News & Insights

Employment bulletin September 2014

This month we look at whether non-payment of wages will prevent an employer enforcing restraints of trade, and if reading employees’ private emails may infringe their human rights.

FSP Breakfast Briefing Tuesday 14 October 2014

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Can an employee claim constructive dismissal despite committing gross misconduct?

Where an employer commits a fundamental breach of an employee’s contract of employment, an employee may elect to resign in response, treat himself as dismissed, and pursue a claim for constructive dismissal.  In a recent case the Employment Appeal Tribunal (EAT) considered whether an employee can still bring such a claim if the employee was in fundamental breach of contract at the time he elected to resign.

Mr Atkinson was Director of Resources at a housing association.  After discovering an overspend of £1.8 million in Mr Atkinson’s department, the association instigated disciplinary proceedings and began an investigation into Mr Atkinson’s actions.  In the course of the investigation the association looked at personal emails sent by Mr Atkinson, which included overtly sexual material.  The emails had been sent in breach of Mr Atkinson’s employment contract and these matters were included as part of the investigation.  Before the outcome of the disciplinary hearing was announced, Mr Atkinson resigned and brought a claim for constructive dismissal on the grounds that the manner in which the association had handled the investigation amounted to a fundamental breach of contract.

The EAT held that at the time of Mr Atkinson’s resignation the association had not yet exercised its right to terminate Mr Atkinson’s employment in response to his gross misconduct.  As a result the association’s contractual obligations to Mr Atkinson continued and he was entitled to resign and claim constructive dismissal.

The decision in this case may cause concern for some employers.  However, a tribunal is likely to reduce an employee’s entitlement to damages by up to 100% where an employer is able to demonstrate that it would have fairly dismissed the employee in any event as a result of the employee’s fundamental breach.  In that context, the right to bring a constructive dismissal claim in Mr Atkinson’s circumstances could be seen as something of a pyrrhic victory.

Can an employer enforce post-termination restraints after refusing to pay salary during the notice period?

In last month’s bulletin we emphasised the importance of careful drafting when it comes to enforcing post-termination restraints against departing employees (read more).  This month we look at a recent High Court case, which dealt with whether an employee can be held to his notice period and his restraints, despite not being paid.

Mr Rodgers, a broker, wanted to leave Sunrise, his employer, as he was unsatisfied with the distribution of the bonus pool.  However, his contract of employment contained a 12 month notice period and extensive restraints of trade.

In March 2014 Mr Rodgers secured a role with one of Sunrise’s competitors, to start in January 2015.  Shortly afterwards, and in breach of his contractual notice obligations, Mr Rodgers informed Sunrise that he would no longer be coming into work.  Sunrise did not accept Mr Rodgers’ resignation as he had not given the required notice, but refused to pay his salary on the basis that he was not ready and willing to attend work.  Sunrise also sought to enforce the restraints of trade in the employment contract.

Mr Rodgers argued that Sunrise’s non-payment of his salary allowed him to leave without honouring his notice period, as it either showed an acceptance of his earlier resignation or it was in itself a fundamental breach of contract allowing him to leave immediately.

The Court held that as Mr Rodgers was not ready and willing to work, Sunrise was entitled to withhold his salary.  Sunrise had made it clear that Mr Rodgers’ resignation was not accepted and the employment relationship would continue until the expiry of his notice period (subject to an offered reduction), at which point the post-termination restraints would apply.  The non-payment of salary accordingly did not prevent Mr Rodgers being held to his notice period and the restraints of trade.

When an employee resigns without notice, or on short notice, employers need to think carefully about whether or not to accept the resignation and if they wish to hold the employee to their notice period.  A court will rarely force an employee to work during their notice period, but may enforce a notice period to stop an employee working for a competitor.

If an employer accepts a resignation on short notice, either expressly or implicitly by their actions, they will not be able to change their mind and seek to enforce the notice period at a later date.  

If an employer does want to hold an employee to their notice period they need to be very clear that the resignation is not accepted and must continue to meet their contractual obligations.  An employer should accordingly only cease paying salary if there is a period of unauthorised absence.

Can an employer read their employees’ private emails?

An employer carrying out an investigation ahead of a disciplinary meeting will be keen to uncover as much relevant information as possible to enable it to make a fair and well-informed decision.  However, when employers examine personal emails sent using workplace email systems, some employees may feel this oversteps the mark.

In the same case as described above (read more), Mr Atkinson, a Director of Resources, argued that his employer, a housing association, had infringed his right to respect for private and family life under Article 8 of the European Convention on Human Rights by reading his private emails and by making use of them in disciplinary proceedings against him.  The emails in question were sent to Mr Atkinson’s lover and some included overtly sexual content.  Other emails revealed that Mr Atkinson had improperly attempted to assist his lover in securing a job at the association.

The EAT held that there could only be a breach of Mr Atkinson’s rights under Article 8 if there was a reasonable expectation of privacy taking into account all the circumstances.  In this case, no such expectation of privacy had arisen.  Mr Atkinson had failed to mark his emails ‘personal’ or ‘private’ in accordance with the internet and email policy, despite the fact that he had drafted the policy himself.  His use of the font ‘wingdings’ in an attempt to disguise the content of his emails, showed an understanding that somebody other than the recipient might seek to read them.  His employer had also come across the emails as part of a legitimate investigation for disciplinary purposes, rather than as part of an indiscriminate trawl.

The case confirms that, in some circumstances, reading employees’ private emails could constitute an infringement of their human rights.  Where employers habitually read private emails or do so without good reason then the risks of infringement will increase.  Where employers limit review of private emails to disciplinary investigations, monitoring for viruses and ‘keyword’ scans for breaches of email policy, they will be better placed to defend themselves against any allegations.  Employers should also ensure that their email policies are regularly reviewed so that they accurately reflect the employer’s approach in practice.

Can an illegal immigrant bring a claim for discrimination?

It is an established principle of English law that a person who commits an illegal act should not be permitted to profit from their wrongdoing.  In a recent case the Supreme Court considered whether this principle would prevent an illegal immigrant claiming employment law protection.

Miss Hounga, a Nigerian national, had come to the UK after obtaining false identity documents.  After arriving in the country Miss Hounga worked for Mrs Allen, providing care for Mrs Allen’s children.  Miss Hounga was given food and lodging but was not paid.  She suffered physical abuse at the hands of Mrs Allen and was ultimately dismissed from her employment.  Miss Hounga brought various claims which included race discrimination, unpaid wages, and outstanding holiday pay.  Mrs Allen pleaded the defence of illegality, arguing that Miss Hounga could not bring these claims because she had no right to work in the UK.

The Court found that Miss Hounga was entitled to bring a claim for discrimination because there was an insufficiently close connection between Miss Hounga’s immigration offences and the discriminatory treatment she suffered from her employer.  In reaching its conclusions the Court put a heavy emphasis on public policy concerns.  It decided that ruling in favour of Mrs Allen might compromise the integrity of the legal system by encouraging employers to believe that they could discriminate with impunity against employees in Miss Hounga’s circumstances.

Separately, Mrs Allen’s defence of illegality did defeat Miss Hounga’s claims for unpaid wages and holiday pay, as these were directly based on her illegal employment.

This case, while sensitive to its facts, shows that even employees that have no right to work in the UK may benefit from legal protection against discriminatory treatment.  Employers will in any case be keen to avoid employing illegal workers and, as we reported in April, there are strong financial penalties should employers fail to meet their obligations in this respect (read more).