May Legal Alert

legal alert

This month: 


Case law: Disciplining an employee for proselytising in the workplace is not discrimination

Employers should ensure their staff, particularly those in positions of power, are clear they should not do anything that could be construed as imposing their religious beliefs on others, a ruling has confirmed.

A Christian manager in an NHS Trust was responsible for a Pakistani Muslim employee. The employee complained that the manager had imposed her Christian values on her over a prolonged period, in a number of ways, knowing she was a Muslim.

The employee alleged, for example, that:

  • when she told her manager she suffered from Crohn's Disease the manager told her there was no such disease because it was not in the Bible, and only Jesus could make her well again;
  • the manager invited her to Christian services, sent her tickets to Christian events and invited the employee to pray with her;
  • the manager laid hands on her and encouraged her to 'ask Jesus to come into you';
  • the manager told her to 'invite Jesus to come into her spirit' and to say out loud 'I believe you are the son of God, Jesus; I believe in you and your power; come into me and heal me';
  • the manager gave her a book about a female Pakistani Muslim who converted to Christianity;
  • on one occasion when she ran to the toilet because the manager had upset and distressed her, the manager followed her in.

The manager was suspended and given a first written warning (initially a final warning, but reduced on appeal). She claimed religious discrimination, including that the employer had breached her rights to manifest her religious beliefs at work under the European Convention on Human Rights (ECHR).

In fact, the right under the ECHR to manifest a religious belief at work is subject to a condition that doing so does not infringe on the rights and freedoms of anyone else.

In this case the Employment Appeal Tribunal (EAT) found that the manager had done more than 'enter a conversation about religion' and then back off because her views were not accepted, or encouraged or welcome. Instead, she had persisted, even when told informally but clearly that she needed to create distinct boundaries between her work life and her religious life, and that her behaviour was particularly inappropriate as she was in a position of power over the employee.

The EAT therefore ruled that, by 'subjecting a subordinate to unwanted and unwelcome conduct going substantially beyond religious discussion without regard to her own senior position', the manager had gone beyond her right to manifest her religious belief at work. The imposition of a first written warning in the course of a proper disciplinary procedure did not therefore amount to discrimination by the employer.

The law is identical in relation to sexual preferences, so attempts in the workplace to convert someone of one preference to another, or otherwise impose one's views on sexual preference on another, would be treated in the same way.

Additional guidance from the EAT includes the following:

  • It is not necessary for an employee to say or show at the time that they are distressed or upset by another employee's behaviour - particularly where the employee feels unable to complain because, for example, they are junior to the other person.
  • There is no need for the behaviour to be intended to cause upset or distress (on the contrary, the behaviour may be with the best of intentions). It is enough if that is, in fact, its effect.

Operative date

  • Now


  • Employers should ensure it is clear to staff, particularly those in positions of power over others, that they should not do anything that could be construed as imposing their religious beliefs on others, whatever their motives.
  • The same applies in relation to sexual preferences.

Case ref: Morgan v Royal Mencap Society UKEAT/0272/15/LA


New guidance: Government issues guidance on new company law requirements for UK companies and LLPs

UK companies and Limited Liability Partnerships (LLPs) will welcome a raft of government guidance to help them comply with the new law requiring them to identify and register individuals who exercise 'significant control' over them.

Since 6 April 2016, every UK private company, most UK public companies, and all UK Limited Liability Partnerships (LLPs) must create a statutory register of Persons with Significant Control (PSCs). Failure to do so is a criminal offence. Each must take reasonable steps to find out if it has any PSCs and to identify them. It must give notice to each person (or legal entity) it knows or has reasonable cause to believe should be recorded in its PSC register. It may also give notice to others who may know someone is a PSC, or who know someone who does.

The PSC register is open to the public, provided inspection is for a proper purpose. From 30 June 2016, information from a company's PSC register must be filed at Companies House on a regular basis.

The rationale behind the new rules is that if UK companies and LLPs are required to make public the names and other particulars of individuals who ultimately control or influence them, the probability that those individuals are using UK companies or LLPs for tax evasion, money-laundering, to fund terrorism, or for other wrongful activities, is reduced.

The law sets out specific criteria for determining who is a PSC, which can be complex to apply. For instance, an individual is a PSC if they do, or can, exercise 'significant influence or control' over a company, or over the policies or activities of any trust or firm whose trustees or partners would, if they were individuals, be PSCs.

