In-house lawyers’ forumMarch 2017, Birmingham

Employment update

James Tait, Partner

Today’s session

1. Restrictive covenants2. Immigration Act 20163. Gender Pay Reporting4. Budget

Restrictive Covenants

Restrictive covenants: Overview

• Contractual term that can place post terminationrestrictions on an employee in relation to:– Employment with competitors– Poaching colleagues– Poaching clients/customers

• To be enforceable they must be reasonable induration and geography, not going beyond what isreasonably necessary in order to protect legitimateinterests of the employer’s business

Bartholomews Agri Food v Thornton

• Employee began work with the employer as a traineeagronomist in 1997

• At this time he had no experience or customer base• At the time of termination, the employee’s customer

base made up for 2% of the employer’s overall turnover• Employee challenged the enforceability of a non-

compete clause which prevented him from workingwith the whole of the employer’s customer base for 6months

Bartholomews Agri Food v Thornton

• High Court rejected the covenant on two grounds:• If a covenant is unenforceable when it is first imposed

(it was imposed when the employee was a trainee,meaning, at that time, it was wholly unreasonable dueto his lack of client base), it will remainunenforceable regardless of experience gained orpromotions

• Preventing an employee from dealing with anycustomer regardless of previous dealings is too wide,even after a 20 year career

So what?

• Don’t just get off the shelf covenants drafted up –think about it!

• When was the covenant agreed? The question iswhether it was reasonable then, not whether it isreasonable now

• Is the covenant limited?• Many covenants in employment contracts are

outdated and too wide – check them every timeyour employees are promoted – do they still work?

Immigration Act 2016 (IA 2016)

a) Immigration: Overview

• It is unlawful to employ a person who does nothave a right to live and work in the UK or who isworking in breach of their conditions of staying inthe UK

• Initial and, sometimes, follow up checks required• Failure to do so can lead to civil or criminal

penalties• Enforced by the Home Office (via immigration

officers)

b) Public Sector Fluency Duty

• Introduced under the Immigration Act 2016• Came into force on 21 November 2016• Applies to public authorities (including NHS Trusts)• Code of practice came into force on 22 December

2016 – gives guidance and examples for employers

b) What is it?

• The fluency duty applies to those persons workingin roles which have, as a regular and intrinsic partof that role, a requirement to speak to members ofthe public in English.

• This could be in face to face discussions or over thetelephone.

• It covers employees, apprentices, workers andagency workers

b) Steps to take

• Assess what standards are required for particularroles and whether those standards are being met.

• If not, consider training / methods of support• Review existing policies and procedures to include

reference to the fluency duty• Review employment contract to include reference

to required fluency standard• Ensure members of the public are aware of the

complaints procedure and how they can access it

c) IA 2016: Other changes (1)• It used to be a criminal offence to knowingly employ

an individual who does not have the appropriatepermission to undertake the work for which they areemployed

• From 12 July 2016, the offence was widened to includeemploying an illegal worker where the employer has“reasonable cause to believe” the employee does nothave the appropriate immigration status.

• Increased conviction on indictment from 2 to 5 years

c) IA 2016: Other changes (2)

• A power of immigration officers to close businesses thatcontinue to employ illegal workers

• Increased powers for immigration officers to enterbusinesses and seize/retain evidence

• A requirement that public authorities ensure public sectorworkers in customer-facing roles speak fluent English

• April 2017 - Provisions giving the secretary of state thepower to introduce an ‘immigration skills charge’ on certainemployers who sponsor skilled workers from outside the EEA

Gender Pay Gap Reporting

Gender Pay Reporting• Final draft Government regulations published 6

December 2016• All relevant employers with more than 250

employees will be required to publishinformation about their gender pay gap

• Includes bonus information• Government has pledged to work with

businesses to eliminate all-male boards in top350 companies

Gender Pay Reporting – nextsteps• carry out a pay audit to identify what your likely

gender pay gap will be and the reasons for this;• benchmark your gender pay gap within your industry;• consider what information you will want to add to any

report to set your figures in context;• start to plan a strategy to address your gender pay gap• Consider communication strategy ahead of publication

date• We can help you!

Budget

Implications for employers and employees:

- Changes to taxation of termination payments- IR35 – responsibility shifts from personal service

company to public sector ‘employer’- Removal of salary sacrifice tax breaks apart from

certain exemptions

Regulatory update

Rachel Lyne, Partner

CPD update

Claire Stripp

Coffee break

Commercial update

Richard Nicholas, Partner

Areas to look at today:• Making a start

• Making a change• Making a claim

5 minutes before signature

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Making a start

Letters of intent

• Spartafield v Penten – CFI 2016

• Arcadis v Amec – CFI 2016

So What?

LOI can be a good thing

BUT– what should happen if the agreement isn’t signed?

