EMPLOYMENT LAW UPDATE
SOCIAL MEDIA IN THE LAW FIRM
WORKPLACE
HR in LAW
Susanne Foster, Esther Martin & Clare Murray
CM Murray LLP
11th July 2012
CM Murray LLP: Specialists in Employment and Partnership Law
Social networking sites
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:901 million monthly active users at
the end of March 2012
•
: :340 million Tweets per day with 140million
+ active users
•
:161 million members at the end of March
2012
CM Murray LLP: Specialists in Employment and Partnership Law
Summary
• Benefits / Concerns of Social Media Use
• Recent Case Law
• Recruitment / Vetting
• Data Protection Laws
• Best Practice
CM Murray LLP: Specialists in Employment and Partnership Law
The Benefits
•
Enables law firm employers to find different ways to approach the recruitment
and selection of associates (NB: Generation Y employees)
•
Allows employees to business network and build professional relationships
•
Law Firm clients are increasingly using such media which may result in an
increasing expectation that their law firms do the same (NB: Law Society
Practice Note)
•
Provides an instantaneous, responsive and different method of communication
internally and externally
•
Enables the sharing of knowledge, research and articles within online
communities (particularly important in law i.e. a knowledge based business)
CM Murray LLP: Specialists in Employment and Partnership Law
The (Potential) Key Concerns
•
Damage to client relationships / Firm reputation
•
Breach of Contract / Confidentiality Issues / SRA Code of Conduct
•
Cyber-bullying e.g. bullying, harassment etc
•
Discrimination Claims
•
Unfair Dismissal:
– Privacy concerns under the Human Rights Act 1998:
• Article 8 (right to private and family life, home and correspondence)
• Article 9 (right to freedom of thought, conscience and religion/to manifest his
religion or belief)
• Article 10 (right to freedom of expression)
– Qualified rights: Justified; in accordance with law; necessary etc
•
Breaches of Data Protection Act
CM Murray LLP: Specialists in Employment and Partnership Law
Key Risk: Damage to client relationships
and Firm reputation
Preece -v- JD Wetherspoons plc, ET (2010)
– Pub manager made inappropriate comments on FB about customers (whilst she was
on duty):
Fellow Employee 2:
Friend / Customer:
Miss Preece:
Fellow Employee 1:
Miss Preece:
Fellow Employee 1:
Miss Preece:
Fellow Employee 3:
Miss Preece:
“are they barred now – D”
“can’t believe you barred all those dear old nice
people...”
“ha ha just has a phone call from the daughter
callin me a snide b**** lol”
“ha ha ha, that’s well funny!! She is right though...
Shame on you picking on the old ladies ha ha ha!!”
“can u f..c of each plz lol”
“only messin’ bout time some 1 told the moanin old
hag lol”! X”
“fu...in hag!!!!!! Hope her hip breaks”
“why does fun stuff happen the one night I am not
working!” What happened?”
“Sandra an Brian barred ha ha ha!”
