Social media – issues for employers and employment agencies/businesses

This is the text of some notes I prepared to support a talk that I gave recently on this subject.

Use of Social Media

Have policies for internet and social media use.  Good policies will cover:

  • Protecting confidential information – yours and your clients/candidates
  • protecting the good name of your business: not posting anything unprofessional or inappropriate
  • Observing laws – regulatory; harassment, discrimination, threats; defamation etc
  • not making disparaging/derogatory comments about the company, its staff or clients or candidates
  • Personal use of social media while at work: if this is permitted it should be on the basis that it does not interfere with employment responsibilities or productivity
  • Unacceptable use (viewing inappropriate sites, running a private business)
  • Monitoring of employees’ internet/social media use
  • a reminder that breaches of the policy may give rise to disciplinary action
  • a reminder that the internet does not forget

But remember that a policy is only as good as its enforcement.  Make the policy widely available.  Be consistent in its enforcement.

 Who owns the contacts?

Your employee leaves. He has always been very active on LinkedIn (possibly with your encouragement) with several hundred contacts that he has built up during his time as your employee. Who owns those contacts? Can you prevent him from using them for the benefit of his new business/employer?

Type “who owns LinkedIn contacts” into your preferred search engine, and you will quickly see (a) that this is a hot topic and (b) that the courts have yet to give a definitive answer.

There has been one relevant High Court decision in recent years: Hays Specialist Recruitment (Holdings) Limited and Another v Ions and Another [2008] EWHC 745

In this case the High Court ordered pre-action disclosure in relation to a potential claim by Hays that an ex-employee had, during the course of his employment, copied and retained confidential information which he used after leaving Hays. Hays alleged that the employee had deliberately migrated details of business contacts from a confidential database to his personal LinkedIn account by uploading those contacts so that LinkedIn could invite the contacts by e-mail to join his network. The employee argued that the migration was carried out with Hays’ consent – since it had encouraged him to join LinkedIn – and that, once the business contact had accepted the invitation, the information ceased to be confidential as it could be seen by all his contacts. The High Court held that Hays had reasonable grounds for considering that it might have a claim, and ordered pre-action disclosure of certain documents.

Although this was only a preliminary hearing, as opposed to a final judgment after hearing all the evidence on both sides, it shows that the Court recognises that LinkedIn can be abused by employees who are looking to harvest their employer’s confidential information for their own use.  In this regard the principles are the same, whether the copying is into a Filofax, onto a memory stick, or to a LinkedIn account.

I was recently made aware of a similar case recently commenced in the High Court in which an interim injunction has been granted preventing use of LinkedIn contacts. My understanding is that that case is continuing. A trial will probably be several months away, that is if the case is not settled.  As I understand it, the Claimant in that case is an employment business, and its contract with the (ex) employee contained terms to the following effect.

      i.        All use of online networking sites is solely for company and not personal use.

     ii.        All contacts and customer lists developed during the course of employment remain the property of the employer.

    iii.        All social media accounts used during the course of employment are property of the company.

   iv.        An undertaking by the employee to hand over details of user names and passwords for all social media accounts on leaving the company’s employment.

Until there is a High Court decision following a complete trial, I can only give you some educated guesswork.  My own view is that provisions of this nature may be difficult to enforce in respect of a LinkedIn account created by the employee before commencing employment.  Similarly if personal and company contacts are mixed.  So, pending a definitive ruling, my recommendation is that by all means an employer should use provisions of the type described, but it really should not overlook the essential employer protection provisions of an employment contract:

  • Prohibit copying, use or disclosure of employer’s confidential business information.
  • A non-solicitation clause
  • A non-dealing clause

These last two should be no broader in effect than is necessary for the reasonable protection of the employer’s business interests.  Within that sentence lies another detailed discussion!

Popular law – insolvency

This is the second post in my “popular law” series.  In a previous job, a few years ago, I was a Senior Solicitor in the Insolvency department of a substantial regional law firm. The trainee solicitor seat in the Department was with me, in my office. Trainee solicitors would spend six months with me, before moving on to another seat in another department.

On the first day in my office, I would ask each new trainee to give some thought and to come back to me with a clear and simple answer to the question:

what is insolvency?

As often as not, I would be given a learned explanation citing cash flow and balance sheet tests. In such a case, I would ask the trainee to come back with a simpler answer.

Because the answer is simple …

insolvency is when there is not enough money to go round

That’s right.  A person/business/company (which I will refer to as “the debtor”) is insolvent when he/she/it owes more money than he/she/it can pay.

