Canter Levin & Berg Employment Solutions Canter Levin & Berg Employment Solutions
November 2014

Welcome to our November employment law newsletter.

This month, apart from a little discussion about the costs aspects of yesterday's Mitchell judgment our updates take the form of a series of questions

I hope that you find them of interest.


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This month's news round-up:

1. Mitchell, costs and the trickle down to SMEs

Mitchell

So, Andrew Mitchell's mission to seek redress for having been falsely accused of using the word "pleb" came to an ignominious conclusion yesterday when Mr Justice Mitting found that his behaviour was "childish" and that he did use the politically charged word. It mattered not that he admitted that his exchange with PC Toby Rowland was littered with expletives, but describing him as a "member of the common people", derived from the Roman plebeians, was evidently beyond the pale. Foreign commentators have been thoroughly bemused by the entire process and why it has achieved such prominence - "what's the problem?".

The political ramifications are for others to deal with elsewhere. Of more relevance here is the costs fall-out. National newspapers have estimated Mitchell's costs liability in a range from £1.5m to £3m. In fact, it turns out that Mitchell's solicitors, Slater and Gordon, were representing him on a "no win no fee" basis so they will certainly be sharing a good deal of the pain. In such cases it is usual to insure against the potential liability for your opponent's costs if you are unsuccessful by taking out an "after the event" policy. If an insurer was prepared to take on the risk in Mitchell's case it would be reasonable to assume that the premium would have been eye-watering but not as bad as the uninsured outcome.

So what has all this got to do with SMEs? The answer is spiralling legal costs across the board. Although it is not an employment case Mr Justice Edwards-Stuart in the High Court case of Laing Construction v Healthcare Support (Newcastle) and Newcastle Upon Tyne NHS Foundation Trust in a judgment issued on 21 November called into question what he considered to be excessive costs incurred in a procedural hearing concerning interpretation of a document which took place over two days in July. Both the Claimant and Defendants were successful in part. Mr Justice Edwards-Stuart said that "the amount of the parties' costs of preparing for this hearing were somewhat startling".

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2. is it discriminatory not to offer a suitable vacancy to a woman selected for redundancy while on maternity leave?

sefton_council

The case of Wainwright v Sefton Borough Council was initially heard by Employment Judge Robinson in the Employment Tribunals in Liverpool in September 2013. His judgment was that Mrs Wainwight's claims of automatic unfair dismissal, breach of regulation 10 of the Maternity and Paternal Leave Regulations 1999 (right to be offered suitable alternative jobs) and direct sex discrimination all succeeded.

In November 2010 the Authority was planning redundancies (as it is again now). The process continued into 2012/13. Mrs Wainwright had worked for the Authority since 2001, latterly as Head of Overview and Scrutiny. From July 2012 to July 2013 she was off work on her third period of maternity leave. As part of the restructure a new post was created - Democratic Services Manager. This combined Mrs Wainwright's existing role with the post of Head of Member Services, held by a Mr Steve Pierce. Both were placed at risk of redundancy and both were interviewed for the new post in December 2012. It was decided that Mr Pierce was the better candidate and he was offered the new job. As a result, in January 2013, Mrs Wainwright was given three months' notice of redundancy, which took effect on 15 April 2013.

The new post was a suitable alternative vacancy but it appeared that there were no others at the time. The Council maintained that Mrs Wainwright was not entitled to special treatment under Regulation 10 until the decision was taken about who was the best candidate for the Democratic Services Manager role. However the Tribunal took the view that the right to be offered the vacancy arose when the redundancy situation affecting her job became known and was extinguished either when the appointment took effect or when the maternity leave ended. The Tribunal also took the view that the Regulation 10 right was absolute - where there is a suitable vacancy it has to be offered to the employee on maternity leave. Failure to do so made the resulting dismissal automatically unfair and was direct sex discrimination. Judge Robinson's reasoning was based on him holding that Mrs Wainwright's job was no longer available when she was put at risk in July 2012.

On appeal, there were two main grounds.

  1. 1. Breach of Regulation 10 was not direct discrimination. Instead, Regulation requires more favourable treatment whereas there can be no direct discrimination unless there is unfavourable treatment.
  2. 2. It was an error to conclude that Regulation 10 applied before the interviews for the Democratic Services Manager role.

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3. is it possible to extend the time limit for proceedings against a former director?

software

In IT Human Resources PLC v Land the question for the High Court was whether an employer was out of time for bringing proceedings for infringement of copyright against a former director.

David Land was employed by and was a founding director of IT Human Resources PLC (ITHR). The Company is a recruitment agency, specialising in personnel who provide IT services. Mr Land created some software called Interact. Nationwide Technology Recruitment Limited was another IT staff recruitment agency. Mr Land was not a director of that Company but he did work for it from time to time over a number of years. Nationwide was dissolved in 2011.

ITHR maintained that it owned the copyright in the Interact source code and database schema. Mr Land accepted that ITHR owned the sources code but not the database schema. ITHR claimed that he infringed the copyright by making the software available to Nationwide. Mr Land accepted that he had provided the software to Nationwide, but not on as many occasions as was alleged. He also accepted that, without permission from ITHR, his actions would have been in breach of copyright. However he maintained that he had permission, given orally by ITHR, on all occasions that he provided the software to Nationwide.

Mr Justice Morgan decided that if the database schema were part of the source code then they were owned by ITHR. If not, they were nonetheless part of the Interact system and the relevant agreement provided for the software in the system to be owned by ITHR. Consequently, either way, ITHR owned all the relevant rights.

