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2012/2013

June 2012

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March 2012 & budget brief

February 2012 News

January 2012 Team Moves

November 2011 Law update

October 2011 Leadership

2012/2013

In Patsystems Holdings Ltd v Neilly, an employee left their senior role in the organisation and started to compete, in breach of their restrictive covenants. These restrictions were, in theory, valid and enforceable, given the employee's position. However, the restrictions had to be judged in relation to the point at which they were originally agreed. The employee had signed their contract when they started at the business. They were recruited into a more junior role, but were promoted during the course of their employment. At no point was the contract revisited, or the restrictions re-agreed. As such, the restrictions were held to be unenforceable.
Employers should therefore consider explicitly revisiting covenants when granting promotions to staff – it is not enough merely to state that the employee's terms remained unchanged.

Proposals for changes to employment law.

The main proposals are:

• Compulsory pre-claim conciliation through ACAS prior to issuing proceedings.

• Changes to the cap on the compensatory award for unfair dismissal, which could vary depending on the type of employer and range between one and three times median annual earnings.

• Financial penalties for employers who are found to have breached employment rights, where the employment tribunal decides there are aggravated features (what these might be is not yet clear). Such penalties will generally be 50 per cent of the total award, subject to a minimum of £100 and a maximum of £5,000. There will be a parking ticket style reduction for quick payment.

• Whistleblowers will only be protected if they believe that the disclosure is made in the public interest.

• Compromise agreements will be renamed settlement agreements.

Whilst the risk of a financial penalty is unlikely to be welcomed by most employers, the pre-claim conciliation (provided ACAS has the necessary resources) is likely to encourage parties to consider the merits of the claim at an earlier stage and settle before the process becomes too costly. The proposed change to the whistleblowing protection is also good news for employers as it will almost certainly mean a decrease in the number of whistleblowing claims, many of which currently involve employees whistleblowing about breaches of their own employment contracts. The proposal to change the basis of the unfair dismissal compensatory award has taken many by surprise - whereas the effect of the change is likely to be a lower award in most cases, the devil will no doubt be in the detail.

The Bill will now go through the parliamentary process and may be subject to change – it remains to be seen whether the above proposals will become law in their current form.

Protection against unlawful competition

The recent High Court case of Clear Edge UK Ltd v Elliott provides useful insight into a number of strategic considerations for employers who suspect unlawful competition, and provides a wealth of hints and tips for recruitment businesses that may need to apply for injunctive relief, as well as some words of warning for those defending such cases.

The claimants were granted an interim springboard injunction, restraining three employees/ex-employees (the defendants) from working for a competitor for a period of around two months, pending a speedy trial. This relief was granted regardless of the fact that the employees were not subject to any restrictive covenants. The High Court held that there was an arguable case: a) that the three employees had colluded in soliciting each other to resign and join a competitor together, in breach of their duty of fidelity; and b) that the three had misused the claimants' confidential information. Following the established tests in this type of case, it found that there was a serious issue to be tried, damages would be difficult to quantify and recover, and the balance of convenience fell in favour of granting the relatively short injunction until full trial.

It is important to remember that this is only an interim decision, and the full merits of the case have yet to be heard. The company was obliged to give an undertaking that if the defendants are exonerated at full trial in due course, it will pay damages to the defendants for any losses they suffer as a result of this injunction (including loss of earnings) which, if they lose their job offers, could be significant. However, if this decision is upheld, it may well signal a change in the way recruitment businesses prosecute claims against employees involved in team moves.

What is confidential information and how can it be protected?

It is often difficult to identify what information is confidential (and therefore protectable) among the data that employees have taken. Whilst in employment, the scope of the implied duty of confidence is wider than after termination, and case law (Faccenda Chicken v Fowler) has distinguished between the information that is confidential during the employment relationship (known as category 2) and the narrower category which remains confidential post-termination, and which is limited to trade secrets or similar (category 3).