CM Murray LLP: Specialists in Employment and Partnership Law
Key Risk: Damage to client relationships
and Firm reputation
Preece -v- JD Wetherspoons plc, ET (2010)
– ET claim for unfair dismissal (not upheld)
– Employer had email, internet and intranet policy which referred to employee
use of sites such as FB and Miss Preece was aware that her actions were in
breach of that policy
– Miss Preece’s activities were in the public domain
– Miss Preece’s mitigation argument that using FB to vent anger and upset at
incidents at work not upheld (ET considered entries were more of a joke
between friends; discourse took place over period of time; ‘hotline’ available
to Miss Preece)
– ET considered a final written warning may have been more appropriate
(cannot substitute view)
CM Murray LLP: Specialists in Employment and Partnership Law
Key Risk: Damage to client relationships
and Firm reputation
Whitham v Club 24 Ltd t/a Ventura, ET (2010)
–
ET claim for unfair dismissal (upheld)
–
Mrs Whitham, posted the following comments (outside of working hours):
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Mrs Whitham: “I think I work in a nursery and I do not mean working with plants”
Team Member: “Don’t worry, takes a lot for the b******* to grind me down. LOL”
Former Team Member:“Ya, work with a lot of planks though!!! LOL”
Mrs Whitham: “2 true xx”
–
Mrs Whitham was suspended and a disciplined
–
Dismissal for a relatively mild comment on FB fell outside the band of reasonable responses
–
Comments on FB did not refer to a client nor was there any evidence of any actual or likely harm
to the relationship
–
Relevant policy documents only sought to prevent disclosure of confidential information on such
sites
–
ET took into account of Mrs Whitham’s exemplary record and mitigating factors to do with health
and personal circumstances
CM Murray LLP: Specialists in Employment and Partnership Law
Key Risk: Damage to client relationships
and Firm reputation
Crisp – v- Apple Retail (UK) Ltd (2011)
– Claimant, posted number of FB posts e.g. “Mobile Me f***** up my
timezone for the third in a week and woke me up at 3am? JOY!!” and
“Apple!! “shakes fist””
– Employee suspended and disciplined
– Mr Crisp argued FB page was private and was unrepentant in disciplinary
hearing
– Dismissed for gross misconduct for bringing Apple into disrepute; posts
attacked Apple’s core value of protecting its image
CM Murray LLP: Specialists in Employment and Partnership Law
Key Risk: Damage to client relationships
and Firm reputation
•
ET claim for unfair dismissal (not upheld):
– Training received on posting comments re Apple could amount to misconduct
– Policy documents referred to speaking favourably and contained relevant guidelines
– Importance of image to Apple entitled them to treat this as gross misconduct
– Mr Crisp responded to questions by stating “no comment” – no help to Apple in
understanding mitigating reasons
– Article 8 - Mr Crisp had no control over how his comments might be copied and
passed on to others. Even if article engaged use of FB information by Apple was
justified and proportionate to protect its own reputation
– Article 9 – Type of comments made not important to free expression and damaging to
Apple’s reputation, therefore Apple could limit right
CM Murray LLP: Specialists in Employment and Partnership Law
Key Risk: Harassment
Teggart v TeleTech UK Limited NIIT 00704/11
• Mr Teggart posted obscene comments on FB (at home, on his own PC,
in own time) about the promiscuity of a female colleague mentioning the
name of his employer
• A person claiming to be a member of the public reported the comments
• Mr Teggart was dismissed for gross misconduct on grounds that he
made offensive comments which breached the Company code of
conduct and the comments brought company into disrepute
• NI Industrial Tribunal dismissed claim of unfair dismissal
CM Murray LLP: Specialists in Employment and Partnership Law
Key Risk: Harassment
Teggart v TeleTech UK Limited NIIT 00704/11
– Decision to find Mr Teggart guilty of having brought the company into
disrepute was “seriously flawed” (little evidence on this)
– Comments satisfied the definition of harassment in the Company’s dignity at
work policy; this was sufficient to justify dismissal of claimant
– Articles 8, 9 and 10 of HRA not engaged
• Article 8 – posting of comments on FB, Mr Teggart abandoned any right
to consider his comments private
• Article 9 – “belief” does not extend to a comment about the promiscuity
of another person (refers to a philosophy, set of values etc)
• Article 10 - must be exercised in a way that is necessary for the
protection of the reputation and rights of others
CM Murray LLP: Specialists in Employment and Partnership Law
Key Risk: Breaches of confidentiality
Hays Specialist Recruitment (Holdings) Ltd and anor v Ions and anor (High
Court, 2008)
– Court did suggest that the transfer of information concerning clients and
applicants to Mr Ions LinkedIn Network whilst still employed by Hays may
amount to breach of duties as an employee
– Highlights risk for businesses of confidential information being uploaded to
social networking sites
Consider employee’s:
– Express confidentiality covenants
– Implied duty of confidentiality (protection both during and after employment)
– Obligations under Code of Conduct 2011 (Chapter 4 – Confidentiality &
Disclosure)
CM Murray LLP: Specialists in Employment and Partnership Law
Other possible risks
Other possible areas to consider (not exhaustive):
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Libel
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Time Wasting
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Personal injury claims
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Intellectual Property Issues
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False Advertising
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Insider trading and market abuse
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Agency law concerns
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Criminal law
CM Murray LLP: Specialists in Employment and Partnership Law
Case Law Summary
•
Nature of the comments made: are they minor comments? do they genuinely damage firm /
reputation / client relationships? Do not take a disproportionate view
•
Is there a social media policy (or other policy) in place and has this been breached? What is the
specific wording of any such policy / Can it be used as ground for disciplining / dismissal?