Making a change

No-Variations provisions

- Globe Motors v TRW (CA) 2016

- MWB v Rock Advertising (CA) 2016

So what?

“No Variation” is a bluff

- So are long “Change Control” schedules

- Regardless of what the contract says – watch outfor changes. You need a way to respond to them!

“Your in-house lawyer – not there for pre-signature”

Making a Claim

Notices provisions/ preventing claims

• Oliver Nobahar Cookson v The Hut Group 2016 (CA)• Axa Reinsurance v Field 2016 (CA)• Lehman v Exxon Mobile 2016 (CFI)• Tesco v Aircon Jersey 2016 (CFI)

Making a Claim

Notices provisions/ preventing claims

Oliver Nobahar Cookson v The Hut Group 2016 (CA)

“…within 20 business days after becoming aware ofthe matter…”

Making a Claim

Notices provisions/ preventing claims

Axa Reinsurance v Field 2016 (CA)

“…as soon as possible”

Making a Claim

Notices provisions/ preventing claims

Lehman v Exxon Mobile 2016 (CFI)

“…by close of play”

Making a Claim

Notices provisions/ preventing claims

Tesco v Aircon Jersey 2016 (CFI)

“within a reasonable notice period”

“…are contemplating claiming…”

So what?

• Time obligations do work BUT are interpretednarrowly (as a limit of liability)

• Likely not to capture claims/events that are new

• If you make a claim – be bold! Don’t “contemplate”claiming – just do it!

In the last 5 mins

• Which 5 words that can save you from large losses?

– Let me think about it…?

– Actually…let’s not get married…?

– I’ll check with Browne Jacobson…?

In the last 5 mins

Fairhurst Developments & Fairhurst v Collins(2016) CFI

– “For and on behalf of”

So what?

• Making a Start– Letters of intent – can be useful, but what if nothing follows?

• Making a Change– need to be vigilant “no-variations” clauses don’t work

• Making a claim– Time limits are read narrowly. Claims must be bold.

So what?

• For letter agreements in particular“For and on behalf of”

• When you need quick advice…Run it past Browne Jacobson

Data protection update

ICO investigations, Brexit and other newsHelena Wootton, Partner

Some information about data

• ICO investigations and how to approach them• Subject Access Requests• Latest fines• Directors disqualification• Fines for Directors• GDPR• New ICO guidance• Brexit and adequacy

The enforcers

ICO’s key priorities• Current information rights priority areas

– Health– Criminal justice– Local government– Online and mobile services

• Sectors under the spotlight– Charities– Affiliate marketing– Gambling, finance and dating

Typical incidents

• Security breaches• Direct marketing• Subject access

Security breach trends

Marketing concerns

Some recent developments• Subject access

– Dawson-Damer v Taylor Wessing LLP [2017] EWCACiv 74)

• Telephone marketing– FEP Heatcare v ICO EA/2016/0093

• Text marketing– LAD Media Limited Jan 2017

Some recent developments• Telephone preference service

– IT Protect Limited Jan 2017

• Government to introduce monetary penaltiesfor directors

• Disqualification of Leighton John Power– Help Direct UK MPN

ICO strategy and policy• Information rights strategy• ICO operations directorate service guide• Data protection regulatory action policy• ICO prosecution policy statement

ICO enforcement codes andprocedures• Assessment notices code of practice• Monetary penalties guidance• Standard operation procedures for monetary

penalties• Framework used to determine the amount of a

monetary penalty

What prompts regulatory action?• Issues of general public concern• Novel or intrusive activities• Complaints

– Report your concerns tool– 7726 service

• Self-reported incidents• Concerns from ICO activities• Intelligence• Collaboration with other regulators

ICO’s tools• Informal requests for information• Information notices (First and Third party)• Warrants• Special information notices• Undertakings• Enforcement notices• Consensual assessments• Assessment notices and compulsory audits• Monetary penalty notices/Fixed MPNs• Prosecution

To self-report or not• No legal obligation except

– Telcos

• Notification of data security breaches guidance• Other regulators

To self-report or not• Pros

– Good practice– Gets your version in first– May reduce a penalty

• Cons– Highlights incident which may not be a breach– Too early – may be unnecessary or incomplete– Too late - criticism

ICO options

• Inform you that they have received a concern thatthey are keeping on file

• Ask you to respond to a concern• Ask you to put right what is wrong• Ask you to contact individuals• Ask you to supress contact details for marketing

ICO is considering enforcement• Do not ignore communications or be obstructive

– see e.g. FEP Heatcare

• Is the communication clear?– Do you understand the law and the issues raised?– Do you understand the questions?– Certainty of scope– May be poorly drafted– Do you have enough time?

