News & Updates
February Employment Briefing
- Quilter Private Client Advisers Ltd V. Falconer And Another – Restrictive Covenants In A Financial Adviser’s Employment Contract Were Wider Than Necessary And An Unlawful Restraint Of Trade
- Heskett V Secretary of State for Justice - Indirect Discrimination Can Be Justified If the Measures are Proportionate and Necessary to Balance the Employer's Books
- Gender Pay Gap Reporting - 4 April 2021 Deadline
- Supporting Employees Who Are Victims of Domestic Abuse
- ‘No Jab, No Job’ Policies – Caution Urged
- Update on the Coronavirus Job Job Retention Scheme
Welcome to February’s Employment news briefing, providing a summary of some of the recent employment judgements.
If you have any questions about any of the topics covered, or would like to discuss anything with our Employment team, please call Martin Stephen on 0141 248 3434 or email firstname.lastname@example.org.
Quilter Private Client Advisers Ltd V. Falconer And Another – Restrictive Covenants In A Financial Adviser’s Employment Contract Were Wider Than Necessary And An Unlawful Restraint Of Trade
Ms Falconer with a financial adviser at Quilter who resigned shortly before the end of her six-month probation.
The High Court in England held that the nine-month non-compete clause in her employment contract was void as it was broader than necessary to protect Quilter’s business interests and represented an unlawful restraint of trade. The court specifically considered that it was unreasonable to impose a nine-month restriction given Ms Falconer had been at the firm for less time than that. It was also noted that Ms Falconer’s restrictive covenants were more onerous than those of a more senior colleague at Quilter and that such non-compete restrictions were not industry standard for advisers at Ms Falconer’s level. In addition, Quilter accepted that it typically took at least a year to build client relationships and the court considered that access to client documentation alone couldn’t justify a nine-month non-compete clause.
Furthermore, the 12-month non-solicitation and non-dealing clauses in Ms Falconer’s contract were also void. They prevented Ms Falconer, in the 12 months following the termination of her employment, from giving financial advice to any customer who had been a client of Quilter during the 18 months prior to Ms Falconer leaving the firm and with whom Ms Falconer was “materially concerned” or had “material personal contact” during those 18 months. The court held that the length of the 18-month restriction was excessive, particularly given Ms Falconer’s relatively junior position at the firm and that she had only been employment for around six months.
This case serves as a reminder of the pitfalls when drafting restrictive covenants. Employers need to ensure that their restrictive covenants are effective at protecting their business interests but do not stretch beyond what is actually necessary in achieving this. Employers should also ensure that the restrictive covenants in their employees’ contracts are suitable for those particular employees. Companies may wish to consider having a sliding scale of restrictive covenants with senior employees given more onerous restrictions than their more junior or newer colleagues.
Heskett V Secretary of State for Justice - Indirect Discrimination Can Be Justified If the Measures are Proportionate and Necessary to Balance the Employer's Books
Amid the rise of Covid-related redundancies, the decision by the English Court of Appeal’s decision in Heskett v Secretary of State for Justice is particularly significant.
In this case, the appellant was a probation officer, working for an executive agency of the Ministry of Justice. Following the austerity measures introduced by the government after the great financial crisis, temporary changes were made to how probation offers’ pay was determined. Previously, their pay increased by three pay points per annum but following the changes, they were increased by just one pay point per annum. This change disproportionately affected younger probation officers, taking them much longer to reach the top of the pay scale. The claimant therefore argued that the pay-scale changes amounted to indirect age discrimination.
The Employment Tribunal held that the measures were indirectly discriminatory but that they could be justified as they were not just a cost-cutting exercise but also a proportionate means of ensuring the agency lived within its means. The Court of Appeal upheld this decision. It stated that an employer's need to balance its books could constitute a legitimate aim for the purpose of justifying indirect discrimination. However, it would need to be demonstrated that the measures were a proportionate means of achieving the desired outcome, taking into account the impact on the affected group and whether the aim could be addressed without resulting in indirect discrimination. The court stressed that the measure needed to be more than a cost-saving exercise but acknowledged that this distinction between this could be subtle.
This case would suggest that courts are now more willing to accept budgetary concerns as a legitimate reason to adopt indirectly discriminatory measures. The question now is one of proportionality. However, as the court stressed, there are often very subtle differences in the justifications for the discriminatory measures and arguments will require to be nuanced. To this end, while courts have taken a more employer-friendly approach, employers would still be advised to err on the side of caution when implementing such measures.