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Has the employee received the policy and any training on it?
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Full and proper investigation – statements for affected employees / third parties (if relevant).
Remember ACAS Code
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Consider:
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Individual’s disciplinary record
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Circumstances at the time
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Individual’s health and personal circumstances
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Any mitigating circumstances
•
Articles 8,9 and 10 – employees may struggle with this line of argument
CM Murray LLP: Specialists in Employment and Partnership Law
Recruitment and Vetting
• Checking on-line profiles: whilst not unlawful, not good practice
• Details re candidate’s ethnic background, age, sexual orientation etc.
should be part of separate monitoring process
• Shoulder-surfing (NB: Certain US states legislating against such a
practice)
• Possible discrimination claims
• HRA concerns
• Data protection concerns – ‘vetting’
CM Murray LLP: Specialists in Employment and Partnership Law
Data Protection Laws
•
DPA Code confirms:
– Only personal information should be sought that is relevant to the
recruitment decision to be made; and
– It should be clearly stated to applicants the nature of and sources from
which information might be obtained about the applicant
•
Candidate should be allowed to make representations regarding information
that will affect the decision to finally appoint
•
DPA does not prevent monitoring
•
Carry out an ‘impact assessment’ to decide if and how to carry out monitoring
CM Murray LLP: Specialists in Employment and Partnership Law
Best Practice - Law Society Guidance
•
Law Society guidance (issued December 2011):
http://www.lawsociety.org.uk/productsandservices/practicenotes/socialmedia/5049.article
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No requirement to follow but sets out standard of good practice for solicitors / firms to follow which
will make it easier to account to SRA for actions.
•
Same ethical obligations apply to professional conduct in an online environment
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Principle 2 (Integrity), Principle 3 (Independence), Principle 6 (Public Trust)
•
SRA Code of Conduct : Client Care, Confidentiality & Disclosure, Publicity and Relations with third
parties
•
Consider putting in place a social media policy (although does state that for smaller practices this
may not be necessary but consider electing one individual for overseeing social media activity)
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Suggests points to include in your social media policy
CM Murray LLP: Specialists in Employment and Partnership Law
Best Practice - Practical Considerations
•
Consider Firm approach to social media: embrace -v- discourage? (ban altogether? reasonable
use?)
•
Properly drafted social media policy or email / internet policy (ACAS also recommend http://www.acas.org.uk/index.aspx?articleid=3381) :•
ACAS recommends consulting with employees when putting together such a policy
•
Clearly explain the possible legal risks associated with social networking in the work place
•
Guidelines for employees for acceptable behaviour and examples of what may be deemed
inappropriate
•
Clear guidance on the protection of a company’s confidential information when using
social networking sites and also confidentiality and privacy of third party information
•
Link to related policies e.g. confidentiality, anti-harassment and bullying, data protection
etc and update those policies if relevant (e.g. cyber-bullying)
•
Consequences of breach i.e. grounds to discipline or dismiss for gross misconduct
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Compliance with SRA Handbook & Code of Conduct 2011
•
NB: Rapidly changing area – policy will need to be updated on regular basis to keep
apace with changes
CM Murray LLP: Specialists in Employment and Partnership Law
Best Practice - Practical Considerations
•
Effectively communicate policy with staff indicating agreement ideally by
signing acknowledgment
•
Training – use the first few weeks of employment to establish acceptable
standards of behaviour with regard to social media
•
Recruitment:
•
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ACAS recommends you use at least 2 different recruitment methods
in any event. Bear in mind exclusion: 10 million people in the UK have
never used the internet.