In such an event, the very simple legal position is that the debtor goes into bankruptcy liquidation. The debtor’s assets are sold, and any cash due to the debtor is collected. The total cash realised is then divided up between the creditors, pro-rata according to what they are owed. They each get the same percentage of the cash available as the debt owed to them bears to the total of the debtor’s overall debts.  Of course it is not as simple as this, not least as it is not often possible to sell assets/collect debts at full book value than the fees charged by liquidators/trustees in bankruptcy will often take a large chunk out of the money available to pay creditors.

This principle of equal payment pro-rata is called the pari-passu principle. Understanding this is essential to understanding insolvency law. Everything flows from this.

I would then take the conversation into some aspects of insolvency law that relate to efforts to bypass the pari-passu principle.

The first of these is taking security.  A typical example is the bank or other lender which requires a charge for mortgage over property as security for a loan. The lender does not want to be an ordinary unsecured creditor sharing equally in the value of the debtor’s realised assets. So it takes security. This puts the lender in the position of having (subject to priorities of any other security) the first bite at the value of the charged property.

On the other side of things, debtors often recognise that they are heading into insolvency. Sometimes they arrange to transfer valuable assets into “safe” hands to put them out of reach of a liquidator/trustee in bankruptcy. Or sometimes they arrange to pay particular debts, for example to family members or close associates or people with whom they will want to do business when they set up a new venture. These are amongst the ways in which debtors try to “protect” assets and to avoid the pari-passu principle.   Insolvency law has long recognised this type of situation, and has developed procedures which allow “antecedent transactions” to be set aside. If a debtor, within a specified period of time before bankruptcy liquidation has disposed of an asset at less than market value (including for no value) or has paid a creditor so that the creditor is in a better position than he would have been in a bankruptcy/liquidation, then the Court can undo that transaction.

 PLEASE NOTE : this is a very simple introductory level post. Insolvency law becomes a massively complicated subject at times. There is a lot more detail to the simple principles that I have outlined. However, it all flows from the simple fact that there is not enough money to go round.

Do you have any suggestions for a future popular law topic? Please leave acomment.

This blog post necessarily contains a brief summary of the legal principles and should not be treated as legal advice in any specific case. Please contact me if you wish to discuss any specific situation.

problematic gender cliches

A wonderful spam comment appeared on this post on Graeme Quar & Co’s blog.  They certainly get more creative!  I can’t remember what it linked to, and I never looked.

Not impressed with the rteslus of this photo shoot it ran too close to the problematic gender cliches of ballet pretty girl dolled up to channel the genuis’ of male creative authority. In the historical photo from the 3-D mood board, the gender dynamics between the men and woman are far more complex. For example, the combination of the woman’s expression and her rendering in (authoritative/ authentic) classical garb makes her a much more powerful figure than poor Lana Jones as an expressionless fashion model. Also, the old photo is much more playful, whereas the shot used by the AB for publicity takes itself way too seriously!! Mind you, I reckon good old George Balanchine would’ve thought the AB publicity photo showed things just how they should be

popular law – unfair dismissal

This is the first post in the “popular law” series I promised a long time ago.  It is a post that I have been meaning to write for quite some time, and frankly could have written many months ago.  I have been prompted to get my act together by reading a recent Employment Appeal tribunal decision.

Often I find myself explaining that the “unfair” in unfair dismissal relates above all else to the employer’s processes leading to the decision to terminate an employee’s employment.   The question is whether the employer’s procedures leading to the dismissal were fair.  The question is NOT whether the employer was correct in determining that the employee was likely to have committed the alleged misconduct.

Understanding this enables employers to take steps which can reduce the chances of a successful claim.  Understanding this enables employees’ advisers to determine the chances of successfully bringing a Tribunal claim for unfair dismissal.

Last week I read a recent Employment Appeal Tribunal decision, Ministry of Justice v Parry UKEAT/0068/12/ZT http://www.bailii.org/uk/cases/UKEAT/2012/0068_12_1411.html.  My eye was caught by paragraph 10, in which Mr Justice Langstaff, President of the Employment Appeal Tribunal, succinctly reminds us of the analysis that and Employment Tribunal should carry out in determining whether an employee has been unfairly dismissed for misconduct:

Surprisingly for a conduct dismissal, the analysis by the Tribunal did not address in turn the issues to which case law has established a Tribunal should pay regard: whether the employer had a genuine belief that the employee was guilty of the misconduct alleged; whether that was based on reasonable grounds; after a reasonable investigation; and whether the decision to dismiss was within the range of reasonable responses open to an employer in respect of the misconduct. 

