February Legal Alert

legal alert

This month: 

 

Case law: Obese employees not necessarily disabled

Obesity is not itself a disability but an obese employee can be disabled if the effect of their condition is a physical or mental impairment, and no other underlying cause can be found, the European Court of Justice has ruled.

An employee in Denmark was made redundant after 15 years' service. He weighed 25 stone and fell within the World Health Organisation's definition of obesity. He claimed that he was selected for redundancy because he was obese and this amounted to disability discrimination. His employer denied he was disabled.

The European Court of Justice (ECJ) ruled that an obese person is not automatically disabled, but may be if the effect of their condition is that they have a physical or mental impairment which interacts with external factors, on a long-term basis, to stop them from participating fully and effectively in professional life on a par with other workers. It is irrelevant that they may have contributed to their own condition. The cause of their obesity may be medical or simply because they eat too much, provided the obesity results in a long-term impairment. 

However, it will be easier for an employee to prove they are disabled if an underlying medical condition is contributing to it or, conversely, if their size causes them to suffer from other conditions such as joint pain or diabetes.

The ECJ went on to confirm that an obese employee who can participate fully at work may still be disabled if the only reason they can participate fully at work is because of adaptations made by their employer. 

The Court said it was a matter for national courts, such as UK employment tribunals, to decide when obesity would amount to a disability. Under UK law someone is disabled if they have a physical or mental impairment which has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities.

In a recent case in the UK Employment Appeal Tribunal (EAT) an obese employee suffered from numerous conditions including diabetes,  hearing loss, anxiety and depression, carpal tunnel syndrome, and eye problems. The occupational therapist said these were compounded by his obesity and amounted to a chronic permanent condition affecting his daily living. However, there was no apparent cause.

The employee claimed disability discrimination but the employment judge ruled he was not disabled on the basis that his occupational health specialist could not find an underlying 'physical or organic cause' for his condition, other than obesity.

The EAT ruled this was the wrong approach. The test was whether the employee had a physical or mental impairment which had a substantial and long-term adverse effect upon his ability to carry out normal day to day activities. It referred to para A8 in the government guidance on matters to be taken into account when considering disability, which says:

"It is not necessary to consider how an impairment is caused, even if the cause is a consequence of a condition which is excluded. For example, liver disease as a result of alcohol dependency would count as an impairment, although an addiction to alcohol itself is expressly excluded from the scope of the definition of disability in the Act. What it is important to consider is the effect of an impairment not its cause – provided that it is not an excluded condition."

The judge should therefore have looked at the effect of the employee's condition, rather than search for its specific cause. In this case, the employee clearly suffered long-term physical or mental impairment that satisfied the test.

The EAT did, however, say that its cause may provide evidence that an impairment is not substantial or long-term. For example, if an obese employee's impairment would disappear if he lost weight, this may mean his impairment is not long-term and he would not be disabled.

Operative date

  • Now

Recommendation

  • Employers considering whether an employee is disabled should:
    • Consider the effect of his condition, not the cause, when deciding whether he or she has a physical or mental impairment.
    • Consider whether any identifiable cause of an impairment, such as obesity, could be remedied within, say, 12 months, so the impairment will not have a long-term effect.
    • Download the free Guidance from the gov.uk website.

Case refs: Karsten Kaltoft v Municipality of Billund, case no. C-354/13; Walker v Sita Information Networking Computing Ltd [2013] UKEAT 0097_12_0802

 

Case law: Government limits employees' claims for back holiday pay

Employers will welcome new rules limiting employees' ability to bring long-term claims for back holiday pay in the ET and the civil courts, following three landmark rulings.

The new 'two-year rule limits an employee's ability to claim unlawful deductions of wages (except in relation to certain claims, such as maternity, sick and guarantee payments) that took place more than two years before a claim is made to the Employment Tribunal, provided the claim is lodged on or after 1 July 2015. Under the new rule, the right to paid holiday is not incorporated as a term in employment contracts. The two-year rule reduces the impact on employers of recent rulings that said employers must pay their workers holiday pay at the same rate as their 'normal pay'. The underlying principle is that workers should not be paid less than normal just because they are on holiday.