In this case, the fact that the employees had breached their duty of fidelity by copying, retaining and deleting confidential information during their employment (i.e. while they were under a higher duty of confidence) meant that it was not necessary to establish whether the information that they retained fell into category 3. Springboard relief was awarded to remedy the unfair advantage caused by the defendants' past misuse of category 2 information as well as potential category 3 trade secrets.

The misuse of information while in employment, coupled with concerns about seemingly duplicitous behaviour of the employees when asked to deliver up, lent substantial weight to the argument that they were likely to further misuse confidential information in the future and that therefore a springboard injunction was appropriate.

In order to grant an interim injunction, the court must be satisfied that there is a prima facie case to answer and that damages would not be an adequate remedy for the wrongdoing. In this case, the judge readily accepted that once confidential information has been stolen, the substantial damage that its misuse could cause to the claimants would be hard to quantify, and even harder to recover.

The scope of the duty of fidelity

The company asserted that each of the defendants owed fiduciary duties while in employment (which include a heightened duty of undivided loyalty to the employer and a clear duty to report one's own wrongdoing as well as that of others). However, demonstrating this proved unnecessary, as the court agreed that there was a serious arguable case that all three employees had breached their implied duty of good faith and fidelity (a duty owed by all employees) by colluding to leave their employer together in order to compete and in concealing this from their employer.

Although a judge will need to be convinced on the evidence available in each case, this case confirms that, where employers can demonstrate their suspicions of an orchestrated, concealed team defection by senior employees who intend to compete, this will amount to a serious breach of the duty of fidelity. Here, the findings that the defendants all appeared to have misused confidential information, and intended to do so in the future, also influenced the judge's view that they were plotting together to defect.

What is a springboard injunction and when can it be used?

A springboard injunction prohibits employees from taking unfair advantage of the 'springboard' that their unlawful activity has given them. It was first used to prevent a former employee from using a card index full of client contact details that he had stolen from his former employer, and is an invaluable tool for recruitment companies seeking to protect themselves from the misuse of databases.

It is only recently that courts have begun to grant springboard injunctions in cases other than breaches of confidence, and this case supports an emerging line of authorities that accepts that businesses may need the protection of springboard injunctions in other instances of unlawful competition. Here, if the team were allowed to join the competitor before the full trial was heard, they would unfairly profit from the head start that their breaches of fidelity afforded them in the set up of a competitive business, a business which threatened to cause substantial damage to their former employer.

Tactics for claimants

The judge also provided a number of helpful pointers on difficult pre-action considerations that recruitment businesses have to grapple with quickly when faced with a team defection and the suspicion of misuse of their information:

• Pre-action negotiations: The parties' reasonableness in pre-action conduct is an important factor that is taken into account by the court. Recruitment businesses face a difficult choice between going straight to court without notice to the defendants, or pausing and trying to negotiate undertakings before they do so. If they do the former, they risk being criticised for not giving the defendants an opportunity to explain themselves and provide undertakings which may obviate the need for court proceedings, whereas if they choose the latter, they risk further damage being done to their business, the loss or destruction of confidential information and evidence, and criticism of delay. Here, the claimants first sought undertakings. The defendants refused because the undertakings went further than their contractual restrictions. Further, they denied that the new employer was a competitor (which was subsequently found to be untrue by the judge). While these negotiations did not initially produce more than partial delivery up of confidential information, they turned out to be very useful, as the judge relied on the fact that the defendants had both refused to provide undertakings and denied that their new employer was a competitor in support of his decision that there was a basis for springboard relief.
• Delay: Injunctive relief is any equitable remedy, and undue delay in seeking this relief is likely to jeopardise the chances of obtaining it. The defendants sought to use the claimants' delay (of around four weeks) to convince the judge not to exercise his discretion to grant the injunction. The judge recognised that “it is always difficult for claimants in these circumstances to know exactly when they have sufficient to persuade a court of the risks involved", and held that although the claimants could have been quicker in making their application, this should not deprive them of the relief to which they were otherwise entitled.
• Evidence: So how much evidence is required? Interestingly in this case, the claimants had no actual evidence that the defendants had actually misused information to compete but this was the conclusion they, and the judge, came to when the defendants failed to deliver up and began wiping information. The claimants could have chosen to make their application when they first received mobile phones back from the defendants that had been wiped of all data, as negotiating the delivery up of information and then having IT forensic experts analyse it takes time. However, the evidence that the claimants obtained from IT experts, and how this differed from the defendants' witness evidence, formed a key part of the judgment against the defendants in this case. A short period of thorough investigation before instigating court proceedings is often wise, and obtaining early IT forensic evidence can be invaluable.
• Who to sue? While in most cases claimants bring proceedings against both the defecting employees and their new employer, and for good reason, the claimants chose not to in this case for commercial reasons. This turned out to be a wise move as far as their interim application was concerned, as it supported the claimants' arguments that damages against the individual ex-employees would not be an adequate remedy, as they were unlikely to have substantial personal assets.