It was found that Mr Land had provided copyright material to Nationwide on a number of occasions between 2000 and 2002. These acts amounted to copyright infringement. There may have been further infringements from mid-2002 to April or May 2003. the reason for uncertainty is that further functionality was added to the software from mid-2002. In the event Mr Justice Morgan concluded that the infringements continued until April/May 2003. There was a further infringement on 12 December 2006 when a backup of the database was made. He also found that Mr Land knew that it was not in the interests of ITHR to provide Interact to Nationwide.It followed that he was acting in breach of his fiduciary duties as a director of ITHR.

In general the time limit for commencing proceedings for copyright infringement (and most other causes of action) is six years from the accrual of the cause of action. On that basis all the alleged infringements bar the 2006 backup would be out of time since the claim form in the proceedings was issued on 3 October 2011.

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4. is it possible to "re-litigate" an out of time discrimination claim?

"Issue estoppel" is the legal principle that, when applied, is intended to ensure finality and clear determination of issues in legal proceedings. It is defined as follows:

It applies where an issue in a cause of action was decided in a previous action. It must be a finding that is fundamental to the outcome of the decision, so fundamental that if a different conclusion had been reached on the issue, the outcome would have been different.

It is a form of res judicata. Although lawyers are encouraged to avoid the use of latin phrases there is no direct translation of res judicata. In essence this is the principle that a matter that has been adjudicated by a competent court and therefore may not be pursued further by the same parties.

High_Commission_of_Brunei_in_London

In Nayif v High Commission of Brunei Darussalam the Court of Appeal was asked to consider whether a tribunal's rejection of a race discrimination claim that was out of time prevented a negligence claim based on the same facts being brought in the High Court. Mr Nayif was employed as a chauffeur from 2003. He made a number of complaints that, during his employment from 2003 to 2010 he was treated unfairly and subjected to various acts of bullying, harassment and abuse. He claimed to have suffered psychiatric injury as a result.

On 26 October 2011 he commenced a race discrimination claim in the employment tribunal. All his claims were outside the standard three months time limit. It is possible for a tribunal to extend the time limit if it is thought just and equitable to do so. In Mr Nayif's case the tribunal declined to exercise the discretion to extend the time limits. Mr Nayif applied for permission to appeal to the Employment Appeal Tribunal but his application was rejected.

One might reasonably have thought that, as a result, he was at the end of the judicial road in terms of pursuing claims resulting from his employment. However, on 20 December 2012 he commenced proceedings in the High Court alleging negligence and breach of contract in respect of the same alleged psychiatric injury. His complaints were effectively the same as those made in the employment tribunal proceedings. However, he did not allege race discrimination.

The Commission applied for the claim to be struck out on the basis of issue estoppel with reference to the earlier employment tribunal proceedings. At the hearing of the application Master Leslie "with considerable reluctance" agreed with the Commission. However he was concerned that Mr Nayif may have suffered a "grave injustice" as a result of him barring the claim and he therefore granted permission to appeal the decision. On appeal Mr Justice Bean also agreed with the Commission so the claim remained struck out.

Mr Nayif appealed to the Court of Appeal. The appeal was heard by Sir Brian Leveson (he of the now largely forgotten Leveson Inquiry), Lady Justice Rafferty and Lord Justice Elias.

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5. to what extent is an employer liable for psychiatric injury?

Yapp

In Yapp v Foreign and Commonwealth Office the Court of Appeal was asked to consider to what extent an employer can be held liable for injuries suffered by an employee, in this case depressive illness and associated symptoms.

Mr Yapp was, with effect from January 2007, the British High Commissioner in Belize. In June 2008 he was withdrawn from his post on operational grounds and disciplinary proceedings were commenced. He received a written warning. His suspension was lifted but in the meantime he suffered from a depressive illness and had heart surgery. He did not take up any other post in the FCO until his retirement in January 2011.

In May 2011 he commenced proceedings against the FCO. He maintained that his withdrawal from the post of the High Commissioner and the handling of the disciplinary proceedings had brought about the depressive illness which in turn caused his inability to work and consequential financial losses.

At a liability hearing in February and March 2013 Mr Justice Cranston found that the withdrawal from the post was a breach of contract and a breach of the common law duty of care owed to him by the FCO. However claims relating to the disciplinary process were dismissed.

Mr Justice Cranston also found that Mr Yapp was entitled to recover damages in connection with his depressive illness, subsequently agreed in the sum of £320,000. However there was a dispute about whether interest on that sum should also be paid. At a further hearing in June 2013 it was held that Mr Yapp was also entitled to interest.

The appeals in the Court of Appeal concerned:

  1. - the FCO's appeal from the finding that the withdrawal from post constituted a breach;
  2. - that, even if there was a breach, Mr Yapp should not be entitled to damages for depression and its consequences on the basis that they were not caused by the breach and/or that they were not foreseeable consequences;
  3. - Mr Yapp's additional grounds for upholding the Judge's order; and
  4. - the award of interest.
The allegations that had led to disciplinary action against Mr Yapp included that he was arrogant and had a bullying style. Complaints about him were also made by the former Belizean Minister for Foreign Affairs, Eamon Courtenay, including that he behaved inappropriately with women, including touching Mrs Courtenay's bottom, so that people were no longer willing to invite him to events, that he was having a relationship with a member of staff at the Ministry of Foreign Affairs of Belize, that he was not joining diplomatic events, that he had adopted an inappropriate tone with the Belizean Prime Minister and numerous other allegations. He was withdrawn from post because it was considered that, in light of the allegations it was untenable for him to remain in post and he was suspended pending the outcome of the disciplinary process.

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