•
Be cautious if using social networking sites to vet potential candidates
•
If using as part of recruitment process, allow prospective candidate to
comment on findings
•
Disclaimer
Sample principles / policies available online: Coca-Cola, HP, Intel, Volvo
etc
CM Murray LLP: Specialists in Employment and Partnership Law
UPDATE:
EMPLOYMENT LEGISLATION
HR in LAW
Esther Martin
esther.martin@cm-murray.com
@MsEstherMartin
CM Murray LLP: Specialists in Employment and Partnership Law
Recent Developments
April 2012
Unfair Dismissal:
Tribunal Procedures:
Statutory awards:
Two year qualifying period
Judges to sit alone
Maximum Costs Awards and
Deposit orders increase
Witness expenses
SSP, SMP, SPP etc. increased
July 2012
Pensions:
Auto-enrolment begins
CM Murray LLP: Specialists in Employment and Partnership Law
Future Developments
• Enterprise and Reform Bill 2012-13:
– Protected conversations
– Settlement agreements
– Mandatory pre-claim conciliation
– Whistleblowing legislation amended
– Financial penalties for employers
– Legal Officers
– Unfair dismissal compensatory awards
CM Murray LLP: Specialists in Employment and Partnership Law
Future Developments
Published Consultations:
- Discrimination Questionnaires
- Tribunal Recommendations
- Third Party Harassment provisions
(Equality Act 2010)
- Collective Redundancy Rules
- Modern Workplaces
CM Murray LLP: Specialists in Employment and Partnership Law
Future Developments
• Parental leave (increase to 4 months)
by March 2013
• Flexible working for all employees
by 2015
• Fees introduced for employment
tribunal claims
by December 2013
CM Murray LLP: Specialists in Employment and Partnership Law
New SRA Requirement for
Law Firms
Diversity Data Collection
Principle 9, SRA Handbook:
“You must…run your business or carry out your role in the
business in a way that encourages equality of opportunity
and respect for diversity”
• Law firms now required to report diversity
statistics to the SRA annually
• From 2013 statistics must be published
CM Murray LLP: Specialists in Employment and Partnership Law
PARTNER, EMPLOYEE, OTHER
HR in LAW
Clare Murray
Clare.murray@cm-murray.com
@ClareMary
CM Murray LLP: Specialists in Employment and Partnership Law
Spot The Odd One Out
Unfair
Dismissal
Statutory
Maternity
Leave & Pay
Discrimination
Protections
TUPE Rights
CM Murray LLP: Specialists in Employment and Partnership Law
Spot The Odd One Out
Salaried
Partner
Mezzanine
Partner
Fixed Share
Partner
Junior Equity
Partner
CM Murray LLP: Specialists in Employment and Partnership Law
Spot The Odd One Out
Mimi
Rogers
Nicole
Kidman
Penelope Cruz
Katie Holmes
CM Murray LLP: Specialists in Employment and Partnership Law
Why status is important
• A Fixed Share Partner (FS Partner) may have employment rights
• A formal consultation process may need to be followed to exit an
FS Partner for conduct, performance or redundancy reasons
• An FSP’s complaint may need to be dealt with as a grievance
• Restrictive covenants more likely to be enforceable against
genuine partners than employees
• Ensure FS Partners are correctly assessed for tax and NI
• Exiting Partners may raise it to improve their negotiating position
CM Murray LLP: Specialists in Employment and Partnership Law
Statutory rights available only to
Employees (not Partners):
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Unfair dismissal
Statutory Redundancy Payment
Collective Redundancy Consultation Rights
TUPE protections
Statutory Maternity & Paternity Leave & Pay
Statutory Minimum Notice of Termination
Written reasons for dismissal
Continuity of Service
(And others)
CM Murray LLP: Specialists in Employment and Partnership Law
Who is an Employee?
• s.230 Employment Rights Act 1996:
“..an individual who has entered into or works
under.. a contract of employment”
“..contract of employment means a contract
of service..whether express or implied..oral or
in writing”
CM Murray LLP: Specialists in Employment and Partnership Law
Who is an Employee?