ICO is considering enforcement• Inform your insurer – you may have cover• Obtain internal and external advice• Prepare PR team• Investigate

ICO requests for information• Informal requests to you

– Cooperate or demand formal notice– Breach of confidentiality– Certainty about scope– Breach of other legislation– Legal professional privilege– Freedom of information issue– Responding may improve outcome– Make clear if response is incomplete

• Informal requests to third parties– e.g.to service providers/partners

Be aware• ICO does get the law wrong

– Niebel [2014] UKUT 255 (AAC) (11 June 2014)– Dawson-Damer

• ICO will refer to its own codes and guidance• Guidance, codes and advice may be contradictory• May apply new guidance retrospectively• May fail to apply guidance/codes in force at

relevant time

Digital Rights and Data

• ePrivacy Regulation• Digital Economy Bill

GDPR

• Consider your organisations readiness for GDPR?

• Who is preparing your organisation for GDPR?

• What is the most significant hurdle your organisationfaces in preparing for GDPR?

New guidance from ICO

• Consent – consultation open• Big Data, artificial intelligence, machine learning

and data protection• Data Portability• Lead supervisory authorities• Data Protection Officers

An example, third party consentA. “We would also like to share your information withother companies so that they may send you informationabout their products and services, by post, telephone,email and SMS.”

B. “We may use the personal information that you supplyto us and work with other third party businesses to bringselected retail opportunities to you via direct mail, emailand telemarketing. These businesses may includeproviders of direct marketing services and applications,including lookup and reference, data enhancement,suppression and validation and email marketing.”

Feeling inadequate post Brexit?

• Will the UK have adequate data protection laws• Impact of a lack of adequacy?

• http://www.computerweekly.com/news/450414506/UK-should-pursue-EU-data-protection-adequacy-post-Brexit-says-ICO

Competition law update

Matt Woodford, Partner

What will we cover?

• General update• What’s on the horizon?

• Brexit• Will anything really change?

• Online restrictions• Where to tread carefully

Update - Fines

• EU– €3.7 billion in 2016– Average is €1.8 billion p.a

• UK– £142 million in 2016– £0.37 million in 2014!– Pharmaceutical, modelling

agencies, online posters,bathroom fittings, cateringequipment, galvanisedsteel tanks

Update – UK focus• More cases (16 in 2016 v. 6.8

in previous 5 years)• Commitment to more cases –

increase target by 50%• Balanced portfolio of big &

small cases– Warning & advisory letters– Director disqualification

(online posters case)

• Any areas of focus?– Pharmaceutical– Value for money for public

services– Online & digital

Brexit – What will change?

• Little change in short tomedium term– Competition Act modelled on

EU competition law– Duty of cooperation will fall

away – look to the US (?)– Still subject to EU law in EU!

• But - no longer in singlemarket (?)– Fortress UK (?)– Absolute import/export

restrictions (?)

Brexit – Who will you deal with?• Parallel competition

law investigations• Merger control

– No more one-stopshop

– More notifications tomultiple regulators

– CMA anticipating 40% -50% increase inworkload

Online restrictions – Beware!

• Remains a key priorityfor CMA and rest of EU

• More cases, more focusbut still limitedguidance!

Online restrictions – Beware!• UK cases – bathroom fittings;

catering equipment; posters &frames

• Warning letters – 37% relatedto online

• Advisory letters – 43% relatedto online

• Sectors – cosmetics &toiletries; clothing; recreation& sports goods; electronicsaccessories; leisure products;electronic equipment; utilities– price comparison sites

Online restrictions – Caution areas• EU guidance

– Internet friendly– Limited help– Undermining of exclusive

and selective systems (?)• Absolute online sales ban

– Not even in a selectivesystem (Pierre Fabre)

– Consider bricks & mortarrequirement in selectivesystem

– Consider quality standards forsite

Online restrictions – Cautionareas• Price (examples from CMA

letters)– Below minimum advertised

price– Fixed advertised price– Withdrawal of discount– Withdrawal of supply

• Price comparison site bans– BMW / carwow case

(January’17)– German case – sports

goods

Online restrictions – Cautionareas• Third party platforms

– EU guidance suggeststhat a restriction is ok

– German cases havetaken a different line

– Case before ECJ onuse in a selectivesystem (Coty)

Your speakers today

talk to us…Richard Nicholas|0121 237 3992 |richard.nicholas@brownejacobson.com

James Tait|0121 237 3999|james.tait@brownejacobson.com

Rachel Lyne|0121 237 4584|rachel.lyne@brownejacobson.com

Claire Stripp| 0330 045 2134|claire.stripp@brownejacobson.com

Helena Wootton|0115 976 6108|helena.wootton@brownejacobson.com

Matthew Woodford|0121 237 3965|matthew.woodford@brownejacobson.com

All information correct at time of production.

The information and opinions expressed within thisdocument are no substitute for full legal advice. It isfor guidance only and illustrates the law as at thepublished date. If in doubt, please telephone us on0370 270 6000.

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