Warnings for defendants

Although the claimants here did not sue the team's new employer, recruitment businesses that take on teams from a competitor will usually find themselves brought into any litigation that ensues on the basis that they have induced breaches of contract by the consultants, and because they have the deeper pockets. As their new employer, the business should be careful to ensure that the individuals concerned do not make a defendable situation much worse.

The judge was very critical of the defendants, whose evidence he clearly disliked, but the following points are useful to bear in mind when standing behind consultants who are threatened with court action:

Many of the defendants' actions were found to be suspicious by the judge, who then used those suspicions to find that they were likely to continue to misuse information and use their unfair competitive advantage to the detriment of the claimants if injunctive relief was not granted.

Interestingly, this case was not fought on the usual grounds of the enforceability of restrictive covenants – it seems that the employees were not bound by any restrictive covenants in their contracts. Further, the express duty of confidence in their contracts was held to impose no more onerous duty than that implied by law.

A less restrictive confidentiality injunction to deliver up and not misuse information would not have helped here – the defendants had made it clear that they could not be trusted to deliver up, and the IT forensic reports on the equipment they did deliver up showed evidence of the wholesale deletion of files and information in breach of their obligations. The court was satisfied that, in these circumstances, a springboard injunction was necessary pending a full trial in January.

Although these cases often settle after the interim stage, we wait with anticipation for this case to go to full trial. If the claimants' suspicions are borne out and they can maintain their position following an examination of the merits at the full trial, the manner in which these individuals have been prevented from unfairly competing could become a very important weapon in the defence armoury of all recruitment businesses in the future.
Mishcon deReya

Crawford and another v Suffolk Mental Health Partnership NHS Trust
([2012] EWCA Civ 138)

The Court of Appeal has upheld an Employment Tribunal's decision that two nurses dismissed for professional misconduct, assault and negligence for restraining a patient were unfairly dismissed. Nothing unusual there – there is often a fine line between acting reasonably in dismissing an employee for gross misconduct and a finding of unfair dismissal. However, the facts of the case are unusual, and the judgment offers some useful pointers for employers conducting investigations, as well as guidance on the power to suspend. It also raises an important issue about how employers should approach an appeal.

The nurses, who worked in a ward with patients suffering from dementia and depression, were accused of tying a patient to a chair with bedclothes when he became agitated. They were suspended for alleged assault, and the Trust called in the police (who confirmed a month later that they would take no action). Formal disciplinary action began several months later following a prolonged investigation. While the nurses admitted tying the patient's chair to a table, they denied restraining him with a sheet across his chest, explaining that they had wrapped a sheet around the patient's chest to make him feel as though he was in bed. During the investigation, this premise was tested with a practical experiment which the nurses were not informed about or allowed to participate in. The nurses' appeal against the decision to dismiss them was rejected by the Trust.

In determining the fairness of misconduct dismissals, the Tribunal has to determine whether or not the employer's decision to dismiss fell within the band of reasonable responses open to a reasonable employer in the circumstances, and under no circumstances should it substitute the decision of the employer with its own views – it must look at the matter through the eyes of a reasonable employer. Here, the nurses were successful in overturning the Employment Appeal Tribunal's decision that the Tribunal did just that.

