In Phoenix House Ltd v Stockman, the EAT were asked to determine whether Mrs Stockman’s behaviour in covertly recording a meeting with HR amounted to misconduct and, if so, whether the compensation awarded by the ET should be reduced as a result.

In May 2013, Mrs Stockman, a financial accountant, covertly recorded a meeting with HR following an incident that had taken place earlier that day. A lengthy disciplinary process followed. In November, it was decided that the employment relationship had broken down beyond repair and Mrs Stockman was dismissed. The fact of this recording was only disclosed during Mrs Stockman’s successful unfair dismissal claim in the ET. On appeal, Phoenix argued that any award of compensation should be reduced to Nil as it would have dismissed Mrs Stockman for gross misconduct if it had been aware of the covert recording at the time it was made.

The EAT dismissed the appeal. It considered the variations in expected behaviour between employers; one employer may attach particular importance to a standard of conduct while another might condone it or treat it leniently. Because of this, part of the assessment is the attitude of the employer in question towards the particular behaviour. The tribunal had (rightly, according to the EAT) placed reliance on the fact that Phoenix had not listed covert recordings in its disciplinary policy as amounting to gross misconduct, and the policy was not amended in light of these proceedings.

The purpose of the covert recording was also relevant. Mrs Stockman’s evidence was that she had been flustered and uncertain if the device would even record. The EAT recognised that most people now carry devices capable of recording conversations that only take a moment to switch on. This fact, it thought, reduced the likelihood that a covert recording could be part of a calculated plan to entrap an employer or gain a dishonest advantage. This was aided by the fact that Mrs Stockman had only recorded a single meeting, had not relied on it at any point during the internal proceedings, and there was no suggestion that she had intended to entrap Phoenix.

Where an employer has a strong view that covert recordings constitute misconduct, the Phoenix decision will make it necessary for this attitude to be clearly conveyed to employees in some way. It is also good practice, as suggested by the EAT in obiter, for employees or employers to say if there is an intention to record a meeting and, if so, how.

A case was decided this week in the London Central Employment Tribunal (Dewhurst v Revisecatch) which has dramatic ramifications for employers. The Tribunal’s decision is that, where there is a transfer covered by the Transfer Regulations, individuals who are properly classified as “workers” are covered by the Transfer Regulations.

The Transfer Regulations apply to anyone working as an “employee”. This is defined in the Regulations as someone who “works for another person, whether under a contract of service or apprenticeship or otherwise (emphasis added), but does not include anyone who provides services under a contract for services, and references to a person’s employer shall be construed accordingly”. In other words, someone who is clearly an employee is covered by TUPE because they work under a contract of service. However, what do the underlined words “or otherwise” mean? There is a clear exclusion if you are genuinely self-employed (i.e. engaged in business on your own account), then you are not covered by TUPE. What happens if you are neither working under a contract of service, nor are you working under a contract for services? In other words, what happens if you are somewhere between those two extremes?

In this case, individuals who were cycle couriers claimed that they were “workers” and they should be treated as working under a contract of employment for the purposes of TUPE. Their argument was that clearly TUPE applied to contracts of employment plus a further category (“or otherwise”).

Under English law, there are, in essence, three categories of individual: employee, worker and the genuinely self-employed. The worker category is an intermediary category which, broadly speaking, means that an individual is contracted directly to the end user/employer, and they are not genuinely in business on their own account.

The Tribunal decided, after a careful review of the authorities, that workers were intended to be covered by the Transfer Regulations. This arose in the context of a claim for a failure to consult with those workers’ representatives ahead of the TUPE transfer. Furthermore, there was a claim for holiday pay which was dependant on the individual’s prior holiday pay rights transferring across from a former employer, under the Regulations.