A contract of service will exist if 3 basic conditions are fulfilled:
• The individual agrees to provide own work and skill in
performing a service, in return for pay;
• Agrees to be subject to employer’s control to a degree
sufficient to make employer the master: (control inc. what is
to be done, how, where & when); and
• The other provisions of the contract are consistent with a
contract of service
CM Murray LLP: Specialists in Employment and Partnership Law
Who is an Employee?
Autoclenz v Belcher and others [2011]
• Car valets working under label of being self-employed;
• Key points included:
– Written terms stating that they were self-employed not
sufficient – they did not reflect reality
– Look at the whole relationship and not solely documentation
– What are the parties’ actual legal obligations?
• Tribunal found sufficient control to be employees
• Tribunal could disregard terms suggesting self-employed if they
did not reflect actual obligations in reality
CM Murray LLP: Specialists in Employment and Partnership Law
Partner, Employee, Other?
Starting point to identify a genuine partner:
s.1 Partnership Act 1890:
“Partnership is the relation which subsists between
persons carrying on a business in common with a
view of profit”
s.1(3) PA 1890:
“The receipt...of a share of the profits of the
business is prima facie evidence that he is a partner
in the business but ..does not of itself make him a
partner in the business..
CM Murray LLP: Specialists in Employment and Partnership Law
Range of Factors
“..impossible to say …. a salaried partner is or is not
necessarily a partner in the true sense. He may or may not
be a partner depending on the facts….”
“What must be done is to look at the substance of the
relationship between the parties … and not..any mere label
attached to that relationship.”
“One must in every case look at the terms of the
relationship to ascertain whether or not it creates a true
partnership”
Stekel v Ellice [1973] Megarry J
CM Murray LLP: Specialists in Employment and Partnership Law
Range of Factors
Sharing in profits and losses
V.
Guaranteed pay
Sharing in liabilities
V.
Indemnity against liabilities
from Partners
Capital Investment
V.
No capital requirement
Participation in management
V.
Subject to control
Ability to hire, fire & sign cheques
V.
No such rights
Participation in surplus assets on
winding up of the Firm
V.
No participation
Held out as a partner, inc name
on firm notepaper
V.
Not held out
CM Murray LLP: Specialists in Employment and Partnership Law
Range of Factors
• Critical question – did they intend to create a partnership
rather than another relationship?
• All features of the agreement have to be considered to
establish that intention
• The absence of profit sharing, capital or dominant
management rights does not undermine or negate other
evidence of partnership
CM Murray LLP: Specialists in Employment and Partnership Law
Status of LLP Members?
•
A Member of an LLP can be an employee of it
•
S 4(4) Limited Liability Partnership Act 2000
“A member of a limited liability partnership shall not be regarded for any purpose
as employed by the limited liability partnership unless, if he and the other
members were partners in a partnership, he would be regarded for that purpose
as employed by the partnership”
•
On the facts, would he have been regarded as a partner?
• If not, on the facts would he have been an employee?