The Court of Appeal also made the following findings:

• Automatic suspension: The nurses were suspended for six months. While this did not in itself form part of the appeal, in a footnote to its decision, the Court of Appeal noted employers' tendency to automatically suspend employees accused of misconduct with concern, and warned that suspension cannot be automatically justified, even where there is some evidence supporting an investigation. Automatically suspending an employee may amount to a breach of the implied term of trust and confidence.

• Involving the police: The Court of Appeal considered the employer's decision to call in the police "little short of astonishing" in circumstances where no one suggested that the nurses were acting other than in the best interests of patients.

• Where careers are at stake: The Court of Appeal imposed a heightened duty on the employer to carry out fair and thorough disciplinary processes as the employees' careers were at stake.

• Remedying procedural defects on appeal : There was consideration of the previously accepted principle that procedural defects in coming to the original decision to dismiss can be remedied on appeal, and thus render the dismissal fair. Here, as is often the case, the appeal panel confined its enquiries to whether the decision to dismiss was fair and reasonable. It did not re-hear the evidence. The Court of Appeal held that, although the nurses did not even raise a particular issue on appeal, it was not incumbent on them to do so. It was the employer's responsibility to ensure a fair procedure, and it had not remedied its own procedural failings on appeal. This does lead to a concerning state of affairs whereby unless employers conduct a full re-hearing of every conduct dismissal on appeal, they leave themselves open to subsequent criticism by a Tribunal (and perhaps a finding of unfair dismissal) that they failed to follow a fair procedure. It would appear that relying on employees to raise their grounds of appeal in full may no longer be enough, particularly where careers hang in the balance.

When handling disciplinaries, employers should always consider whether they can justify suspending employees pending investigation. Also think carefully about what, if anything, police involvement might achieve, and only involve the police where there is a genuine belief that there may be criminality involved. Finally, it is important to ensure that where the allegations are so serious that any dismissal may have an impact on an employee's ability to continue their chosen career, the disciplinary process stands up to enhanced scrutiny as regards fairness, thoroughness and the strength of the evidence relied on. This may well include ensuring that appeals involve a full re-hearing, rather than just a review of the decision to dismiss.

IMPORTANT: This briefing note is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice. Release Date: 27 March 2012
Mishcon de Reya

In May 2011, the government published plans to amend the Working Time Regulations 1998 in order to resolve uncertainty following a series of problematic European and UK judgements on the rights of workers who are unable to take holiday due to sickness. In essence, the government is proposing that annual leave can be carried over to the next leave year in circumstances where leave cannot be taken at the scheduled time due to sickness or where the employee is sick during scheduled annual leave.

However, since the Government made this announcement, there has been a European Court of Justice (ECJ) decision, KHS AG v Schulte, which said that the EU working time directive does not require unlimited accumulation of holiday when a worker has been on sickness absence for several years. The ECJ said that a 15-month ‘carry over period’ was lawful.
The Government’s firm proposals are expected during the first half of 2012.

The government has commissioned Mr Justice Underhill to conduct a thorough review of the rules of procedure governing employment tribunal proceedings. The review, to be completed by the end of April 2012, will consider whether the rules have become over complex.
Fundamental review of ERT rules – terms of reference

Pre-tribunal conciliation by Acas
The government has said it will be seeking views on a proposal to introduce compensated ‘no-fault’ dismissals for micro- firms with fewer than 10 employees and on ways to slim down existing dismissal procedures for all employers. No further details of these proposals have yet been published.

The government is intending to introduce a discretionary power for employment tribunals to impose financial penalties on employers who lose cases. The level of penalty that the government has suggested is half of the total award made by the tribunal, with a minimum threshold of £100 and a maximum of £5,000. The penalty would be reduced by 50% if paid within 21 days.

The government proposes to consult during 2012 about whether to have a quicker and cheaper ‘rapid resolution’ scheme as an alternative to employment tribunals for simple, low value claims. This would involve a determination by someone other than a judge, relying on paper evidence rather than full hearings.

