A number of key employment law cases of significance for employers have recently been decided.
Unfair dismissal
Evans v London Borough of Brent
The Employment Appeal Tribunal held that, where no compensation will be awarded but where there is a reasonable prospect of success, an unfair dismissal claim should not be struck out.
The EAT disagreed with the findings of the first tribunal, which struck out the claim on the basis that, since there would be no financial award, it would not be in the interests of justice for the claim to be allowed to proceed, despite the claimant having a reasonable prospect of success due to procedural unfairness.
The claimant, Dr Evans, was dismissed from his role as a deputy headteacher in 2009 for gross misconduct relating to his receipt of over £250,000 in impermissible bonuses.
Prior to being dismissed, he had requested that his disciplinary hearing be postponed to allow him to be accompanied by his sister. The request was refused. The hearing took place without Dr Evans present, after which he was dismissed. Dr Evans claimed unfair dismissal.
The employment claim was stayed twice pending the outcome of criminal and subsequent civil proceedings to recover the monies taken. Of the £250,000, £200,000 was time-barred and could not be recovered.
The EAT was satisfied that the employer had reasonable belief in misconduct, and that there were reasonable grounds for that belief. There was no possibility of the claimant clearing his name or of him recovering any compensation as a result.
However, it could not be said that there was no possibility of the dismissal being held unfair due to potential procedural issues relating to the disciplinary meeting, meaning the issue of procedural fairness remains.
Employment status
Varnish v British Cycling Federation t/a British Cycling
The Employment Appeal Tribunal has dismissed the claimant’s appeal, accepting the first tribunal’s decision that the claimant was not an employee of the respondent, nor was she a worker.
The claimant was a professional cyclist. She entered into a written agreement with the respondent which set out several undertakings, including to train hard for the common purpose of winning medals for the British cycling team. The agreement expressly provided it was not a contract of employment.
The claimant’s relationship with the respondent was terminated on performance-related grounds. She then brought claims for unfair dismissal and discrimination.
At the preliminary hearing, the tribunal found there was no “mutuality of obligation” between the parties, and there was an absence of personal performance consistent with a contract of employment.
The tribunal also held that the claimant did not qualify as a worker under the provisions of the ERA.
The claimant issued appeals proceedings, arguing that the ET had erred in law in finding that there was no mutuality of obligation between her and the respondent, and in concluding that she was not a “limb (b) worker”.
The EAT held that the ET was correct in its consideration of whether the contract should be categorised as one of employment, and in finding that the claimant was not party to a contract whereby she undertook to do or perform personally any work or services for the respondent.
Restrictive covenants
Allen v Dodd
Where an employer recruits an employee and receives legal advice in relation to the enforceability of the employee’s covenants, how equivocal must the advice be for the employer to escape liability for inducing a breach of contract?
In Allen v Dodd, the Court of Appeal found that an employer is not liable for inducing a breach of contract where the legal advice it had received and honestly relied on stated it is “more probable than not” that a restrictive covenant is unenforceable.
The claimant, Mr Pollock resigned from his role at accountancy firm David Allen, to join a competitor practice, Dodd & Co Ltd.
Dodd obtained legal advice as to the enforceability of the non-solicitation and non-dealing covenants contained within Pollock’s contract with David Allen.
Based on the advice from their solicitors, Dodd took the view that while there was a degree of risk involved, it was more likely than not that the covenants were unenforceable against Pollock.
A contested hearing then followed, in which the covenants were found to be enforceable, subject to some severance. Accordingly, Pollock was in breach of contract by working as he did for Dodd.
The issue centred on whether Dodd had had sufficient knowledge that would expose them to liability in tort for inducing a breach of Pollock’s contract.
The tribunal at first instance held that Dodd did not turn a blind eye to Pollock’s contractual obligations, and had sought out early legal advice which it honestly relied on. That the legal advice was in fact wrong was not enough.
Allen appealed the ruling at the Court of Appeal.
The CoA held the defendant had to have realised that a breach would result, and that given legal advice is rarely absolute, it is for the client to appreciate the risk that the advice may not be correct.
In finding for Dodd, Lewison LJ held “if the advice is that it is more probable than not that no breach will be committed, that is good enough.” This is in line with recent decisions to restrict rather than to expand the scope of the economic torts.
Employers are reminded to seek legal advice on the enforceability of any covenants. It is also important to ask potential recruits about the restrictive covenants in their existing contract of employment.
Vicarious liability
Barclays Bank plc v Various Claimants
The Supreme Court has reversed the Court of Appeal in a decision which may offer some relief for employers in relation to vicarious liability, accountability for the actions of third party contractors and use of the “independent contractor defence”.
The case saw 126 claimants bring a class action against Barclays Bank in respect of alleged sexual assaults committed by Dr Gordon Bates.
Bates was not a Barclays employee, but was engaged to conduct medical examinations on prospective and some existing employees as part of the company’s recruitment process. The assaults are alleged to have taken place during these examinations.
The Court of Appeal upheld the High Court’s decision from 2017 that the bank could be held vicariously liable for the actions of independent subcontractors.
The CoA confirmed that the question involved a two-stage test: (1) is the relevant relationship one of employment or “akin to employment” and (2) if so, was the tort sufficiently closely connected with that employment or quasi-employment. Both tests were found to have been satisfied.
The Supreme Court allowed an appeal from Barclays and subsequently found in favour of the bank, holding that the company was not vicariously liable for the wrongdoings of Dr Bates.
The issue turned on whether Dr Bates was acting as an independent contractor, carrying on business off his own account or if he was in a relationship akin to employment.
Lady Hale held that although Dr Bates “was a part-time employee of the health service, he was not at any time an employee of the Bank. Nor, viewed objectively, was he anything close to an employee”. Dr Bates was free to refuse examinations and even “no doubt carried his own medical liability insurance”. She compared the arrangement to other contractors such as auditors and window cleaners. Dr Bates also had other clients and was therefore on business on his own account.
The case is of note for employers on the issue of vicarious liability. While the relationship between Dr Bates and Barclays was found not to be sufficiently close, the decision confirms that the facts of a case could override any express agreement between the parties if on those facts the relationship between those parties made it fair, just and reasonable to impose vicarious liability.
The decision was handed down on the same day as WM Morrisons Supermarket PLC v Various Claimants, another landmark ruling in relation to the vicarious liability of employers.
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Last updated: 29 July 2020
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Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.
She is a recognised by Legal 500 and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.
Anne is an active public speaker, immigration commentator, and immigration policy contributor and regularly hosts training sessions for employers and HR professionals