Quarterly Case Law Update: January 2021

For the first quarterly update of the year, we look back at some of the key employment law cases from the past three months and the lessons we can learn from them.

Discrimination

The case of Higgs v Farmors School considered whether Christian beliefs that gender cannot be fluid and that someone cannot change their biological sex or gender were protected beliefs under the Equality Act 2010.

Mrs Higgs is a Christian and was employed in Farmor’s school as a pastoral administrator.

The school's head teacher received an email from someone outside of the school making a complaint about Mrs Higgs related to a Facebook post that demonstrated she held homophobic and prejudiced views against the LGBT+ community. Following an investigation and disciplinary hearing, Mrs Higgs was dismissed for gross misconduct for breaching the school's conduct policy, including in relation to discrimination and serious inappropriate use of social media.

Mrs Higgs claimed that she had been directly discriminated against and harassed on the ground of her religion. Whilst the Tribunal accepted that Mrs Higgs’ beliefs were protected, it found that she had not been discriminated against or harassed because of those beliefs but rather because of the way in which she had chosen to manifest them in breach of the school’s policy.

This is a helpful case for employers who are increasingly having to balance competing protected characteristics in the workplace. Whilst religious beliefs are protected, this does not allow employees to express their beliefs in a way which insults or discriminates against others. We understand that this case is to be appealed so it is hoped further guidance in this respect will follow.

In Ryan v South West Ambulance Services NHS Trust the Employment Appeal Tribunal looked at whether an employer’s talent pool, which mainly included employees aged under 55, indirectly discriminated against an employee on the grounds of age. The Trust had set up a Talent Pool to identify and develop future leaders and managers as well as to retain existing ones. Mrs Ryan was an Education and Business Manager who at the time was aged 66 or 67 years old. She was not placed into the pool as her appraisal rating was not high enough nor did she self-nominate for inclusion into the pool. As a result, missed out on a vacancy which were filled from within the pool. She claimed age discrimination on the basis that employees aged 55 and over were under-represented in the pool. 

Although initially Mrs Ryan lost, on appeal the Employment Appeal Tribunal (EAT) did not uphold the original Tribunal’s decision, finding that Mrs Ryan had suffered a disadvantage by not being in the pool, which was a disadvantage also generally suffered by those aged 55 and over, so that there was a prima facie case of indirect discrimination. In addition, the EAT did not think the Tribunal had properly considered the issue of objective justification.

This case is an important reminder to employers to review policies and procedures to ensure that they do not have a discriminatory impact on groups with a protected characteristic such as age.

Settlement agreements

In Murphy v HMRC, the taxpayer and others brought a group action against the Metropolitan Police for unpaid overtime and allowances. The Metropolitan Police reached a settlement and paid a global settlement sum which included not only the principal settlement amount but also contributions towards agreed costs such as legal fees and insurance premium. HMRC argued that the whole of the global settlement sum, including the elements for legal fees and insurance premium, fell to be taxed as general earnings.
The First-tier Tax Tribunal agreed with HMRC. They reasoned that the amounts arose from employment and were therefore taxable.

The tax treatment of sums under a settlement agreement is complex. What this case demonstrates, however, is the importance of separating out elements to be paid under a settlement agreement and to deal with the tax treatment of each element to avoid a situation where the whole of a global amount may be subject to tax.

Post-termination covenants

In Quilter Private Client Advisors Ltd v Falconer, the High Court considered whether non-compete, non-dealing and non-solicitation covenants were reasonable and only went as far as was necessary to protect Quilter’s legitimate business interests.

Ms Falconer was employed by Quilter as a financial advisor until she resigned after less than 6-months. Her employment contract contained a 9-month non-compete and 12-month non-dealing and non-solicitation clauses. The restrictions applied irrespective of the length of time she worked for Quilter. Ms Falconer joined a competitor immediately after the end of her 2-week notice period. Quilter brought a claim for breach of contract against her and sought to enforce the post-termination covenants.

The Court held that it was unreasonable to restrict Ms Falconer from competing with Quilter for 9 months. In particular the non-compete applied regardless of how long she had worked for them. Ms Falconer was on 6-month probation during which Quilter could have chosen to dismiss her with a 2-week notice. The Court reasoned that the shorter the notice period, the less important the employee’s services would appear to be to the employer and that the restrictions went further than necessary to protect Quilter’s legitimate interest, particularly as it would take her typically 12 months to build strong relationships with Quilter’s clients. The Court also decided that it was unreasonable to restrict Ms Falconer for 9 months when her manager, who had access to more confidential information, was only subject to a 6-month restriction.

The Court further held that it was unreasonable to restrict Ms Falconer from dealing with anyone as a client for 12 months after termination. The restriction included any client on the Quilter’s books during the 18 months before termination (including those she had not met or spoken to) and Ms Falconer’s family or friends. The Court said a 6-month backstop would have sufficed because the Quilter’s clients benefited from a six-monthly review and could transfer their portfolios elsewhere.

The case highlights the importance of tailoring post termination covenants to the employee in question taking account of their role and status. It also highlights the importance of considering the applicability of the covenants in different situations, such as where an employee leaves after a short period of employment. It may, therefore, be appropriate to provide shorter, more limited covenants during a probationary or initial period.

Redundancy

In UQ v Marclean Technologies SLU, the claimant was dismissed on 31 May 2018. A further 36 employees were dismissed between 31 May and 15 August 2018. The claimant argued that her dismissal formed part of a series of redundancies which, when added, triggered the obligation to consult collectively. The European Court of Justice held that the relevant period to take into account when looking at whether the trigger has been met covers any 30 or 90 consecutive days which includes the date of the dismissal in question, whether those consecutive days are before, after or both before and after that dismissal.

In the UK, this means that the relevant period to consider is any 90 consecutive days before/after and including date of the dismissal. The actual aggregation period are the 90 consecutive days which include: (i) the dismissal in question; and (ii) the highest number of other redundancy dismissals. To decide the correct aggregation period, an employer needs to look backwards and forwards and choose any 90 days which have the highest total number of redundancies within the 180-day period. It does not matter that later redundancies were not proposed at the date of the dismissal in question.

This is an important decision for employers, particularly at the current time when many have made redundancies and are considering further redundancy proposals. Employers proposing redundancies should look both back and forward from an individual dismissal to determine whether there are 20 or more proposed dismissals, and, if there are, to ensure that collective consultation obligations are complied with.