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June 2012
Holidays
Extra bank holiday

The Queen's Diamond Jubilee will be marked with an additional bank holiday on Tuesday 5 June 2012. The late May bank holiday will be moved to Monday 4 June to create a long weekend of celebration.

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April 2012

The Olympic Games
Acas advice and guidance

Everyone is working together to make the Olympic and Paralympic Games a great success, but there are some real issues employers need to start thinking about now. Your employees will fall largely into two groups:

As the countdown to the Games continues, Acas will be publishing new and updated guidance to help you:

Tribunal -potential changes

Various changes are being made to tribunal procedure from April 2012. Witness statements will not be read out but will be taken as read by the tribunal, judges will sit alone without lay members for some unfair dismissal cases and expenses are to be withdrawn for witnesses.

The qualifying period of employment before a claimant can claim unfair dismissal will increase from one to two years from April 2012. This will only apply to employees who start a new job on or after 6 April: employees already in employment on that date will retain the current one-year qualifying period.

In addition, the amount of costs a tribunal can award (without referring the case to the county court) will increase from£10,000 to £20,000. The amount of the deposit that tribunals can order a claimant to pay before proceeding with a claim will rise from £500 to £1,000.

Rates of statutory maternity pay, adoption pay and paternity pay will rise from £128.73 to £135.45 per week from April 2012. Statutory sick pay will increase from £81.60 to £85.85 per week.

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March 2012

Budget brief points:

The highest rate of Income Tax is to be reduced from 50% to 45% from April 2013.
From April 2013 the availability of Age Related Personal Allowances (for those over 65) will be restricted.
A Stamp Duty Land Tax rate of 7% on properties worth more than £2m will apply, 15% if purchased through a company.
A number of consultations to consider possible future changes will be run later this year. These include capping tax reliefs, introducing a Capital Gains Tax charge on residential property owned by non-resident non-natural persons, and increasing the amount a UK domiciled individual can transfer to a non-UK domiciled spouse/civil partner.

Tribunal reform Regulations laid before Parliament

The Employment Tribunals (Constitution and Rules of Procedure) (Amendment) Regulations 2012 , which bring in various changes to the Employment Tribunal Rules of Procedure, have been laid before Parliament. The new procedural rules will apply to cases submitted to an employment tribunal on or after 6 April 2012. The changes brought in by the Regulations are the following:
the maximum amount of a deposit order, which a tribunal can order a party to pay as a condition to continuing with tribunal proceedings, increases from £500 to £1,000; witness statements are to be taken as read, unless the tribunal directs otherwise; employment judges can direct that a party makes a payment to a witness in respect of the costs of attending a tribunal hearing, and the losing party can be ordered to reimburse the winning party for any such costs that have already been paid out; and the maximum amount of a costs order, which a tribunal may award in favour of a legally represented party, increases from£10,000 to £20,000.
These changes were announced in the Government's response to its consultation on "Resolving workplace disputes", along with a range of other proposals for reform of the law on employment disputes.Employment Tribunals (Constitution and Rules of Procedure) (Amendment) Regulations 2012 The Regulations are available on the UK Governernment's legislation website. Resolving workplace disputes: Government response to the consultation. More detail on the Government's proposals for reform of the tribunal system and the law on workplace disputes can be found in the consultation response document (on the BIS government website).

The EU Parental Leave Directive (2010/18/EU), adopted in March 2010, increases parental leave from three to four months.
The increase is unlikely to have a major impact in the UK, since statutory parental leave is unpaid and it is relatively uncommon for employees to take it. BIS has indicated that implementation will take place in March 2013.

February 2012

NEWS

Law now in force

Tribunals
Changes to compensation limits

The upper limit on the amount of a ‘week's pay’ increased from £400 to £430 from 1 February 2012. Among other things, this figure is used to calculate statutory redundancy pay and the ‘basic’ award for unfair dismissal. As a result, the maximum redundancy payment/basic award has risen from £12,000 to £12,900. At the same time, the maximum compensatory award for unfair dismissal went up from £68,400 to £72,300. The maximum that an unfairly dismissed employee can recover (basic award plus compensatory award) is now £85,200.

