HR briefing - November

Welcome to this month's briefing for HR teams and in-house employment counsel – bringing you recent employment law highlights in an easy-to-read package.

In the courts

Holiday pay and part-time working

The Court of Appeal (CA) has considered how to deal with holiday pay for part-time workers. Acas’ long-standing guidance was to make a pro rata payment of 12.07% of the hours worked (on the basis the statutory holiday allowance of 5.6 weeks is equivalent to 12.07% of a full-time worker’s annual hours). The CA did not agree and ruled that the Working Time Regulations do not permit such a calculation. The proper method for part-time workers is to identify a “week's pay” in accordance with the Employment Rights Act 1996 and multiply this by 5.6. Permission has been given to appeal to the Supreme Court.

Legal privilege

The confidentiality of legal advice has been a cornerstone of the common law for hundreds of years, yet the precise scope of the protection remains a contested area. The CA has reviewed the ambit of the rule in the context of a disputed redundancy exercise, with very unusual facts. A lawyer, who was disabled, lodged a number of grievances alleging discrimination:

  • his performance was regarded as below par and legal advice was taken on his position;
  • a change in the business necessitated redundancies and advice was then taken on whether the employee could be included in the process and dismissed;
  • he overheard lawyers from an external firm chatting in the pub about a disabled employee whose “days were numbered”, he assumed they were talking about him; and
  • when he then issued a claim for disability discrimination, alleging the redundancy was a sham he was sent some of the internal emails containing advice by an anonymous source, and sought to have them included in the bundle of documents for the tribunal hearing.

The CA confirmed that legal advice privilege can be set aside where it is deliberately being used to hide or cloak serious wrongdoing – the so-called "iniquity principle". However, in this case there was nothing to suggest the redundancy exercise was a sham, or that the inclusion of this particular employee in the list of employees at risk of redundancy was improper. The advice in the emails therefore remained privileged, and the overheard pub conversation did not change that fact.

Clients and lawyers alike should be clear on the privilege rules, and ensure that communications seeking and giving legal advice are framed in appropriate terms.

Employee monitoring

Organisations often want to check systems are being used correctly and employees are behaving properly. Some want to use covert monitoring to achieve this. The UK regime for covert monitoring (whether of email traffic or by CCTV) is subject to a range of legislation and guidance, which emphasise the need for monitoring to be the last resort, and only used where there is a clear and justifiable business reason. The guidance also requires a full risk assessment before any monitoring is carried out. Covert monitoring is clearly an intrusive step, from a data protection and human rights perspective, and previous cases at a UK and EU level have grappled with the delicate balancing exercise between a firm’s right to check its systems are properly used, and an individual’s privacy rights.

In the latest of these the European Court of Human Rights has confirmed that hidden CCTV put in place by a Spanish supermarket to check for fraud at the tills was found to be warranted. Importantly, there was an assessment of the risks before the checks were carried out, there had been a history of fraud which it was fair for the company to investigate, the recordings did in fact allow the culprits to be identified, only a very limited number of people had access to the recordings, and no other less intrusive step was obviously available.

Clients wishing to set up any form of monitoring, whether covert or not, should seek advice at an early stage to ensure the correct methodology is adopted from the outset.

In the news

NDAs in the #metoo era

In the wake of the #metoo campaign, the use of confidentiality provisions (or NDAs) in employment contracts and, particularly, settlement agreements has been sharply criticised by a number of reviews. The Parliamentary Women and Equalities Select Committee (WESC), the Law Society and the Solicitors Regulation Authority, the Equality and Human Rights Commission (EHRC) and the Government itself have all issued guidance or consultations examining whether part practice in this area needs amendment. The EHRC’s latest guidance makes a number of recommendations that would mark quite substantial changes to market practice. The guidance is clearly intended to reduce the number of wide-ranging confidentiality provisions used in employment contracts and settlement agreements, as reflected in the recommendations, which include:

  • confidentiality provisions should only be included where necessary, and where signed off by senior management;
  • employees should be told why any confidentiality wording has been included;
  • warranties and repayment provisions that have the effect of stifling disclosure of wrongdoing should be discouraged;
  • employees should have sufficient time (typically no less than 10 days) to consider any settlement agreement; and
  • it should be made clear that any NDA does not prohibit disclosure to, for instance, a regulator.

The government’s consultation on reform of the law in this area remains ongoing, although it has recently responded to some of the recommendations put forward by the WESC. The government’s response does not go as far as the WESC had suggested, or as far as the EHRC’s guidance. Instead, it recommits the Government to relatively modest legislative reforms, concentrating on ensuring that the terms and scope of any NDA are clear to the employee/ex-employee, and are only entered into after proper advice has been received.