In a previous case, the European Court of Justice ruled that 'normal pay' included all elements of pay that are 'linked intrinsically to the performance of the tasks which the worker is required to carry out under his contract of employment'.  The UK Employment Appeal Tribunal has therefore ruled that 'normal pay' included payments for regular, settled, but non-guaranteed overtime so that such payments should be taken into account when calculating holiday pay. However, it also decided:

  • This only applies to the four weeks of the worker's annual leave required under the EU Working Time Directive (20 days for a full-time worker). There is an assumption that this part of the worker's annual leave is taken first. It does not apply to holiday pay for the additional 1.6 weeks (eight days for a full-time worker) of annual leave also required under the UK Working Time Regulations (or to any additional contractual annual leave), which continues to be calculated by reference to basic pay.
  • Workers claiming to have been underpaid holiday pay must have been underpaid within the three months before they lodge a claim. Any claim is for unlawful deduction from wages.
  • If they are claiming a series of underpayments, claims for previous underpayments will not succeed if there is a break of more than three months between underpayments. This will mean most workers can only claim underpayments for their most recent holiday.

Another UK decision said that normal commission payments should be also included when calculating holiday pay. This issue has been referred back to the Employment Tribunal to decide how employers should make this calculation.

In addition to the three-month limits referred to above, the new two-year rule now also ensures that, for claims brought after 1 July 2015, no employer can be asked to compensate employees for unpaid holiday pay that goes back more than two years. This is a welcome limit for employers who pay significant overtime but did not factor this into holiday pay, as they might otherwise have faced claims for back holiday pay.

Operative date

  • Now

Recommendations

Employers should:

  • Identify workers who regularly work overtime, or receive commission or other job-related allowances; ensure workers' holiday dates are accurately recorded; work out how far back each worker may be able to claim underpaid holiday pay (both under the new 'two-year' rule, and because claims are blocked if there has been a three-month break between holidays); and budget accordingly.
  • Consider reducing overtime to minimise future holiday pay.
  • Consider whether to continue to pay lower holiday pay in relation to the eight days' of annual holiday under the Working Time Regulations compared to the 20 days' holiday under the Working Time Directive – effectively introducing 'two-tiers' of holiday pay.
  • Consider whether their systems (including any payroll software) can cope with this.
  • Take specialist legal advice if in doubt.

Case refs: Bear Scotland Ltd & Others v Fulton & Others UKEATS/0047/13/BI; Hertel (UK) LTD v Woods & Others UKEAT/0160/14/SM; Amec Group LTD v Law & Others UKEAT/0161/14/SM

 

Case law: Gross misconduct does not automatically justify dismissal in every case

Employers should not assume that because there has been gross misconduct by an employee, dismissal is automatically within the band of reasonable responses, following a legal ruling.

A hospital consultant was off sick and claiming sick pay, but saw patients privately. At an investigatory meeting she was told that this could amount to gross misconduct leading to her dismissal. She was later told her actions amounted to fraud, and dismissed. She claimed unfair dismissal.

The Employment Tribunal ruled that dismissal was automatically within the band of reasonable responses for an employer to take if an employee was guilty of gross misconduct.  The Employment Appeal Tribunal (EAT) said this was wrong and found that there may be mitigating circumstances which make dismissal unreasonable, even if there has been gross misconduct. For example, in this case perhaps the employer should have considered the effect of dismissal on a consultant's future career in the NHS.

The EAT sent the case back to the Tribunal to consider whether, in this particular case, dismissal was within the band of reasonable responses.  However, while it is clear from this ruling that dismissal should not be a foregone conclusion in cases of gross misconduct, it will almost always lead to dismissal.

Operative date

  • Now

Recommendation

  • Employers should not assume that, because there has been gross misconduct by an employee, dismissal is automatically within the band of reasonable responses.

Case ref: Brito-Babapulle v Ealing Hospital NHS Trust [2013] UKEAT 0358_12_1406

 

Case law: Employers can 'perceive' an employee is disabled without realising they have done so

Employers should consider whether any employee has a medical condition, its likely duration and its effect on the employee.  If they don't, they risk being treated as having perceived the employee to be disabled, so that disability discrimination laws apply - even though they are not actually aware there is a disability.

