What’s new this month?
Thank you to those of you who attended our latest HR Breakfast Club sessions last month. The topic was the so called “gig economy” and issues that arise from short term contracts and freelance agreements. This seemed to generate a good deal of interest and we shall keep an eye out for the forthcoming decisions re. Deliveroo and others and will keep you posted.
We will shortly be announcing the dates and topic for the next round of sessions so keep your eyes peeled for this to reserve your place!
Nicky Cockerill also recently presented to start up businesses at the Business Growth Conference at the Allia Future Business Centre. This is a new initiative which was very well attended and for those of you that attended we hope you took away some valuable learning points.
Brexit
The government has set out its plans for EU citizens living in the UK after it leaves the EU. In the expectation of reciprocal arrangements for UK nationals resident in the EU, it proposes that:
- Qualifying EU citizens resident in the UK before the exit will be able to apply for residence status under a new scheme.
- Qualifying EU citizens will be granted indefinite leave to remain (settlement) under existing rules. They would be free to live in the UK in any capacity and undertake any lawful activity, to access public funds and services and to apply for British citizenship. To qualify, they must have been resident in the UK before a specified date and have five years’ continuous residence in the UK. The “specified date” is to be agreed, but will be no earlier than the 29 March 2017 (the date Article 50 was triggered) and no later than the date the UK leaves the EU.
- EU citizens who became resident before the specified date but do not have five years’ continuous residence at the time of the UK’s exit will be able to apply for temporary status to remain in the UK until they have five years residence, when they will be eligible to apply for settlement.
- EU citizens who arrived in the UK after the specified date will be able to remain in the UK for a period and may become eligible to settle permanently, depending on their circumstances, but are not guaranteed settled status.
- Family dependants who join a qualifying EU citizen in the UK before the UK’s exit will be able to apply for settlement after five years, irrespective of when they arrived. Those joining after exit will be treated in the same way as those joining British citizens.
- EU citizens with settled status will have access to UK rights and benefits on the same basis as comparable UK nationals under domestic law.
- EU citizens that do not meet the qualifying criteria but who remain legally in the UK on a pathway to settled status will have access to the same rights and benefits that they can access now (broadly, equal access for workers and the self-employed and limited access for those not working).
EU citizens do not need to apply now for settlement or documentation to prove they are currently exercising Treaty rights or have permanent residence in order to secure their status following the UK’s exit.
The government will publish proposals on how EU migration will work for new arrivals post-exit at a later date.
Obviously, this is all subject to negotiation with the EU and we will keep you updated of any relevant developments as and when they arise.
Any new cases to be aware of?
There are a couple of particularly interesting cases this month that I would like to highlight.
Firstly, in the case of MPT Group v Peel and Others, the High Court held that an employee was not under a duty to disclose their intention to compete to their employer. The background to this case involved two individuals employed in senior roles within the business. One was employed as a Technical Manager responsible for producing drawings for machinery. The other was employed as a Technical Sales Manager and was responsible for business development and managing key relationships with the company’s customers and suppliers.
Both employees were subject to a restrictive covenant in their contracts of employment which prevented them from soliciting or dealing with customers with whom they had personally dealt for the period of six months after their employment terminated. Both employees resigned from their roles and in the period between resigning and their employment terminating their employer enquired as to the reasons they were leaving. One informed the employer it was because they wanted to work from home more in order to spend time with their child and therefore wanted to work as freelance CAD designer. The other gave the reason for leaving being due to being offered another job doing panel writing. In any event neither of these reasons were correct and, immediately upon the expiration of the six month restricted period, both former employees incorporated their business and started trading in direct competition.
The previous employer claimed that the former employees had breached their contracts of employment for a number of reasons, one of which included failing to answer questions truthfully in respect of future intentions.
The High Court was reluctant to hold that there is a contractual obligation for departing employees to explain their own confidential plans for the future and would not accept that an employee is under a duty to disclose their true intentions to an employer.
This is very interesting decision and one that will be seen as potentially advantageous to departing employees. However, adding a word of caution, the employees in question in this case were not bound by fiduciary duties which could well have affected the Court’s decision. I would expect it would be difficult for this decision to apply where an employee does have fiduciary duties requiring them to act in the best of interests of the company, when they are planning to set up in competition!
The second case that I would like to highlight is that of FNV v Smallsteps, which involved a Dutch company acquiring a business via a “pre-pack” administration under Dutch insolvency law. In this case a pre-pack had been signed between an insolvency administrator and Smallsteps for the latter to buy 250 childcare centres. A number of employees were not offered contracts after the insolvency and brought action against Smallsteps. As part of the process they sought a declaration that TUPE applied to the pre-pack administration in which case they would be regarded as working for Smallsteps.
Under Dutch law where an employer is going into administration or liquidation then Article 5 of the Acquired Rights Directive 2001 precluded TUPE protection. However, the Court decided that the fundamental question was whether the business was being salvaged or whether it was being liquidated and how the Directive applied to transfer employees. It concluded that pre-packs were intended to salvage the business and therefore employees would not lose their right to transfer under TUPE.
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