Gender Pay Gap Reporting - 4 April 2021 Deadline
Gender pay gap reporting was suspended last year amid the Covid-19 pandemic, but the suspension has now been lifted and qualifying employers will need to submit their reports by 4 April 2021. Towards the end of last year, the government published some guidance to assist organisations in establishing which employers needs to report, what data they should gather and what information they need to provide.
If your business furloughed staff during the pandemic, how will this impact your reporting requirements? Furloughed employees should still be included in calculations relating to bonus pay, but, if you didn’t top up your employees’ wages from 80% to 100%, you can exclude them from the calculations relating to hourly pay. Furloughed employees do still count towards the 250-employee threshold for reporting, though.
Supporting Employees Who Are Victims of Domestic Abuse
In June 2020, the Department for Business, Energy and Industrial Strategy (BEIS) undertook a review to understand how employers can best support domestic-abuse victims and how to train and empower employers to do so. The resulting report was published on 14 January 2021.
The report stresses the importance of employers in helping employees to feel comfortable enough to disclose domestic abuse. In order to achieve this, it suggests that employers need to be aware of and have a good understanding of domestic abuse as well as creating an supportive atmosphere and culture. Furthermore, employers should be vigilant for signs of abuse, be trained in how to respond when a disclosure of domestic abuse is made and be able to signpost employees to specialist organisations who can help.
The report sets what respondents considered best practice to look like and included the following list of measures:
• Creating a comprehensive domestic-abuse policy, setting out:
o signs of domestic abuse;
o training for employees on domestic abuse;
o steps to ensure safety in the workplace; and
o practical help for employees such as financial assistance, flexible working hours, and paid leave.
• This policy should be developed with input from trade unions and specialist domestic-abuse organisations.
• Domestic-abuse ‘champions’ should be trained to recognise signs of abuse, and then support employees who disclose abuse and direct them to specialist help.
• Safety measures at the workplace. Employers should inform security; provide safe parking spaces or have someone accompany the employee on public transport; and ensure that information about the employee’s whereabouts is not publicly available.
• Employers should take a robust approach in dealing with perpetrators of domestic abuse and employees demonstrating abusive behaviour.
In order for these measures to be successful, a supportive approach needs to be embedded within the firm, driven from the senior management. Only then will employees feel comfortable in coming forward and be able to receive support from their employers.
‘No Jab, No Job’ Policies – Caution Urged
The announcement by Pimlico Plumbers that they would require all of their staff to be administered with a Covid-19 vaccination – via a change in their employment contract – has raised both ethical and legal questions. These mainly stem around the question of whether an employer can enforce such a policy upon their workforce when the government has not made receiving the vaccine itself mandatory. Employers might have more success when the employment is particularly vulnerable to the spread of Covid – for example, where it involves travelling abroad or care and social work – but may otherwise be on shaky ground enforcing such a policy. Staff may refuse the vaccine on health and ethical grounds; due to a health condition or for age-related reasons, or owing to ethical issues surrounding the use of animal matter. These would need to be considered on an individual basis but may leave an employer open to accusations of discrimination relating to disability, age and faith if a ‘no jab, no job’ policy is introduced for existing employees.
If, however, an employer can prove that it has measured the needs of the business and its customers against the personal needs and safety of the employee, it may be able to defend the position in the case of a discrimination or a dismissal for refusal to take the vaccine. Pimlico Plumbers took their position on mandatory vaccination based on a wish to prove to their customers that no home-visits would be conducted by a potentially infectious person, rather than for the personal safety of employees.
Instead of insisting that all employees take the vaccine, a company could introduce policies to encourage those who can safely be vaccinated to be vaccinated on a voluntary basis, centred on the employer’s responsibility to create a safe and healthy work environment for all. This could include opening discussions with trade unions and providing information to employees around the benefits of the vaccine and any risks so that employees are fully informed.
Update on the Coronavirus Job Job Retention Scheme
Following the government’s announcement that the Coronavirus Job Retention Scheme (CJRS) has been extended until the end of April 2021, HM Treasury released its sixth direction on the scheme. Most of the key features of the furlough scheme remain the same, but changes have been made to the reference date for calculating furlough payments for non-fixed rate employees. When calculating their furlough pay for March and April 2021, the reference dates to use will be March and April 2019 as opposed to 2020. If such a provision hadn’t been introduced, these workers may only have otherwise been entitled to 80% of their 80% furlough pay.
On the same date as this direction was published, HMRC also disclosed the names of all employers that made furlough claims in December. In the next few weeks, HRMC is expected to start disclosing how much each employer claimed within a banded range.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at February 2021. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.