A hospital consultant was dismissed after an investigation during which colleagues said they found his behaviour erratic and unusual. If an employee is treated less favourably than another worker because are perceived to be disabled, they can claim disability discrimination (even though they are not in fact disabled). This is called 'perceived discrimination'.

The consultant claimed perceived discrimination. He said his colleagues had perceived him to be suffering from mental disability (even though he was not) and that was the reason he had been dismissed. His dismissal was therefore disability discrimination.

Someone is disabled for discrimination purposes if they have a physical or mental impairment which has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities. 'Long-term' usually means 12 months. They are also automatically disabled if they suffer from any of certain specified conditions, including blindness, cancer, HIV and multiple sclerosis.

The Employment Tribunal had to decide if the employer perceived the employee as disabled. It ruled that an employer perceives an employee as disabled if the employer perceives that the employee satisfies all the elements of the definition of disabled - irrespective of whether or not they appreciate that these bring the employee within the legal definition of 'disabled'.

For example, if an employer perceives an employee has a condition which has a substantial and long-term effect on their ability to carry out normal day to day activities, the employer has therefore perceived that the employee was disabled - even if they do not realise they have Similarly, if an employer perceives an employee is blind, then that is also a perception that the employee has a disability, even if the employer does not realise blindness automatically amounts to a disability.

Operative date

  • Now

Recommendation

  • Employers should consider whether any of their employees has a medical condition, its likely duration and its effect on the employee, or risk claims they have perceived the employee to be disabled without realising they have.

Case ref: Estlin -v- Central Manchester University Hospitals NHS Foundation Trust

 

Case law: Supreme Court to consider whether landlords must repay overpaid rent following exercise of break clause

Landlords may be liable to repay rents paid in advance of exercise of a break clause.  The Supreme Court is to hear an appeal against a ruling that there is no implied right to repayment of that part of the rent relating to the period after the lease ended.

A tenant leased part of a large office building. The lease gave the tenant a right to break the lease provided its rent was not in arrears at the break date; and provided it made a payment equal to one year's rent before the break date.

The tenant purported to exercise the break clause to end the lease during the December 2011 quarter. The landlord invoiced the tenant for pro rata rent (and other sums) calculated up to the intended break date. However, following previous rulings that tenants exercising a break clause that will end the tenancy during a rental quarter should pay the full quarter's rent or the break is ineffective, the tenant paid a full quarter's rent before exercising the break. It also paid the sum equal to one year's rent required under the lease. The break was effective and the tenancy came to an end on the intended date.

The tenant wrote to the landlord requesting repayment of that part of the quarterly rent for the period after the tenancy had come to an end. The landlord refused, relying on previous court rulings that landlords only had to repay rent to a tenant in these circumstances if the lease expressly said they did. In this case it did not.

The High Court ruled in favour of the tenant, but was overruled by the Court of Appeal which found that it would have been obvious when the parties entered into the lease that the tenant might have had to pay a whole quarter's rent before exercising the break clause. They could therefore have made express provision in the lease for repayment of that part of the rent relating to the period after the lease had ended, but had chosen not to. It was not therefore possible to imply a term that part of the rent be repaid.

The Supreme Court will hear the appeal, giving hope to tenants that they may be able to reclaim part of a quarter's rent paid in advance if they successfully exercise a break clause during that quarter.

Operative date

  • Now

Recommendation

  • Landlords who have resisted claims for repayment of pro-rata parts of quarterly rents paid in advance of a successful break in a lease during the quarter should budget for the possibility that such repayments are payable after all, depending on the Supreme Court's ruling.

 

New guidance: New guidance for employers on Fit for Work scheme

Employers will welcome new guidance Fit for Work: Guidance for employers from the Department for Work and Pensions on the new Fit for Work service, and a website introducing the new service.

The two elements of the new service are an occupational health assessment for employees, and an advice service. It will run alongside existing occupational health schemes, if employers have one.