If correct, this case extends the ambit of TUPE significantly. Employers will have to treat workers as if they were employees for the purpose of TUPE protection. This would clearly apply in relation to collective consultation rights, and the transfer of historic contractual rights and claims over to the new employer. Transferees will need to negotiate appropriate warranties and indemnities to cover workers as well as employees. This case does not give workers the right to claim automatic unfair dismissal, because that part of TUPE regulations refers back to the definition of “employee” in the Employment Rights Act 1996, which excludes workers. However, it is probably only a matter of time before someone argues that it is necessary to interpret the UK legislation to give workers dismissed following a TUPE transfer the right to claim automatic unfair dismissal.

Please remember that this is an Employment Tribunal decision. As such, it does not create a binding precedent. This case will be appealed, or one of the cases coming along in its wake will be appealed. However, for now, it is necessary for employers to think about how they are going to handle collective consultation and the allocation of risk in any TUPE transfer. For those interested, we will discuss this case further in our next employment podcast.


The Supreme Court has today released its decision in the whistleblowing case of Royal Mail Group v Jhuti.  The case concerns the unfair dismissal protection for whistleblowers, which provides that a dismissal will be unfair if the reason for it (or the main reason) is that the employee has made a whistleblowing disclosure.  The question in the Jhuti case was whether, in identifying the reason for a dismissal, it is only the motivation of the ultimate decision-maker that matters.

The facts were that Ms Jhuti had made a whistleblowing disclosure to her line manager which was not well received by him.  He set about creating a false picture of poor performance by Ms Jhuti which ended up in her dismissal, but it was not the line manager who made the decision to dismiss.  For the disciplinary process, the company had appointed a different manager, who knew nothing of Ms Jhuti’s whistleblowing disclosure and had no reason to doubt the truthfulness of the poor performance evidence which was found to be sufficient to justify dismissal.

The Court of Appeal had previously decided that, on these facts, the reason for the dismissal could not have been the disclosure made to the line manager as it was only the “mental processes” of the dismissal decision-maker that mattered and that person had based their decision on poor performance.  The Supreme Court disagreed and overturned the Court of Appeal’s decision.  They said that, when identifying the reason for the dismissal as required by the legislation, it is necessary to identify the “real reason”.  Normally, the real reason will be the reason given by the decision-maker but where, as in this case, the real reason has been hidden, the court must “penetrate through the invention”.  The real reason for Ms Jhuti’s dismissal was that she had made a whistleblowing disclosure to her line manager.

The facts of the Jhuti case are extreme; cases involving fabricated dismissal grounds will be rare.  Employers are, however, often faced with employees who have made whistleblowing disclosures and who are also (for unrelated reasons) the subject of an internal HR process, whether that is a disciplinary, performance or redundancy process.  Notwithstanding the decision in Jhuti, the recommended course in such circumstances will normally be to separate out the whistleblowing disclosure, and any associated investigation into it, from any other HR process, with different decision-makers being appointed for each.  That will normally reduce the risk of the employee arguing that the outcome of the HR process was motivated by their whistleblowing disclosure.

The Pensions Regulator (TPR) is the body responsible for regulating workplace pension schemes in the UK. Where an employer operates a defined benefit trust-based pension scheme for its employees, legislation requires it to notify TPR if certain events occur. Some events must always be notified, while others only need to be notified in certain circumstances.

Events which employers must always notify

  • Receipt of advice that the employer is wrongfully trading or knowledge that there is no reasonable prospect of the employer avoiding insolvent liquidation.
  • Conviction of a director or partner for a dishonesty offence.
  • A decision which results or is intended to result in non-payment of a debt due to the pension scheme.
  • A decision to cease business or the cessation of business in the UK.

Events which employers only need to notify in certain circumstances

  • Breach of a banking covenant.
  • A decision to relinquish control or relinquishment of control of an employer.

Employers must notify these events if either or both of the following apply:

  • The scheme was not fully funded on the Pension Protection Fund basis at its most recent valuation.
  • The trustees have had to report a non-payment under the schedule of contributions to TPR in the previous 12 months.

Notifications must be made in writing and as soon as reasonably practicable after the employer becomes aware of the event. Failure to notify can result in a fine of up to £5,000 for an individual and up to £50,000 for a company or partnership.

