants in employment contracts, and particularly those which seek to restrict a former employee from joining a competitor, can be difficult to enforce in practice. That’s because they are a form of restraint of trade which, on the face of it, is contrary to public policy. However, courts have acknowledged over the years that employers have legitimate business interests which they ought to be able to protect, but only to the extent that it is reasonable to do so. Consequently, such restrictions should be reasonable in area and duration, with the restrictions providing no more protection than is reasonably necessary. the received wisdom has been that if they go too far, they are likely to be struck out altogether. Since court proceedings in this field can be cumbersome, time-consuming and very expensive, often with no guarantee of a successful outcome and with an opponent who might not be in a position to pay costs if ordered to do so, employers have tended to be understandably wary about litigating and have instead relied on the deterrent factor of including such clauses in contracts.

There has been a good deal of litigation concerning restrictive covenants, very often considering what restrictions are reasonable in terms of their scope and application. However, it has been over 100 years since restrictive covenants have been considered by our most senior court. That is until the judgment of the Supreme Court in the case of Tillman v Egon Zehnder Limited, which was handed down on 3 July.

Labour, anti-semitism and unfair dismissal

A recent case in the London Central Employment Tribunals has touched on some very topical issues concerning the Labour Party, as well as considering whether activities undertaken by an employee outside the workplace can impact negatively on the employment relationship.

In Mr S E Keable v London Borough of Hammersmith and Fulham, Mr Stan Keable brought a claim of unfair dismissal against Hammersmith and Fulham Council (HFC) when he was dismissed after a video showing him arguing that the Zionist movement collaborated with the Nazis went viral on Twitter and was picked up by a Newsnight journalist, David Grossman.

Mr Keable worked for HFC from 2001 until his dismissal on 30 May 2018 and his employment record was blemish free. He was a political activist and was a member of the Labour Party until he was expelled as a result of his membership of Labour Party Marxists, a non-affiliated organisation.

The employer’s terms and conditions included a requirement to “avoid any conduct inside or outside of work which may discredit you and/or the Council”.

Paramedic who fell out of back of ambulance unfairly dismissed and discriminated against.

Dealing with sickness absence is a persistent problem for many employers, particularly when dealing with the apparent dichotomy between potentially fair dismissal on the ground of extended sickness absence and discrimination based on disability. The issue reared its head once again in the recent case of Muller v London Ambulance Service NHS Trust.

Mr Muller, a paramedic, injured himself when falling out the back of an ambulance while on duty in March 2016. He never returned to work and was dismissed 11 months later. His main injury was to his right shoulder which did not heal during this time. By the time of his dismissal he had not had the required surgery, let alone sufficient time to recuperate thereafter. A contributory factor to the delay was that a tear in the cartilage around the shoulder joint was not diagnosed until November or December 2016. A steroid injection in January made little difference and an arthroscopy was scheduled for 14 March, just over two weeks after he was dismissed.

As well as claiming that his dismissal was premature, Mr Muller said that the Trust had a duty to make reasonable adjustments to accommodate his disability, e.g. by providing him with office based work. As it happened, the arthroscopy confirmed that there was a tear which was repaired by surgery in July 2017. In January 2018 Mr Muller returned to occasional front line duties with a private ambulance service.

The Trust had encouraged him to apply for other jobs. There was a redeployment scheme. Mr Muller applied for a job in the archive department but was unsuccessful. In any event, he did not want a permanent reassignment.

He submitted a claim to an Employment Tribunal, for unfair dismissal, direct sex discrimination (a female comparator had been provided with office based work), disability discrimination based on failure to make reasonable adjustments and discrimination in connection with his dismissal.

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.

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.