That paragraph contains the legal analysis in a nutshell, certainly when dealing with a claim for unfair dismissal following the termination of employment for gross misconduct.

It is a common misconception that an Employment Tribunal looks at whether the employer “got it right” in terms of whether the employee did or did not do whatever it was that he was dismissed for. That is not what the Tribunal does.   Only in the most exceptional cases will a Tribunal go behind the employer’s decision in that respect.

What a Tribunal wants to see is whether the employer followed reasonable and fair investigation and disciplinary processes.   If at all possible (and this may be difficult for the smaller employers) the investigation should be carried out by someone other than the person making the decision at the disciplinary meeting. The investigation should be as thorough as is necessary in the circumstances.  The person conducting the investigation should do so with an open mind: it is possible that when the evidence has been gathered he may conclude that proceeding to a disciplinary meeting is not appropriate or justified.

If it is decided that there should be a disciplinary meeting, then the employee must be given advance notice of the meeting and the material gathered in the investigation should be disclosed to him.  These may be documents that have been gathered, statements of people involved, etc.  The purpose of disclosing relevant material to the employee is to give him an opportunity to consider it.

The purpose of the disciplinary meeting is to enable the decision maker and the employee to hear the evidence against the employee. The employee should then have the opportunity to ask questions, if need be to call his own witnesses who may contradict facts or show them in a different light, and to put forward an explanation.

The manner in which the decision maker goes about things may help show whether he has approached the meeting with an open mind.  Has he allowed the employee to speak, and listened? Has he interrupted?  Has he given a decision instantly, almost without pause to think? Or has he taken some time to consider, even if it is a case of asking the employee to wait for a few minutes while he thinks about what he has heard and makes his decision?

If an employer is able to show that he has conducted fair investigation and disciplinary processes, then he is well on the way to successfully defending the unfair dismissal claim. Going back to what Mr Justice Langstaff said, the question then becomes whether the employer had a genuine belief that the employee was guilty of the misconduct alleged. If the decision maker can demonstrate that he came to the disciplinary meeting with an open mind and that he reached his decision after considering the evidence at the disciplinary hearing and the employee’s response, then he will be likely to be able to satisfy the Tribunal in this regard. It is only in the most exceptional cases that the Employment Tribunal will go behind the question of the decision maker’s belief in the employee’s guilt. The Tribunal will only do this in cases where, having regard to the evidence, the decision that the employee was guilty of the misconduct staggers belief. The word that is used is that the decision was “perverse”.

Finally, there is the question whether the decision to dismiss was within the range of reasonable responses. Obviously the answer to this question will depend on the circumstances, not least the seriousness of the misconduct and the previous employment history of this employee. A note of caution: if the employer is relying on the fact that the employee has had previous warnings, when dismissing for what might otherwise be a relatively minor infraction, then it is important that the decision maker at the disciplinary hearing is aware of the history of warnings and has that history in mind.

Therefore if an employer is able to show that:

  • he followed fair investigation and disciplinary processes;
  • leading to a decision taken on the evidence and with an open mind that the employee was guilty of the misconduct alleged; and
  • with an appropriate outcome;

then he is likely to be able to defeat an unfair dismissal claim, even if the employee can now cast some doubt on the question of his guilt of the alleged misconduct.

On the other hand, if the employee can show that the employer failed in one or more of those points, then he is on the way to establishing unfair dismissal.

As I said at the beginning, the word “unfair” in unfair dismissal relates to the procedures operated by the employer leading to the decision to dismiss.

These are the questions that those advising employees ask and go through. If, as an employer, you operate procedures which will satisfy these tests, then it is likely that an employee’s advisers will warn that the chances of success are not high. This can be important if the ex-employee has legal expenses insurance or is trying to persuade a lawyer to represent him on the basis of sharing a percentage of the winnings. In either case, the insurer or the lawyer will only take on the case if the chances of winning it are good enough.

There is one further point claimants must be aware of.  This is the possibility of a Polkey deduction.  In the 1987 case of Polkey v AE Dayton Services http://www.bailii.org/uk/cases/UKHL/1987/8.html the House of Lords ruled that even if a dismissal was procedurally unfair, nevertheless a Tribunal can reduce the compensation awarded if it considers that a fair procedure would have led to dismissal. 