The Government has now published the following guidance to help businesses comply with the new law, which they will find useful:

  • Draft statutory guidance to help companies interpret what amounts to 'significant influence or control'.
  • Similar draft statutory guidance for LLPs.
  • An 87-page guide on the PSC rules generally. This is not statutory, but provides useful guidance on interpreting the conditions.
  • A five-page summary of the 87-page general guidance.
  • Guidance for potential PSCs themselves.

These are all available on the GOV.UK website.

Operative date

  • Now



Case law: Court ruling summarises new approach to interpreting commercial contract terms in contract disputes

Businesses arguing over the meaning of clauses in their commercial contracts will welcome a High Court ruling summarising the new approach to interpreting contractual terms recently established by the Supreme Court.

The Supreme Court ruled in 2015 that clear, unambiguous words in a contract should not be overturned merely because they are not commercially sensible – even if the outcome is commercially disastrous for one of the parties. It set out principles to be applied when interpreting commercial contract clauses.

These have recently been summarised and clarified in a recent legal ruling, as follows:

  • The aim of the court in construing a commercial contract is to ascertain, objectively, the intention of the parties.
  • For this purpose, the court must put itself in the position of a reasonable person in possession of all background information reasonably available to both (not just one of) parties at the time the contract was entered into.
  • When unambiguous, ordinary language has been used in a contract, the court will normally give effect to that language. It will not rewrite a bad bargain, or change what was agreed just because it was imprudent, unwise or even if the outcome is disastrous for one of the parties. Particularly, it will not apply hindsight to determine whether or not an agreement is commercially sensible, and rewrite it.
  • However, if words are not clear, the court may properly consider alternatives to the natural meanings of words used – although it should not specifically search for 'drafting infelicities'.
  • When there are two (or more) possible interpretations of a word or phrase in a contract, the court will prefer that which made the most commercial sense at the time. However, commercial common sense and surrounding circumstances should not be used to override the importance of the words specifically chosen by the parties at the time.
  • If a contract defines a word or phrase used, the court will usually take that definition as the meaning of the word or phrase whenever it is used in the contract. However, if it is clear that a defined term is intended to have a different meaning in one or more places in the contract, the court may deviate from that practice.
  • Particularly, by testing the defined meaning of a word or phrase against the commercial consequences and the background facts, it may be open to the court (whether or not the contract was drafted by lawyers) to properly decide that the parties did not intend the definition in the contract to apply to the word or phrase in one particular part of the contract.

These principles show that, wherever possible, the courts will give words in a contract their natural meaning, whether or not it is commercially sensible.

Operative date

  • Now


  • Businesses entering into commercial contracts should be aware of how the courts will now interpret them in the event of a dispute, and draft them accordingly to avoid uncertainty.

Case ref: Europa Plus SCA SIF & Anor v Anthracite Investments (Ireland) Plc [2016] EWHC 437


Case law: How shares should be valued on disposal under pre-emption provisions in a company's articles

Companies and shareholders should check any pre-emption provisions in their articles  to ensure they understand how the shares will be valued if the provisions are to be exercised, following a recent ruling.

Many UK companies' articles of association contain 'pre-emption' clauses requiring a shareholder who wants to dispose of their shares to offer them pro-rata to other shareholders before they can be transferred to anyone else, or in any other proportions. In those circumstances it is essential the pre-emption clauses make clear how the price to be paid by the other shareholders will be calculated.  For instance, it must be made clear whether the value of shares comprising a minority holding should be discounted on such a valuation, to take account of the fact they are not a controlling stake.

In this case, two minority shareholders wanted to sell 22 per cent of a company's shares. Pre-emption rights applied under the articles of association. In relation to valuation of the shares, these said:

"The "prescribed price" shall be such sum per share as shall be agreed between the Vendor and the Company failing which it shall be the median price of the prices as determined and certified in writing by two independent chartered accountants as being in their opinion the fair value thereof as between a willing buyer and a willing seller valuing the Company on a going concern basis … the said chartered accountant when determining and certifying the fair value of the Transfer Shares as aforesaid shall act as an expert and not as arbitrator"

The sellers argued that the words 'sum per share' meant their shares should be valued on a per share basis, rather than as a bloc of shares. No discount should therefore be applied on the valuation of their shares on the basis that the shares, as a block, comprised only a minority stake.

The buyer argued that the references to the 'fair value of the Transfer Shares', and to valuing them on the basis of a sale between a willing buyer and a willing seller, both implied the shares to be transferred should be valued as a block, so that it would be appropriate to discount them for being a minority stake.