Rule change on work experience
Minister for Employment Chris Grayling has welcomed a change in the rules of the Government's work experience scheme.
29 Feb 2012 - 16:17 Source: Press Association

Youngsters on the Government's work experience scheme will be able to leave after a week without facing benefit sanctions, ministers have said.The change was announced after a meeting with scores of employers following protests by activists who complained that youngsters were being forced to work for nothing.

The Department for Work and Pensions (DWP) said sanctions will still apply for cases of gross misconduct, such as stealing or racist abuse. But those taking part in the scheme will be able to leave after a week without losing their benefits.

Employment minister Chris Grayling described it as a "change" that would help companies, insisting that opponents were"completely misguided".

Mark Dunk from the Right to Work campaign, said: "The dropping of sanctions for the work experience scam is one battle won but the wider fight goes on. Forced unpaid work still continues in the form of the mandatory work activity and community activity programme. We demand that the Government immediately drops not just one of its forced labour schemes, all of them.

"There should not be any young person anywhere forced to work for no pay. Everyone on any training scheme should receive minimum wage or above. We demand real jobs now for all." The group said it will go ahead with protests against firms including restaurant chain McDonald's. Katja Hall, the CBI's chief policy director, said: "It's good to hear that many more employers are signing up to give young people a chance to get experience of work".
Gaining hands-on experience of the workplace is vital to giving young jobseekers a foot in the door, and it can make such a difference when they are applying for interviews. The advantage of this scheme is that they gain work experience while remaining on benefits. The work experience scheme's record of getting people into jobs is very strong, with more than half coming off benefits after 13 weeks of starting a placement."
New law now in force

Tribunals
Changes to compensation limits

1 February 2012
The upper limit on the amount of a ‘week's pay’ increased from £400 to £430 from 1 February 2012. Among other things, this figure is used to calculate statutory redundancy pay and the ‘basic’ award for unfair dismissal. As a result, the maximum redundancy payment/basic award has risen from £12,000 to £12,900. At the same time, the maximum compensatory award for unfair dismissal went up from £68,400 to £72,300. The maximum that an unfairly dismissed employee can recover (basic award plus compensatory award) is now £85,200.

Vince Cable, UK Secretary of State for Business, has announced that he wil levaluate the administrative implicationsof the Agency Workers Regulations.
The Global Recruiter, December 2011


Market

A survey of 400 recruitment companies by the Recruitment and Employment Confederation (REC) and the professional services firm KPMG has shown that recruitment of temporary staff has fallen for the first time in almost two-and-a-half years. Hiring of permanent staff also declined for the third successive month, according to the survey. It should be noted that Kevin Green, the REC's chief executive, believes that the drop in temporary recruitment has been prompted by economic
uncertainty rather than the impact of the new Agency Workers Regulations.
Brian Groom, Financial Times, 11 January 2012

A study by Astbury Marsden, a financial recruitment company, has shown that new job openings in the City of London fell by 43 percent in December 2011, as financial services reduced hiring amid the uncertain economic outlook.
Simon Mundy, Financial Times, 9 January 2012

The mining industry's boom on the back of rising commodity prices has caused considerable shortage of staff. Workers in the sector are enjoying soaring salaries as companies compete to attract them.
Emma Rowley and Jonathan Pearlman, Daily Telegraph, 28 December 2011
Antal International has released its Global Snapshot study, which shows that current world recruitment levels are up.
Recruitment International, January 2012

Research carried out by TipTopJob.com has shown that almost a fifth of all jobseekers apply for more than 20 jobs.
The Global Recruiter, January 2012

Totaljobs.com quizzed over 160,000 people from 66 countries and revealed that despite the global economic downturn affecting the UK, London is the number one city of choice for international jobseekers.
The Global Recruiter, December 2011