Under the scheme an employee will usually be referred for an assessment by their GP after four weeks' sick leave (or if the GP anticipates the sick leave will last at least four weeks). If the GP has not referred an employee for an assessment after four weeks the employer can do so. The assessment can be made face-to-face or over the phone.

The outcome of an assessment is a 'return to work' plan recommending ways to get the employee working again more quickly – such as retraining, homeworking or medical care; and sources of help and advice.

Employees are entitled to a tax exemption of up to £500 if they are receiving medical treatment either recommended by the service or arranged by their employer, as the treatment would otherwise be treated as a benefit in kind (and therefore income tax and employer National Insurance contributions would be payable).

The advice service is available to employers, employees and their GPs over the phone. The Government has also launched a new Fit for Work website introducing the new service, with sections for employers, employees and GPs.

Operative date

  • Now

Recommendation

  • Download the new guidance from the gov.uk website, visit the Fit for Work website and review your sickness absence policies to see if changes are needed.

 

Case law: Offensive but apparently personal tweets by employee can justify dismissal

Employers should ensure they have social media policies, induction and training that make it clear to employees that both work and personal and private use of Twitter (and other social media) can, in certain circumstances, result in dismissal, and give guidance on what those circumstances could be.

An employee's responsibilities included monitoring Twitter for inappropriate activity by other employees. He set up his own Twitter account for this purpose. This did not expressly identify him as employed by his employer, a major retailer. He 'followed' 100 of the retailer's stores on Twitter and 65 of them followed him back.

One of the store managers complained to the employer that the employee's tweets were offensive. The employer investigated and found that 28 tweets were offensive, including comments about 'dentists, caravan drivers, golfers, the A&E department, Newcastle supporters, the police and disabled people'. Disciplinary proceedings were brought and he was summarily dismissed.

The employee argued that there was no express provision in his employer's disciplinary policy making it clear that offensive or inappropriate misuse of social media was gross misconduct. He also said he had tweeted in his spare time, not during working hours, and his comments were unrelated to his work. The Employment Tribunal ruled that his dismissal was unfair.

However, the Employment Appeal Tribunal disagreed: the proper test was whether dismissal was within the band of reasonable responses for an employer, following a reasonable investigation, and based on conclusions which it had generally and reasonable reached. It ruled that relevant issues included:

  • Whether the employer has an IT or social-media policy
  • The nature and seriousness of the alleged misuse
  • Any previous warnings for similar misconduct
  • Any actual or potential damage done to customer relationships
  • If applicable, the speed with which any offending tweets are removed

In this case, the EAT found that even though the employee's Twitter account appeared to be personal, he was operating it for work purposes. He was being followed by stores and employees of stores owned by his employer – in fact the manager of one of the stores had recommended other employees to follow him. It said he could have created two accounts – one for work and another for personal use - but had chosen not to do so. He had also failed to adjust the settings for his account to protect his comments from general view, so both employees and customers of the stores could see his tweets. It was possible to work out that he was associated with the employer from the information on his account, so there was potential for his offensive tweets to reflect badly on the employer. They had in fact done so, causing another employee to complain about them.

The EAT therefore remitted the case back to a different Employment Tribunal to be reheard.

Operative date

  • Now

Recommendation

  • Employers' should ensure they have social media policies, induction and training that make it clear to employees that even apparently personal and private use of Twitter (and other social media) can result in dismissal in certain circumstances, and give guidance on what those circumstances could be.

Case ref: Game Retail Ltd v Laws UKEAT/0188/14/DA

 

New guidance: New and updated online resources for employers and employees launched

The Government has added to and updated its range of online resources for employers and employees following the introduction of shared parental leave, and new checks for foreign workers.

These include:

  • A new online calculator to help employees who are prospective parents work out their entitlement to maternity, paternity and shared parental leave and pay
  • Updated guidance for employers Shared parental leave and pay: employers' technical guide to explain the relationship between shared parental leave and pay and sick leave. This covers more technical aspects which rarely occur but should be addressed when writing policies
  • Updated guidance Right to work checks: an employer's guide

Operative date

  • Now

Recommendation

 

Case law: Landlords who don't repay pre-April 2007 shorthold tenancy deposits not placed in protection scheme lose right to recover property

Landlords who have not put pre-6 April 2007 assured shorthold tenancy deposits into government-approved deposit protection schemes should return them, or lose their right to recover possession of the property without giving a reason, following a Court of Appeal ruling.