The court agreed with the sellers. It said that the words 'sum per share' clearly meant shares should be valued simply by dividing the value of the company by the number of shares in issue, and no discount should therefore be applied. The court said that these words:

  • trumped the later wording 'the fair value of the Transfer Shares' – the word 'thereof' showed that a 'value per share' was intended, rather than valuation as a block;
  • overrode the requirement that the shares be valued on the basis the sale was between a willing buyer and a willing seller, which could also carry the implication that they should be valued as a block.

Operative date

  • Now


  • Companies and shareholders should check any pre-emption provisions in their articles and ensure they understand exactly how shares will be valued if a proposed transfer triggers the operation of those provisions.

Case ref: Cosmetic Warriors Ltd & Anor v Gerrie & Anor [2015] EWHC 3718


Case law: Settlement agreements will be interpreted objectively - and can be concluded by email

Businesses negotiating a settlement of a dispute should ensure that on an objective view, it is clear at every stage whether or not the terms being negotiated are 'subject to contract'. Furthermore, settlement agreements can be concluded by email - whether or not intentionally.

A company sub-contracted groundworks on a development site to a sub-contractor. There was a timetable for the works, with payment by instalments, and a contractual process for dealing with disputes which included time limits.

A dispute arose but the sub-contractor failed to comply with the time limits imposed. The company refused to make a payment under the agreement.

There was an inconclusive 'without prejudice' meeting between the parties, held on the basis that any agreement reached 'would have to be put in writing and signed by the parties before it could take effect' – ie that negotiations at the meeting were 'subject to contract'. No agreement was reached either at the meeting, or in 'without prejudice' emails exchanged later that day. The sub-contractor suspended work at midnight that night.

The following day, the company sent a further email offering to settle for £2.3m. The sub-contractor replied by email that it would accept £2.35m, and if the company agreed its proposal (removing the words 'without prejudice') it would withdraw its suspension notice and return to the site. The company replied by email saying it agreed the revised proposal, but set out eight further conditions for resolution of the dispute. One condition was that the sub-contractor should provide a 'formal acceptance in writing'. It ended by asking the sub-contractor to 'please confirm your agreement to the above'.

The sub-contractor replied by email: 'Yes, we are in agreement with this now. Can you carry on formalising the paperwork? Thanks for your efforts.' The company made a deposit of monies (one of the eight conditions) and the sub-contractor returned to work at the site.

The company then emailed a formal deed of variation to the original agreement for signature, but the sub-contractor refused to sign. It said that the original condition agreed at the opening meeting - that any agreement reached would have to be put in writing and signed by the parties before it could take effect - had continued to apply even after the meeting, so all subsequent emails had also been 'subject to contract'.

Recent rulings have said that the question of whether there is a binding agreement between parties does not depend on their 'subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which the law requires as essential…'.

The company argued, in subsequent legal proceedings, that the exchange of emails on the day after the meeting amounted to an agreement to settle the dispute, so it had no further liability to pay. Looked at objectively, the emails had contained an offer to settle and acceptance of that offer, and no reasonable observer could have concluded that the parties intended otherwise. The sub-contractor had not used the term 'subject to contract' (or any similar phrase) in those emails, and had also acted as if agreement had been reached by paying the deposit and returning to work on the site following those emails.

The court agreed with the company: a reasonable business person would interpret the emails as containing a clear offer to settle, and an unambiguous acceptance of that offer.  It rejected the sub-contractor's claim that the agreement at the original meeting that negotiations would be subject to contract should continue into the subsequent email exchanges. It said there was no 'reasonably cogent evidence' that this was what the parties had intended.

The reference to 'formalising the paperwork' in the sub-contractor's final email did not mean that the negotiations were still subject to contract. It simply meant that the sub-contractor expected the company to create a formal record of the agreement they had entered into.

The court was not therefore prepared to depart from the clear words of the relevant emails, which showed there had been an offer, containing all the necessary terms, and an acceptance of that offer. The fact the correspondence comprised emails made no difference – the agreement was still legally binding. To decide otherwise would be to ignore the facts that the parties were treating the whole matter as urgent, and that the sub-contractor subsequently acted as if there had been an agreement.

Operative date

  • Now


  • Businesses in negotiations to settle a dispute should:
    • ensure it is clear, on an objective view, at every stage whether or not terms being negotiated are 'subject to contract';
    • be aware that agreements can, in the absence of specific agreement to the contrary, be concluded by email.