In October, a Pension Schemes Bill was laid before Parliament which would have introduced a more onerous notifiable events regime, including a penalty of up to £1 million for failure to comply with the regime. The Bill did not complete its passage through Parliament before Parliament was dissolved ahead of the December 2019 general election. It is likely that the Bill will be re-laid at some point, but exactly when and in what form is unknown. In addition to complying with the existing notifiable events regime, employers should therefore monitor developments in this area.

TPR has published guidance on the notifiable events regime which employers may find helpful.

In June 2019, the Women and Equalities Select Committee (WESC) published its report on the use of non-disclosure agreements (NDAs) in discrimination and harassment cases. This week, the Government’s response to that report has been published.

The Government had previously (in July) published its proposals for new legislation regarding the use of NDAs, and the response this week restates much of what we knew already: in particular, new legislation will be introduced restricting the use of NDAs in employment contracts and settlement agreements and there will be a requirement for independent legal advice to be provided to individuals asked to sign an NDA.

The Government’s latest response does, however, address some additional points, including the WESC recommendations that it will not be taking forward. These include:

  • Remedies: the WESC had recommended various increases to the remedies available in sexual harassment claims: an introduction of punitive damages, a presumption that employers would pay the employee’s legal costs in successful claims, and a significant increase to awards for injury to feelings. The Government has rejected all of these.
  • Carve-outs from NDAs: the Government has confirmed that its new legislation will require a carve-out in NDAs for disclosures to the police and legal/healthcare professionals, but it will not extend that carve-out to friends, family or victims on the basis that this latter group would not be subject to confidentiality requirements.
  • Legal advice: the Government has confirmed that its new legislation will require independent legal advice to be taken by any individual asked to sign an NDA, but it will not require employers to meet the cost of that advice in full. Instead, the Government response states that employers should ‘contribute appropriately’ to these costs but suggests that the new legislation will not dictate any amounts.
  • Standard wording: the Government will not be mandating standard wording for NDAs but it has committed to produce guidance on the drafting requirements.

Perhaps not surprisingly, some of the more radical proposals made by the WESC have been rejected by the Government, but the commitment to introduce legislation on the use of NDAs remains. With the upcoming general election, we will have to see how quickly that legislation arrives.

For the full text of the Government response, please see the link below:

On 15 October, the eagerly awaited Pension Schemes Bill (the Bill) had its first reading in the House of Lords. Whilst the Bill addresses the launch of collective defined contribution (or CDC) pension schemes and includes provisions enabling pensions dashboards, employers will be particularly impacted by the new requirement on trustees to produce a funding and investment strategy, to which employer agreement must be obtained. However, perhaps of more immediate concern to employers will be the increased powers that the Pensions Regulator (TPR) will be given under the Bill.

The powers that TPR will be given bring into effect the enhanced regulatory tools referred to in the Government’s 2018 consultation on strengthening TPR’s powers. In particular, new criminal offences will be introduced for the following:

  • Failure to comply with a contribution notice – punishable by an unlimited fine.
  • Avoidance of an employer debt under section 75 of the Pensions Act 1995 – punishable by an unlimited fine and/or a maximum of seven years in prison.
  • Conduct which affects the likelihood of accrued scheme benefits being received (which will bring into effect the Government’s plans for “wilful or reckless behaviour” relating to pension schemes to become a criminal offence) – punishable by an unlimited fine and/or a maximum of seven years in prison.

The above punishments are all targeted at employers and in particular seem to be aimed at ensuring that failing sponsors stand behind their pension schemes. On a related note, it is worth noting that the Bill also introduces two new tests for imposing a contribution notice on employers – the “employer insolvency test” and the “employer resources test”.

The Bill also makes it clear that TPR will have the power to issue civil penalties of up to £1 million for any of the above offences, or to an employer that knowingly or recklessly provides TPR (or the trustees or managers of a scheme in certain situations) with false or misleading information.