Under deposit protection rules introduced from 6 April 2007, landlords taking deposits from tenants holding assured shorthold tenancies must pass them to one of three government-approved schemes rather than hold the deposit themselves. The scheme then arbitrates in the event of any dispute over whether the deposit should be returned to the tenant at the end of the tenancy.

Previously, it was thought that any deposit taken before the deposit protection rules came into force did not have to be put into a government-approved scheme.

However, the Court of Appeal has ruled that while there is no obligation to put pre-6 April 2007 deposits into a such a scheme, failure to do so means the landlord loses the right to automatically repossess the property without having to give any reasons once the fixed term (usually of six months) is over.  Landlords holding such deposits can therefore only automatically repossess their property if they return the tenant's deposit in full first.

Operative date

  • Now

Recommendation

  • Landlords holding pre-6 April 2007 assured shorthold tenancy deposits should consider whether to return them, to safeguard their right to recover their property automatically.
  • If they do, they may also wish to take new deposits, but must put these into a deposit protection scheme, so the scheme can arbitrate and allow deductions if the tenants have damaged the property.

Case ref: Charalambous & Anor v NG & Anor [2014] EWCA Civ 1604

 

Case law: Emails containing key settlement terms created binding contract

Parties to a dispute should ensure settlement negotiations are expressly made subject to contract, unless and until all settlement terms are finally agreed and the parties are ready to be bound by their agreement, the High Court has confirmed.

Solicitors acting for 220 parties in a complex dispute made various offers to settle. A settlement figure was agreed, through a series of emails, to be paid within 28 days. The emails said the agreement was to be recorded in a Consent Order for the court to approve. Subsequently, they were unable to agree the wording of the Consent Order.

A contract exists in law if, viewed objectively, it looks as if agreement has been reached on key issues, even if one of the parties did not intend to be bound by the terms agreed at that date.

The court decided:

  • The emails were evidence of agreement on how much would be paid, and when. This was 'sufficiently certain' for the settlement to be enforceable. It was irrelevant that the dispute itself was complicated – the settlement terms could be simple
  • The email exchanges had not been expressly subject to contract, and it could not be implied that they were subject to contract

There was therefore a legally binding contract to pay the specified figure within 28 days. No second stage – agreeing any remaining, detailed terms of the settlement – was required.

Operative date

  • Now

Recommendation

  • Parties to a dispute should ensure settlement negotiations are expressly made subject to contract unless and until all settlement terms are finally agreed and the parties are ready to be bound by their agreement.

Case ref: Bieber and others v Teathers Ltd (In liquidation) [2014] EWHC 238

 

Case law: Online content can be used by third parties on their websites without permission if 'framed'

Owners of copyright in online content such as videos should consider taking steps to protect others from displaying it on their websites without permission, following a European Court of Justice ruling that 'framing' other people's content does not breach their copyright.

Two websites displayed a video on YouTube by 'framing' it – ie by displaying it within a frame on their website.  This meant that it appeared to viewers as if it was part of that website, but was actually being watched on YouTube. This can be accomplished without the video being copied or reproduced on the website's own servers.

The owner of the copyright in the video, a water filter manufacturer, claimed that this infringed its copyright. The website owners, who were two distributors of the owner's products, claimed that as framing did not involve copying the video, there was no infringement.

The European Court of Justice ruled that framing someone else's content did not breach copyright because no copying was involved, provided the content had originally been published on the internet for access by all internet users. It made no difference in this case that the video had been posted on Youtube without the owner's permission.

The effect is that anything you make generally available online can be framed and displayed by someone else on their website, making it look as if it is their own content.

Operative date

  • Now

Recommendation

  • Owners of online content who do not want third parties to be able to display that content on their websites using framing, must ensure it is not made generally available on the internet and/or use technological means to prevent others from being able to frame it on their sites - for example, by using paywalls.