Trends

According to a report surveying 1,000 firms by Adecco, almost one-in-five employers think that school-leavers make better employees than university graduates. Nearly 50% of the graduates surveyed agreed that their degrees did not provide the skills needed to enter the world of work.
Daily Telegraph, 16 January 2012

Research by recruitment agency Hyphen has shown that employers who restrict the use of social networking tools designed for business are risking alienating "Generation Facebook".
Recruitment International, January 2012

Giant Group plc, the contractor service provider, has warned that end users and recruiters who influence agency workers to operate via Personal Service Companies (PSCs) in an attempt to avoid AWR may be liable for unpaid tax and national insurance if HM Revenue & Customs subsequently challenges those arrangements.
The Global Recruiter, December 2011

This newsletter is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice.

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JANUARY 2012

In May 2011, the government announced that it was reviewing the Trade Union and Labour Relations (Consolidation) Act 1992 (sections 188-198) on collective redundancies. It considers that the current rules may be hindering employers’ ability to restructure efficiently.

The government has since been collecting evidence on the statutory obligation for employers to consult about collective redundancies and, in particular, whether the 90-day minimum consultation period should be reduced. The closing date for responses was 31 January 2012.

TEAM MOVES

A. INTRODUCTION
One of the most effective ways of growing a business, particularly in the current financial climate, is to hire in ready-made teams of employees. The flip side is that one of the biggest threats to your business will always be the loss of key teams to competitors.

B. LEGAL FRAMEWORK: WHY MIGHT TEAM MOVES BE UNLAWFUL?
In order to successfully defend against and execute team moves, an understanding of the legal framework that underpins this area is crucial.

B.1 Express duties

B.2 Implied duties

B.3 Fiduciary duties

B.4 How the courts have interpreted the duty of good faith and fidelity

B.5 Claims against third parties

In addition to breaches by the employee him or herself, the receiving employer (and potentially, any recruitment consultantn or head-hunter involved) may be guilty of torts relating to the team move. These include inducing a breach of contract and conspiracy.

C. PROTECTING AGAINST THE THREAT OF TEAM MOVES

So what should you do if faced with a defecting team?

C.1 Immediate action

There are a number of key strategic issues to consider, and fast, when faced with the resignation of a senior employee, and actual or threatened resignations by team members.

c.2 Before bringing a claim

If you have gathered evidence of wrongdoing, consider obtaining pre-action or third party disclosure from third parties such as the new employer, or,interestingly. the headhunter who is facilitating the poaching.

c.3 What types of claims can you bring?

C.3.1 Interim relief

C.3.2 Final remedies

D. Planning to acquire a team, the Theory and Practice

You identify a golden opportunity to acquire a team of four bankers from a key competitor, X Investment Limited. ctive leader, and hand-picked his team at X.
You hope to be able to hire J and get the entire team, as you suspect they will go where he goes.

Q: How would you approach J and his team?

Q: What else do you need to know about their contracts and other duties?

Q: What strategy would you decide on to get J and the team on board?

Q: What are the risks and how would you limit your liability?

Q: How do you reassure them and complete the team move in one piece without casualties?

This represents an outline of key issues when dealing with a team move, for further details please contact me by email or telephone.

The government has been collecting evidence on the effectiveness of the Transfer of Undertakings (Protection of Employment)
Regulations 2006 - in particular, whether the rules are unnecessarily ‘gold-plated’ and bureaucratic. The closing date for responses was 31 January 2012.

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November 2011

Employment law updates

After much speculation, the Business Secretary, Vince Cable, has today set out the Government's plans for a radical shake up of employment law. Mr Cable presented a mix of proposals, pledges and requests for views. Further plans for change are contained in the government's response to the "Resolving Workplace Disputes" consultation, the publication of which coincided with Mr Cable's speech.

So what is new? In this alert, we set out some of the main areas put forward for reform.

Unfair dismissal

The Government has confirmed that it is seeking views on:
•a compensated no-fault dismissal regime for micro firms (10 or fewer employees)
•radically slimming down existing dismissal processes, including looking at "potentially" changing the Acas Code.