Under the Bill, TPR will also be able to require employers to attend interviews in order to provide answers to questions and explanations on matters relevant to the exercise of TPR’s regulatory functions. Employers should also be aware that the reasons for which TPR’s inspectors can enter an employer’s premises will be extended to cover situations where TPR wishes to investigate whether it has grounds for issuing a contribution notice, financial support direction or restoration order.

Unanswered questions

The Bill seeks to impose fines of up to £1 million where misleading information is “knowingly or recklessly” provided. There remains uncertainty around the precise definition of “knowingly” or “recklessly” providing information and further guidance is likely to be required on this.

Whether time can be found for the Bill to pass during this busy parliamentary period remains to be seen, but irrespective of this, TPR’s focus on dealing with poor behaviour by employers in connection with their pension schemes is clearly here to stay.

When making certain future changes to their pension scheme, employers should keep in mind the requirement to consult with their employees before making the change. In this blog post, we run through the key aspects of member consultations to provide a reminder of what exactly employers need to do, and why they need to do it.


Employers who have 50 or more employees based in Great Britain are subject to consultation requirements set out in the relevant consultation regulations. This threshold is based on the number of employees the employer has, even if some of those employees are not pension scheme members.

Continue Reading Talking pension changes

Continuing our spotlight posts featuring contributions from our global Employment & Benefits group, here are some recent articles from our teams in France and Germany:

  • Protecting IP with employment agreements in France – Employment & Benefits partner Julien Haure and associate Marine Hamon provide guidance on how employers in France can establish ownership of the intellectual property rights in works created by employees during the course of employment.
  • Increasing demand for flexibility leads to considerable need – Employment & Benefits partner Hagen Köckeritz considers the increasing need in Germany for “external personnel” (e.g. temporary workers or freelancers) and how to manage the associated risks.
  • Hidden no longer – Employment & Benefits senior associate Pauline Moritz examines the often-overlooked area of calculation of leave pay for commission-based employees in Germany.

For further information on the topics covered in these articles, please contact Julien Haure and Marine Hamon (France) or Hagen Köckeritz and Pauline Moritz (Germany).

As you may be aware, since February 2017, all Employment Tribunal and Employment Appeal Tribunal judgments have been published on an online register on the website. A recent case in the Court of Appeal has confirmed that, other than in cases of national security, the online register will always maintain a copy of any judgment.

In this case, the Claimant made an appeal to the Court of Appeal to argue that his judgment should not be published on the online register, and if the judgment was to be published at all, it should be heavily censored to delete reference to his disabilities, and matters connected to his disabilities, as well as anonymising the parties. The Court of Appeal refused to allow his appeal. It confirmed that neither the Employment Tribunal nor the Employment Appeal Tribunal had any power to prevent the publication of a judgment on the register. Similarly, it was correct to refuse to redact the judgments that had been previously been given at the Employment Tribunal and the Employment Appeal Tribunal stage to delete details of the Claimant’s disabilities and consequential matters.

This case is a clear indication from the courts of the importance of the principle of open justice. Whilst, traditionally, employers often take the view that it is a disadvantage to the employer for it to be identified as being on the receiving end of a tribunal case, and for details of the case to appear in the judgment given online, the same often holds true for claimants. Parties who are in negotiations about resolving employment disputes, before the commencement of formal tribunal proceedings, may both wish to bear this in mind. From the point at which proceedings are launched, the case will appear in the public register at a later date. Although it is possible, in limited circumstances, to ensure that parties are anonymised, this is very much the exception to the rule of the principle of open justice

With the introduction of automatic enrolment, increasing longevity, and employees focusing on the full benefit package offered by an employer, rather than just salary, an employer’s pension offering is under the spotlight. However, despite the increased relevance, the difference between types of pension scheme is not always clear. So, what are the key differences between a workplace trust-based pension scheme (“Trust Scheme“) and a workplace contract-based pension scheme (“Contract Scheme“)? Continue Reading To trust or not to trust, that is the question