Case ref: BestWater International GmbH v Michael Mebes, Stefan Potsch, case no. C‑348/13

 

Case law: Ineffective assignment means old tenant still liable for unpaid rent

Landlords and tenants should ensure that intended assignees of a lease are not allowed into premises until the necessary consents and other formalities have been completed, otherwise they risk unnecessary legal costs and, in the tenant's case, remaining liable for rent despite vacating the premises.

A landlord let a car showroom to tenants on terms they could not assign the lease without the landlord's consent, not to be unreasonably withheld. A break clause also gave the tenants an option to end the lease on six months' notice provided they did so before May 2012. The option was personal to those tenants and would not automatically pass to the assignee.

The tenants asked the landlord to agree to an assignment and deposited a signed transfer deed with their solicitor. The landlord asked for personal guarantees from the directors of the proposed assignee. The proposed assignee asked for an option to end the lease on terms similar to those enjoyed by the existing tenants to be included in their lease.

Despite these issues still outstanding, the tenants moved out and the proposed assignee went into the premises - without a formal assignment being signed. The proposed assignee paid rent to the landlord (which was accepted), made improvements and asked the landlord to carry out certain repairs.

The proposed assignee then gave notice to the landlord that they wanted to leave the premises and paid part of the rent due. However, the landlord claimed the remainder from the original tenants on the basis there had been no effective assignment of the lease and they were still tenants and liable for the rent.

The Court of Appeal ruled that there had been no effective assignment, and the landlord's behaviour in accepting rent from the proposed assignee did not stop it from claiming that the original tenants were still tenants.

Operative date

  • Now

Recommendation

  • Landlords and tenants should ensure that intended assignees of a lease are not allowed into premises unless the necessary express consents, documentation and other formalities for assignment of the lease have been provided or completed, or they risk unnecessary legal costs and, in the tenant's case, remaining liable for rent despite vacating the premises.

Case law: Lankester & Son Ltd v (1) David Robert Rennie and (2) Anne Rennie [2014] EWCA Civ 1515

 

New guidance: New protocol launched for applications for landlord consent to assignment or sub-letting

Landlords and tenants should benefit from a new protocol designed to help them handle applications to landlords for consent to assignments of a lease and/or subletting of property, more quickly and easily.

Two QCs and partners at a global law firm have launched a new protocol – a 'ready reckoner' - to help guide landlords and tenants of commercial properties through the process of applying for, and granting, landlords' consent to assignments and sub-lettings.

The authors' stated aims are to improve communication between landlord and tenant, and establish a workable timetable; to avoid arguments as to the information and documentation that should form part of any application, and as to the period of time within which the landlord should give its decision; and, if disputes arise, to guide parties towards alternative dispute resolution, with recourse to the courts being an option of last resort.

Operative date

  • Now

Recommendation

 

Case law: Court clarifies when copyright infringer is 'targeting the public in the UK'

Businesses bringing copyright claims under UK copyright law, and therefore required to show the infringer's website targeted the UK public, will welcome clarification on the relevant factors to take into account.

A UK company's website targeted a South African company's customers in South Africa. The South African company claimed the UK company had infringed its UK copyright by reproducing a large number of images on its site that it had copied from its company website. The servers hosting the UK company's website were not in the UK. The South African company therefore had to show that the UK company's website targeted the public in the UK. If it could not, there was no infringement of UK copyright and the claim in the UK would fail.

The High Court found that the issue of whether a website was targeting the public in the UK (or any other country) was a "multi-factorial one which depends on all the circumstances. Those circumstances include things which can be inferred from looking at the content on the website itself and elements arising from the inherent nature of the services offered by the website". These included:

  • Any statement on the site showing it is aimed at UK customers, for example, the company serves customers in the UK, or in multiple countries that could include the UK
  • The number of visitors to the site from the UK
  • Whether the company's activities are multi-national
  • The language used on the site
  • If goods or services can be bought from the site, the currency in which prices are stated or goods or services can be bought
  • Use of international telephone contact numbers
  • The domain name
  • Where the owner of the site is established

The court ruled that the UK company's website was targeting the public in the UK. Notably, the fact that 10-25 per cent of the site's visitors – a substantial proportion – were from the UK was significant. The site's home page was also designed to attract visitors from multiple countries.