The Government also confirmed the increase in the qualifying period for unfair dismissal to two years from April 2012.

Tribunals

Proposals include:
•a requirement for all claims to be lodged with Acas for conciliation before they can proceed to tribunal•the potential introduction of fees for bringing employment tribunal claims
•a penalty (at the judge's discretion) for employers who are found to have breached employment rights
•consideration of quicker and cheaper alternative to a tribunal hearing (a "rapid resolution" system)
•a "Fundamental Review" of the whole tribunal system
•increasing the use of mediation in the workplace.

Protected conversations and Compromise agreements

A new concept of "protected conversations" (conversations that cannot be used as evidence in a tribunal) will be introduced to "allow employers to raise issues such as poor performance or retirement plans in an open way". There will be consultation on the detail in the New Year.

The Government will look at ways of simplifying compromise agreements (to be renamed "settlement agreements").

The Government has also:
•pledged to increase the level of deposit orders from £500 to £1,000 and the level of costs that a tribunal can order a party to pay if their case is vexatious or misconceived from £10,000 to £20,000
•pledged to close the "loophole" in the whistleblowing legislation which allows employees to blow the whistle on breaches of their own employment contract•confirmed its commitment to extend rights to flexible working and introducing a system of shared parental leave•called for "evidence" in relation to proposals to reduce the 90 day period for collective edundancy consultation and simplifying TUPE.

This newsletter is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice if necessary.

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October 2011

Old and reliable news regarding leadership

What Makes a Leader Trustworthy?

If you were compiling a list of the fundamental qualities you’d expect to see in any leader, surely it would include m personal integrity. Who would want to work for a leader who is not honest, ethical or reliable? If you did work for such a person, imagine how this would affect your level of engagement—and the impact it would have on the performance of the organisation.

Amazingly, our latest research shows that 28 percent of employees don’t trust their senior leaders. That’s more than one in four workers. The study also found that this lack of trust has a strikingly negative impact on employee well-being, staff retention and organisational performance.

Do smarter people make better leaders? Although the general answer is "yes," it depends on what you mean by "smart." Almost a century of research on basic intelligence (what is referred to as "academic" or "verbal" intelligence - better known as IQ) suggests that IQ is slightly to moderately related to attaining a leadership position and to leader success. But that doesn't always fit with people's experience. Some who we consider iuses don't always make good leaders, for example, scientists, brilliant mathematicians, breakthrough artists. On the other hand, we see leaders who don't appear particularly smart. One US congressman recently said, "you don't have to be a genius to be in Congress." So, IQ matters, but not as much as we might think. There are, however, other types of intelligence.

In the past dozen or so years there has been huge interest in what is called "emotional intelligence" (EQ as opposed to IQ) Emotional intelligence is the ability to communicate with others at an emotional level, to use emotions to help guide decision making, to be able to regulate emotions, and possessing knowledge about emotions and emotional processes. Is EQ related to leadership? Yes, to some extent. It's important for creating good relationships between leaders and followers, and charismatic leaders seem to have an extraordinary ability to communicate at the emotional level. Again, however, the relationship between EQ and leadership is significant but small. But there is a third form of intelligence important for leaders, and it has not received much attention.

Social intelligence is the ability to understand social situations, to play social roles, and to influence others. It
involves being able to see others' perspectives and to understand the complex and abstract social norms, or informal"rules" that govern all types of social situations. Social intelligence is what some refer to as "street smarts" or"everyday intelligence." Our research suggests that social intelligence may be the most important type of intelligence for leaders, although all three types of intelligence, verbal, emotional, and social, are advantageous for leaders.

So, how does this relate to those of us in or aspiring to leadership positions? The good news is that the last two forms of intelligence, emotional and social, are pliable. They can be developed. EQ and SQ (I don't think anyone has actually used that to represent social intelligence, but we will) both relate to interpersonal skills, and more we develop our interpersonal or people skills, the more we will enhance our emotional and social intelligences.

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