The Practical Lawyer


Fiduciary duty – joining rival

An employee was managing director and had a 49% shareholding. He resigned from the company (both as a director and employee, and sold his shares). Shortly afterwards he became a director of a rival company and it turned out that he had been doing preparatory work for a year before he handed in his resignation. Not surprisingly, his former employer argued that there was a breach of fiduciary duty and sought damages (repayment of salary; account of profits on the basis that the competitor was given a ‘head start’).

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Unfair dismissal – negotiations

Employer and employee may enter into pre-dismissal negotiations (eg to work out the terms of departure). Usually, an employer will try to make those discussions ‘without prejudice’ and then hope that they cannot be disclosed subsequently (eg if an unfair dismissal claim is brought). But, the problem with ‘without prejudice’ is that it only exists if there is an existing dispute. If there is no existing disagreement when the first proposal is put forward by the employer then the ‘without prejudice’ rule cannot apply. As a result, there is always a real risk that if the employer raises the idea of termination with the employee, that could then be said to breach the duty of trust and confidence (or that the proposal made amounts to discrimination or victimisation). Thus, the ‘without prejudice’ rule is of relatively little use in pre-termination negotiations.
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Contract – changing

It is a basic contractual principle that a contract cannot be changed unilaterally. Therefore, a contract of employment cannot be changed by the employer unless the employee agrees. In practice, this will often be decided by ‘conduct’.
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Job applicant – discrimination

There have long been stories about individuals who apply for jobs in the expectation and hope that they will be rejected, and so can then claim discrimination. For instance, an older person might apply for a job that would normally be filled by a younger person, and then claim age discrimination. The ECJ has now confirmed that discrimination protection only applies to job applicants who are ‘genuine’ (in that they are properly ‘seeking employment’). This ECJ approach is similar to that already taken by the English courts.

Reasonable adjustments – protected pay?

If a disabled employee is moved into a less well paid job, should they still be entitled to their previous pay rate?
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Injury to feelings – increase

The EAT has held that tribunals can increase the guideline figures for injury to feelings awards to reflect inflation. At the same time, they should also apply the 10% uplift (which is applied to general damages in the civil courts since 2013, following the abolition of success fees and ATE premiums).
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Director – unfair dismissal

A company director can only expect PAYE earnings (not dividends) to be taken into account when assessing unfair dismissal compensation. This is because it would only be payments contractually due under the contract of employment that can be taken into account. Sheridan v GTECH [2015] noted in [2015] NLJ 30 January 5.


Dress code – discrimination?

An employer has the right to implement a dress code in the workplace (eg to communicate a corporate image; ensure that customers can identify staff; satisfy health and safety requirements).

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Working time – no injury to feelings

The power to award compensation for breach of the Working Time Regs 1998 is silent as to whether it includes a power to award compensation for injury to feelings. The EAT has confirmed that it does not. Santos Gomes v Higher Level [2016] UKEAT 0017/16/1805.

Illegal working – offence

A reminder that there is now a new offence of employing an illegal worker. This applies if the employer ‘knows or has reasonable cause to believe’ that the employee has no right to do the work – a wider test than the previous ‘actual knowledge’ requirement. In effect, we now have a stricter test.

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