Operative date

  • Now

Recommendation

  • Businesses bringing copyright claims under UK copyright law, and therefore required to show the infringer's website was targeting the UK public, should ensure they can show one or more of the factors amounting to targeting of the UK public referred to by the court in this decision.

Case ref: Omnibill (Pty) Ltd vEgpsxxx Ltd & Anor [2014] EWHC 3762 (IPEC)

 

Case law: Software which merely 'circumvented' rather than solved technical problem was not patentable in the UK

Businesses developing software should consider whether the software is capable of being protected by a patent in the UK, given that software 'as such', which does not have a technical effect outside the relevant computer system, cannot be protected.

A company developed software enabling users to retrieve data from a remote computer across a network by sending an email containing machine-readable instructions to that computer, which it would read, and then email back the data requested in those instructions. This meant data could be retrieved via the internet, avoiding network problems. The issue was whether the software was an invention capable of being protected by a patent.

Software 'as such' is not an invention and is not therefore patentable under UK law. However, it can be protected by patent if it results in a technical effect or process outside a computer system that makes an innovative, technical contribution.

The signposts that indicate whether or not there is a relevant technical effect are:

  • Whether the claimed technical effect has a technical effect on a process carried on outside the computer
  • Whether the claimed technical effect operates at the level of the architecture of the computer, ie whether the effect is produced irrespective of the data being processed or the applications being run
  • Whether the claimed technical effect results in the computer being made to operate in a new way
  • Whether the program makes the computer a better computer in the sense of running more efficiently and effectively as a computer
  • Whether the perceived problem is overcome by the invention as opposed to merely being circumvented

In this case, the Court of Appeal ruled that the software:

  • Had no effect outside the computers (except for the transmission of emails)
  • Did not operate at the level of the architecture of the computers
  • Did not cause them to operate in a new way - it ran on conventional computers connected by a conventional network and the task it performed (moving data from one computer to another) used email - a conventional technique for carrying out that task
  • Merely 'circumvented' a problem in computer networks rather than actually solving it

Its effect was merely to combine and control known computing and networking technology.

The Court of Appeal therefore concluded that the patent application was therefore merely an application for a patent for software 'as such', and that a data retrieval solution whereby an email containing data retrieval instructions, which then triggered a data retrieval process that emailed back the required data, was not a patentable invention.

However, this was a decision of the UK courts and the UK Intellectual Property Office. The European Patent Office does not approach patents for software in the same way. On occasion, software that is not patentable under one system may be patentable under the other.

Operative date

  • Now

Recommendation

  • Businesses developing software should consider whether it is capable of being protected by a patent in the UK, as software 'as such' cannot be protected in the UK but must produce a technical effect outside the relevant computer system, or by a patent at the European Patent Office.

Case ref: Lantana Limited v Comptroller of Patents [2014] EWCA Civ 1463

 

Case law: A party to a contract cannot hold onto 'intangible property' even if owed money when it ends

Owners of intangible property, such as a database, who provide that property to others in order for them to carry out work under a contract can demand its return when the contract ends, even if the other side claims it is owed money under the contract.

A magazine publisher commissioned a specialist company to hold and update its subscriber database, and handed the database over for that purpose. The publisher was not happy with the service and terminated the contract. There was a dispute over fees and the company refused to hand the database back to the publisher until it was paid. In legal terms, it claimed it had a 'possessory lien' over the database – that, because the database had been supplied to it in order for it to carry out its work under the contract, it could retain the database until it was paid.

The Court of Appeal ruled that it could not do this. While a party could have a possessory lien over physical or 'tangible' property (such as materials, plant or machinery) in those circumstances, a database was 'intangible' property and it was not possible for a party to a contract to claim a possessory lien over intangible property.

Operative date

  • Now

Recommendation

  • Owners of intangible property, such as databases, who provide that property to others in order for them to carry out work under a contract, can demand the return of that property when the contract ends, even if there is a dispute.