The Polkey deduction can be as much as 100%.  I have acted for an employer who sacked two employees on the spot for fighting, right in front of the MD.  One of the employees brought a Tribunal claim.  We had to concede that the dismissal was procedurally unfair, but successfully argued for a Polkey deduction, the Tribunal reducing compensation by 75%.

This blog post necessarily contains a brief summary of the legal principles and should not be treated as legal advice in any specific case. Please contact me if you wish to discuss any specific situation.

Useful link:

The ACAS Code of practice – Disciplinary and grievance procedures: http://www.acas.org.uk/index.aspx?articleid=2174

Popular law

In July 2011 I set myself the rather ambitious task of writing a series of posts under the heading of “Popular Law”.  I thought that if Professors Brian Cox and Jim Al-Khalili can present  popular science, I can present popular law.

As I write this, on 17 October 2011, the first post is being prepared.  It will be on unfair dismissal.

Being a series of blog posts, the popular law posts will not be a text book.  My idea is to try to get to the point of the area of law, what the key principles are.  In all likelihood each post will raise a number of questions in the minds of some readers.  I will be happy to deal with these through the comments.

And please remember.  No post here can be a substitute for full legal advice, given by someone who has been told all the facts and who has been shown all the documents.  Please see my legal disclaimer.

You’ve heard of Popular Science – now “Popular Law”

Following a short discussion last week on twitter, I have decided to write a series of posts on “popular law”.  You know, trying to explain some areas of law simply and clearly.  If Brian Cox can do it for quantum physics, I can do it for some areas of law!

So, from time to time I will write posts tagged as “popular law”.  If you would like to suggest a subject, please do so leaving a comment below.  If need be, I will research the area myself or will find a guest poster to write about the subject.

I think the first post will cover unfair dismissal.

Zen and the art of dispute resolution

 “It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle.”

Sun Tsu, “The Art of War”

A friend sent me this quotation, asking whether it applies to what I do. I think it does. Litigation has, after all, been described as a form of warfare.  Let me add another well-known military-related quotation into the discussion, this time by Donald Rumsfeld, former US Secretary of Defense:

 “There are known knowns; there are things we know we know.  We also know there are known unknowns; that is to say we know there are some things we do not know.  But there are also unknown unknowns – the ones we don’t know we don’t know.”

 In any dispute resolution process there are essential stages of gathering information. These are a necessary part of the process of knowing the opponent, of making the unknowns known.

We start off with a written statement of the Claimant’s case, to which the Defendant responds in a written Defence.  Acting for a Claimant I will evaluate the Defence in the light of the information that is available to my client and me.  I may ask questions for clarification of the Defence.

As a dispute resolution solicitor I press my clients to give me all relevant documents, which very often include e-mails and other electronic documents. I go through these to achieve a full understanding of what happened as shown in my client’s records.

 Court procedures require reciprocal disclosure of documents with the opposing party. At this stage I can see the opponent’s documents and the opponent can see my client’s documents.  There are then similar requirements to exchange other evidence including witness statements and experts’ reports.

These processes should mean that by the time the final decision is taken whether to commit to trial my client and I will have a very full understanding not just of my client’s case and supporting evidence, but also of the opponent’s case and supporting evidence. This should mean that we have a clear understanding of the strengths and weaknesses of the case on both sides. My client and I should know the chances of success. We should also have an understanding of how my client might lose the case.  This knowledge will inform the key final decision to fight or settle.

This is an analysis that should be repeated regularly throughout the course of a case, and particularly where new information or evidence becomes available including as a result of the formal steps in the litigation process. Coupled with the cost, the increasing knowledge of both sides of the case is a reason why so many cases settle before going into trial.

Before trial, there may still remain “unknown unknowns”. Things can come out at trial that are a complete surprise, possibly to everyone on both sides. This is one aspect of what lawyers call “litigation risk”.  I still shudder to remember a case more than 20 years ago where the other side produced at trial a photograph placing one of my client’s key witnesses at a meeting with people he had steadfastly denied that he had ever met. There he was, on a yacht, wearing a flowery shirt and clinking glasses of champagne!

If the decision is taken to go into trial, it should be a decision that is taken by the client and his lawyers knowing both his enemy and himself. Or, as Mr Rumsfeld might put it, as a result of coming to know what the “known unknowns” are and minimising the areas of risk and possible unpleasant surprises of the “unknown unknowns”.