In this round up of other recent cases, we look at the circumstances in which an employer's failure to pay compensation could amount to victimisation, the application of the "band of reasonable responses test" to a claim for constructive dismissal, whether making a payment in lieu of notice constitutes a waiver of an employee's fundamental breach of contract, the requirement to collectively consult over the reasons for a business closure, employers' liability for injury caused to employees by equipment used away from the workplace and a recent decision on enforcing obligations of confidence against a consultant who has misused confidential information.
Failure to pay damages can be victimisation
In the case of Rank Nemo (DS) Limited & others v Coutinho, the Court of Appeal has confirmed that an employment tribunal can hear a claim for victimisation based upon non-payment of a tribunal award. If the victimisation claim succeeds, the claimant will be able to recover both the original tribunal award of £72,000 and any damages awarded as a result of the victimisation. The tribunal will have to discover the reason for the non-payment of the award. If the reason was retaliation for having brought discrimination proceedings, his victimisation claim will succeed.
The respondent in this action inherited liability for the claim under TUPE and this highlights the importance of obtaining appropriate indemnities.
EAT confirms test for constructive dismissal
The EAT has confirmed that the "band of reasonable responses" test does not apply to the question of whether an employer has committed a fundamental breach of contract, entitling an employee to resign and claim constructive dismissal (Bournemouth University Higher Education Corporation v Buckland). The EAT held that the actions of the University in arranging for exam papers to be re-marked without first consulting Professor Buckland had been a fundamental breach of contract. It dismissed the University's argument that there could only be a fundamental breach of contract where the employer's actions fell outside the band of reasonable responses open to it. It reiterated that the test for fundamental breach of the implied term of trust and confidence, set out in Mahmud v BCCI, is whether the employer has "without reasonable and proper cause conducted himself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between them". If the employee accepts a fundamental breach by resigning, it is then open to the employer to show a fair reason for the dismissal and the "band of reasonable responses" test would then be applied in determining the fairness of the (constructive) dismissal for that reason. In this case, however, an inquiry into the employee's complaint completely vindicated him and therefore cured the fundamental breach. As the employee did not resign until after receiving the inquiry report, there was no constructive dismissal.
Payment in lieu of notice did not waive employer's right to terminate for gross misconduct
In the case of Benveniste v Kingston University, the EAT has confirmed that by mistakenly paying in lieu of notice, the employer did not waive its right to rely on the employee's gross misconduct and dismiss her summarily. The letter confirming Ms Benveniste's summary dismissal for gross misconduct was not clearly drafted. It said: "…I have no alternative but to dismiss you with effect from today's date, 13 August 2004 …. As you are entitled to six months' notice, you will be paid six months' notice in lieu of notice and you will no longer be required to work for the University. Your last day of service will be today, 13 August". The University made a payment in lieu of notice in accordance with the letter. Dr Benveniste brought a claim against the University for loss of pension rights during the notice period. The EAT dismissed her claim. It held that the University was entitled to dismiss her without notice and the terms of the letter and the mistaken payment in lieu of notice made no difference to this position. Employers can take comfort from the confirmation that mistaken drafting cannot affect the true legal position between the parties. However it illustrates the necessity of taking care that the terms of any dismissal letter are accurate.
EAT confirms requirement to consult collectively over reasons for closure
The EAT has held, in the case of United States of America v S Nolan, that the USA had failed properly to consult representatives about the closure of one of its army bases in the UK. The EAT applied the UK Coal Mining case and confirmed that, in circumstances involving the closure of a workplace, TULRCA 1992 requires collective consultation over the reasons for the closure. As the USA had not consulted on the reasons for closing the base and had failed to start its consultation in good time, the tribunal had correctly ordered a 30-day protective award.
Council is not liable for defective wheelchair ramp at private dwelling
The House of Lords has held that an employer was not strictly liable for an injury sustained by one of its employees due to a defective ramp at a private dwelling (Smith v Northamptonshire County Council). The Provision and Use of Work Equipment Regulations impose strict liability on all employers to ensure that work equipment is maintained in an efficient state and is in efficient working order and good repair. The claimant's duties involved collecting people from their homes and taking them by mini bus to a day centre. She was injured as a wheelchair ramp at a client's home gave way when she was wheeling the client down it. The House of Lords found that the ramp was not incorporated into or adopted as part of the Council's undertaking because the Council did not provide it, own it, possess it or have any responsibility or right to repair it. The Council was therefore not liable for the employee's injury. This decision is good news for employers whose staff visit external sites and use equipment outside the employer's control in the course of their duties. However employers should not assume that they will never be liable for events that take place outside work. They have duties under health and safety legislation to make risk assessments. Had the Council not undertaken a satisfactory inspection of the ramp or if it had identified the defect but not taken action, it could have faced claims under Health and Safety at Work legislation and for negligence.
Consultant was in breach of confidentiality obligations
The High Court has held that a consultant was in breach of obligations of confidentiality to a former client, when he misused confidential information to develop a competing product for another party (Vestergaard Frandsen A/S and others v Bestnet Europe Limited and others). The parties, unusually, had agreed that the consultant's position should be taken to be analogous to that of an employee. The Court therefore applied the well-known principles in Faccenda Chicken v Fowler to determine whether the information involved amounted to a trade secret therefore could be protected once the relationship between the consultant and the client was at an end. The Court also found that there was an express term in the oral contract between the client and the consultant that he would keep information arising out of the work confidential and that products developed under the contract would belong to the client. This finding was supported by the fact that the consultant had assigned all his rights in the product he had developed and other inventions to the client. The High Court went on to hold that, even if there had been no express term, because of the nature of the relationship, it would have been an implied term of his consultancy agreement that he would keep the information arising out of the work confidential. The decision is a result of a particular set of facts and circumstances and the Court accepted that its approach would not apply to all consultants. Where the nature of a consultant's work involves exposure to and development of trade secrets, clients should protect their trade secrets and confidential information by entering into a written contract that imposes obligations of confidentiality on the consultant and assigns all rights in any work and inventions to the client.