Case ref: Your Response Ltd v Datateam Business Media Ltd [2014] EWCA Civ 281

 

Case law: Employees working for employer's only customer are not automatically protected under TUPE rules

Employers should note that TUPE does not automatically protect employees working exclusively for one client who then takes the work in-house, if the company only has one client, following a legal ruling.

A company employed three painters and decorators and at the relevant time, its only client was a local authority. The local authority ended the company's contract, saying it was taking the work in-house. The employees claimed protection under the TUPE rules.

The TUPE rules are designed to protect employees in certain circumstances by preserving their jobs and their terms and conditions of employment. The circumstances when jobs are protected include a 'change of service provision' when work they do as an independent contractor is brought in-house. However, in order for TUPE to apply on a change of service provision there must be an 'organised grouping of employees' which 'has as its principal purpose the carrying out of the activities concerned on behalf of the client'. In those circumstances, the employment contracts of the employees assigned to the organised grouping of employees will pass to the client, but not otherwise.

The local authority argued there had been no organised grouping of employees at the company so it did not have to take the employees on. The Employment Appeal Tribunal (EAT) ruled that the correct approach was to look at the organisational structure of the company, and the employees' contractual roles within it. In this case, the company could have required the employees to do other work (including work for other customers) at any time. The employees had not been consciously allocated to the local authority work – it just so happened that there was no other work available at the time. One employee had also taken on extra work internally, by becoming company secretary.

There was therefore no organised grouping of employees dedicated to the local authority's work, and TUPE did not apply.

Operative date

  • Now

Recommendation

  • Businesses wishing to claim that TUPE protects their employees if there is a 'service provision change', should ensure their employees are consciously allocated to an organised grouping of employees, and cannot – and do not - call upon them to do other work.

Case ref: London Borough of Hillingdon v Gormanley & Ors [2014] UKEAT 0169_14_1912

 

Case law: Caste discrimination can be unlawful race discrimination

Employers in the UK should ensure they do not discriminate against employees on grounds of caste, if their caste reflects their ethnic origin, or risk race discrimination claims, following an Employment Appeal Tribunal ruling.

An Indian couple employed an Indian domestic servant in the UK. She was a member of the Adivasi 'servant caste'. She brought an Employment Tribunal claim against her employers, including a claim that she had been subject to less favourable treatment because her employers considered her to be of lower status. Effectively, this was a claim for caste discrimination.

The caste system divides people into separate groups (castes) based on birth, and allocates fixed, hereditary rights and obligations to each group. UK equality law specifically gives a minister of state power to make caste discrimination unlawful, as a form of race discrimination, but this power has not yet been exercised.

At the Employment Tribunal, the employers applied to have the claim struck out on grounds it had no reasonable chance of success, because caste discrimination was not unlawful in the UK. However, the Tribunal ruled that the claim could proceed because:

  • The definition of 'race' under statutory UK discrimination law includes 'ethnic or national origin', and ethnic origin could include caste
  • There is UK case law to say that discrimination by descent is unlawful
  • UK human rights law says discrimination law must be construed in accordance with the European Convention on Human Rights (ECHR). The ECHR outlaws discrimination 'on any grounds such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status'. This definition was wide enough to include caste
  • The UK has signed an international treaty (the International Convention for the Elimination of all forms of Racial Discrimination 1965) which outlaws discrimination on grounds of descent

The Employment Appeal Tribunal rejected the employer's appeal. It ruled that while caste does not stand on its own as a characteristic protected by discrimination law, elements of caste identity may reflect an employee's ethnic origin, such as where caste reflects a person's ancestry or membership of a particular ethnic group. If they do, then caste discrimination may be a type of race discrimination and therefore unlawful.

Operative date

  • Now

Recommendation

  • Employers in the UK should ensure they do not discriminate against employees, either directly or indirectly, on grounds of caste if their caste is related to their ethnic origin, or they may face race discrimination claims.

Case ref: Chandhok & Anor v Tirkey [2014] UKEAT 0190_14_1912

 

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