(NB just because he’s not a partner, doesn’t mean he’s automatically an employee)
CM Murray LLP: Specialists in Employment and Partnership Law
Tiffin v Lester Aldridge LLP (2012)
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Solicitor employed by LA as an associate
Promoted to salaried partner
Appointed to fixed share partner as a stepping stone to equity
Fixed profit share, plus 5 profit share points
Capital contribution of £5,000
Signatory to bank accounts
Issued with P45
Tax and NI as self-employed
Signed Members Agreement on LLP conversion
Entitled to participate in the surplus assets on winding up of the
firm in proportion to his capital
Certain voting rights, though not on all matters
CM Murray LLP: Specialists in Employment and Partnership Law
Tiffin v Lester Aldridge LLP (2012)
Was served notice by the partnership
Claim to ET for unfair dismissal, breach of contract and
Redundancy: rejected – he was a partner, not an employee
Appealed to EAT arguing he was in reality an employee
•
He was not involved in management of the firm as FS
Partners’ voting rights were “minimal”
•
His share of profits and capital were too small
•
The ET decision placed too much weight on labels rather
than reality
CM Murray LLP: Specialists in Employment and Partnership Law
Tiffin v Lester Aldridge LLP (2012)
EAT:
There is no certain minimum number or types of rights to
vote or to participate in management decisions to qualify
as a partner
“..in many large professional partnerships, all but a few of
the partners have any right to participate in the
overwhelming range of decisions made by the firm and
yet they are clearly partners”
CM Murray LLP: Specialists in Employment and Partnership Law
Tiffin v Lester Aldridge LLP (2012)
Court of Appeal:
•
Members’ Agreement reflected the parties’ intention to set up a partnership
•
No suggestion by Tiffin that Members’ Agreement was a sham
•
No minimum threshold requirement for managerial involvement or profit share
•
He did have a real voice in the firm’s management by his (more limited)
voting rights
•
Tiffin contributed to the capital, took a profit share and had a voice in
management
•
He participated in surplus assets on a winding up
•
Held: Appeal rejected - he was a Partner
CM Murray LLP: Specialists in Employment and Partnership Law
Partner, Employee, Other? No 1
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CIO in investment management firm
Fixed profit share, paid gross in 12 mthly instalments
No Capital
6 months notice to retire
Paid sick and holiday time
Share options with 3 year vesting
Could sign bank mandate & hire staff
New members agreement gave him – 1/11th share in
profits and 1/11th in sale proceeds on disposal of the firm
CM Murray LLP: Specialists in Employment and Partnership Law
Partner, Employee, Other?
Held: Partner
•
The parties intended it to be a partnership & acted consistently
with the Partnership Agreement
•
He never suggested he was an employee or that partnership
agreement was a sham until termination by the firm
•
He had considerable autonomy
•
No capital but had financial risk & received sweat equity
Kovats v TFO Management (2009)
CM Murray LLP: Specialists in Employment and Partnership Law
Partner, Employee, Other? No 2
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Employee of law firm became salaried partner, then
agreed new partnership arrangements for him
Guaranteed profit share with a 1/18th share in net profits
No capital
Paid tax and NI on self-employed basis
Contractual obligations of full time & attending, perform
assigned duties and comply with reasonable requests
Held out as a partner in the firm
Offered a compromise agreement on exit
CM Murray LLP: Specialists in Employment and Partnership Law
Partner, Employee, Other?
Held: Employee
•
•
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Tribunal decided as a matter of fact that the new
arrangements had not changed the fundamental nature of
the previous relationship; only his remuneration had
changed
He was not regarded as being part of the Partner
hierarchy
No risk of losses of the firm
Parties conducted themselves as if he were an employee
Williamson & Soden v Briars (EAT) (2011)
CM Murray LLP: Specialists in Employment and Partnership Law
Key Practical Points to Remember
• Consider – do we intend appointment to be as a partner?
• Clearly document the relationship you intend to be in effect
• Written terms not necessarily determinative - court will look at the whole picture
and the reality of the relationship
• Check written documentation is an accurate reflection of the relationship,
otherwise it runs the risk of being held to be a sham
• When determining partner/employee status, certain key indicators will need to
be present – try to satisfy as fully as possible
• Take tax advice (or risk being held to ransom)
• If there is doubt about whether an individual is an employee, be cautious and
follow objective and fully documented selection and consultation processes
before expulsion
CM Murray LLP: Specialists in Employment and Partnership Law
Key Practical Points to Remember
Remember:
• Partners are covered by discrimination protections
• LLP Members are covered by Whistleblowing protections
(Bates Van Winkelhof v Clyde & Co)
CM Murray LLP: Specialists in Employment and Partnership Law
Clare Murray, Susanne Foster and Esther Martin
CM Murray LLP
37th Floor
Canary Wharf,
London, E14 5AA
England
DD:
0207 718 0090
FAX:
0207 718 0091
E: clare.murray@cm-murray.com
E: susanne.foster@cm-murray.com
E: esther.martin@cm-murray.com
@cmmurrayllp @Susanne_Foster @MsEstherMartin @ClareMary
CM Murray LLP: Specialists in Employment and Partnership Law