Monthly Highlights – UK Employment Law – August 2024 | Orrick, Herrington & Sutcliffe LLP

Here is an overview of recent developments in employment law in the UK:

The Employment Appeal Tribunal ruled in the case of claimants who do not share a relevant protected characteristic, as those who have that protected characteristic but share the same disadvantage are entitled to bring a claim for indirect discrimination under section 19 of the Equality Act 2010.
The Employment Appeal Tribunal held that an employment tribunal erred in holding that a claimant had to exhaust all internal grievance procedures before it was entitled to conclude that the claimant had a right to resign and claim constructive unfair dismissal.
The High Court has dismissed an application for an interim injunction to restrain a former employee from breaching restrictive covenants.
The employment tribunal found that the withdrawal of a job offer could constitute direct discrimination.
The Solicitors Regulation Authority has updated its warning on non-disclosure agreements.

Recent developments in more detail

1. In Rollett v British AirwaysThe Employment Appeal Tribunal ruled in the case of claimants who do not share a relevant protected characteristic but who share the same disadvantage as those who do have that protected characteristic. The Tribunal held that they were entitled to bring a claim for indirect discrimination under section 19 of the Equality Act 2010.

The facts

The claimants argued that the schedule changes made by the defendant had the following effects, which they claimed constituted indirect discrimination:
- This put employees who lived abroad (mainly non-UK) at a disadvantage compared to those living in the UK.
- This placed employees with family responsibilities (mainly women) at a disadvantage compared to those without such responsibilities.
The applicants included people who did not share the same protected characteristics but who claimed to suffer the same disadvantage as those who did. For example, one applicant was a British national living in France. Another was a male employee with caring responsibilities.
The Employment Tribunal held that section 19 of the Equality Act 2010, which contains the indirect discrimination provisions, should be read in accordance with the principles of EU law established in CHEZ.
- In this case, the Court of Justice held that a person could claim indirect discrimination if they did not have a relevant protected characteristic but suffered the same disadvantage as people with that characteristic.
- The labour court upheld the claims.
In an appeal, the defendant argued that section 19 of the Equality Act could not be interpreted in a manner consistent with CHEZ and that the Employment Tribunal’s decision was contrary to the Equality Act.
The Employment Tribunal dismissed the appeal. It held that the Employment Tribunal had jurisdiction to hear the indirect discrimination claims and that it had not made any error of law in its decision.

Key takeaways

When making decisions about matters such as changing employment conditions, employers must consider the impact and disadvantages the decision may have on all employees, including those who do not have a protected characteristic.
Employers should be aware that a potentially wider group of employees without any protected characteristics may now be able to make a complaint under the Equality Act if they experience the same or similar disadvantage as employees with a protected characteristic.
Since January 2024, the CHEZ principles have been enshrined in the Equality Act.

2. In Nelson v Renfrewshire CouncilThe Employment Appeal Tribunal held that an employment tribunal erred in concluding that a defendant’s conduct did not constitute a repudiatory breach of the implied term of mutual trust and confidence, entitling the claimant to resign and claim unfair and constructive dismissal.

The facts

The complainant alleged that a colleague behaved in an aggressive and intimidating manner towards her.
The first stage of the claims process ended in the colleague’s favour, despite first-hand witnesses corroborating the complainant’s account.
The complainant appealed at a second stage hearing, at which her complaint was again dismissed. The second stage outcome letter reminded the complainant of her right to appeal at a third and final stage of the complaints procedure. However, the complainant did not exercise her right of appeal, having lost confidence in the complaints procedure.
The complainant resigned and filed a claim with the employment tribunal for unfair dismissal. She argued that her colleague’s behaviour and the way her complaint was handled constituted a repudiatory breach of the implied term of mutual trust and confidence.
The Employment Tribunal dismissed the plaintiff’s claim for unfair dismissal. It found that the defendant had not exhausted its remedies when she resigned. Accordingly, the tribunal concluded that the relationship of trust had not been sufficiently damaged to justify a claim for unfair dismissal. The plaintiff appealed.
The claimant’s appeal was allowed. The Employment Tribunal held that the Employment Tribunal had placed unreasonable weight on the claimant’s failure to follow all the steps in the grievance procedure. The Employment Tribunal held that the Employment Tribunal should only consider the employer’s conduct when considering a claim for constructive dismissal. The case was remitted to the Employment Tribunal.

Key takeaways

Employees are not necessarily required to exhaust all steps of the grievance process before a breach of the implied term of trust and confidence may occur.

3. In Literacy Capital Plc v WebbThe High Court has dismissed an application for an interim injunction to restrain a former employee from breaching restrictive covenants.

The facts

The plaintiff acquired the defendant’s 25% interest in Mountain Healthcare Limited, with consideration payable partly in cash and partly by way of a deferred loan.
In 2021, the defendant resigned from Mountain Healthcare. The parties entered into new investment and loan agreements.
The restrictive clauses in the investment agreement were intended to prevent the defendant from competing with the claimant’s subsidiaries in the UK and the Channel Islands in the following areas:
- 12 months after ceasing to be a director or employee of all such subsidiaries.
- The period beginning when it became the holder of a promissory note and ending 12 months after it ceased to be the holder (potentially 10 years, after the long-term repayment date was renegotiated to 2030).
The plaintiff filed a complaint for breach of the agreement and sought an interim injunction to prevent the continuation of the competing activities.
The High Court dismissed the injunction on the grounds that the clauses were void and unenforceable. Indeed, the continued operation of the clauses during the period the defendant held the loan bonds and for the following 12 months was a key factor in the Court’s decision to find the clauses excessive. Furthermore, the Court found that the claimant had failed to justify the 10-year restriction.

Key takeaways

Employers should ensure that restrictive covenants do not go beyond what is reasonably necessary to protect the relevant interest, including in terms of duration, geographic scope and scope of activity.
Even outside the employment context (where, due to perceived inequality of bargaining power, restrictions extending beyond 12 months are unlikely to be enforced), the general principles of applicability still apply.
In light of the above, there should be some logic in linking the duration of the commitment to the interest protected.

4. In Ngole v Touchstone LeedsThe employment tribunal found that the withdrawal of a job offer could constitute direct discrimination.

The facts

The defendant is a charity providing mental health services, including to members of the LGBTQI+ community.
The defendant made a conditional offer of employment to the plaintiff, a Christian social worker.
The defendant withdrew the offer after noting that the plaintiff had made derogatory comments on Facebook about people in the LGBTQI+ community.
The applicant challenged this decision and was offered a second interview to discuss the respondent’s concerns. The respondent did not repeat the offer.
The complainant filed a number of complaints with the employment tribunal, including for direct discrimination.
The Employment Tribunal found that the withdrawal of the job offer constituted direct discrimination on the grounds of religion or belief. Although the defendant’s aim was to protect vulnerable people, the Tribunal found that the withdrawal of the job offer before the second interview went beyond what was necessary to protect those people.

Key takeaways

Job applicants can file discrimination complaints – and employers face a difficult balancing act when a person’s deeply held beliefs conflict with an organization’s ethics and mission.
Employers should balance the right to freedom of expression and religious beliefs with the need to maintain a safe and inclusive environment for staff and customers.
Employers should exercise caution when conducting online background checks and consider the risk involved in relying on such information.

5. The Solicitors Regulation Authority has updated a warning about non-disclosure agreements.

The SRA warns that firms should not routinely use confidentiality agreements and that “at the outset, firms and customers should carefully consider whether a confidentiality agreement is necessary given the specific circumstances of the case”.
Employers should seek legal advice on confidentiality agreements on a case-by-case basis.