Case ref: Mi-Space (UK) Ltd v Bridgwater Civil Engineering Ltd [2015] EWHC 3360


Case law: Importance of reasonable investigation by employer before dismissal

Employers should ensure they carry out a reasonable investigation into possible alternative, exonerating explanations for apparent misconduct before deciding on dismissal or other disciplinary action.

Obscene material was found in the cloud storage account at work of a manager of 27 years' standing. He said he had no knowledge of the material but admitted that he shared his cloud password with others in his department and suggested someone else may have stored the material there while logged on under his password. Password sharing was against his employer's IT Code of Conduct, but he said it was common in his department (and across the organisation) as it was necessary for efficient working.

He was summarily dismissed both for the obscene material and for breaching the IT Code of Conduct.

During the disciplinary process, the disciplinary officer had decided that only the obscene material was serious enough to justify a summary dismissal. On its own, the breach of the IT Code would not have been enough. On appeal, the appeal officer confirmed the dismissal but gave his view that, given the manager's responsibilities and standing, both offences would justify summary dismissal on their own.

The employee claimed unfair dismissal. The Employment Tribunal (ET) said dismissal for the obscene material was unfair as there was not enough evidence the employee himself had stored it in his cloud storage account. It also said that there had not been a proper investigation into the possibility that someone else had used the employee's password. However, it ruled that the appeal officer had behaved reasonably when deciding that the password sharing could justify the dismissal, and his approach had cured any defect in the disciplinary officer's view.

The Employment Appeal Tribunal (EAT) ruled that the employer's investigation into whether password sharing was common, and could have provided an alternative, exonerating explanation of how the misconduct occurred, was inadequate. The investigation was not therefore reasonable.

The ET had also not considered whether the appeal officer's decision could 'cure' the disciplinary officer's view - this was an error of law. The EAT allowed the appeal and sent the matter back to the ET for reconsideration.

Operative date

  • Now


  • Employers should ensure they carry out a reasonable investigation into possible alternative, exonerating explanations for apparent misconduct before deciding on dismissal or other disciplinary action against an employee.

Case ref: Choksi v Royal Mail Group Ltd UKEAT/0280/15/LA


Case law: Employer's restriction on ex-employee dealing with its customers was too wide and unenforceable

Employers should review any restrictions in employees' terms of employment, including restricting dealings with former customers, to ensure they protect a legitimate interest and are no wider than reasonably necessary - or risk them being unenforceable.

Restrictions in an employee's employment contract prevented him from dealing with any of his employer's customers, and those of associated companies, for six months if he left. The restrictions applied whether or not he had dealt with, or even knew of, a particular customer while employed.

Such restrictions must protect a legitimate interest of the employer, for example, preventing poaching of customers or staff, and protecting confidential information. In addition, each restriction (taken together with any other covenants and undertakings) must be no wider than reasonably necessary to protect that interest, or they will be unenforceable.

Despite having been employed for 20 years, the employee in this case had only worked with customers representing some 2 per cent of the employer's turnover. When he left, he argued his employer's restriction was wider than reasonably necessary and unenforceable, as it prevented him dealing with customers representing the other 98 per cent of the employer's turnover.

The High Court agreed and said the employer had failed to show the restriction was no wider than reasonably necessary, and the restriction was manifestly unfair.  It made no difference that the employee's contract provided that he would be paid in full for the six-month period, as this would allow the employer to 'purchase' unlawful restrictions - which would be against public policy.

Operative date

  • Now


  • Employers should review any restrictions in their employees' contracts of employment against dealing with former customers, using or disclosing confidential information or approaching former colleagues, to ensure the restrictions protect a legitimate interest and are no wider than reasonably necessary - or risk being unable to enforce them.

Case ref: Bartholomews Agri Food Ltd v Thornton [2016] EWHC 648


Case law: Employees may be TUPE-protected on transfer of only part of a client's activities to a new provider

Businesses taking over only part of the services provided to a client by a previous service provider should check whether TUPE applies, so that they must take on the previous provider's staff on the same terms, a ruling makes clear.

A local authority had contracted with an organisation to provide services but then split that work into two ('case management work' and 'intervention work') and put each out to tender separately. Different providers won each tender and they took over the respective category of work.

The issue arose as to whether the successful tenderer for the case management work had to take on any of the old provider's staff under TUPE. The TUPE rules are designed to protect employees in certain circumstances – by preserving their jobs and their terms and conditions of employment.

One of the circumstances in which TUPE applies is on a 'service provision change'. A service provision change can take place where a client engages a contractor to do work on its behalf, where work being done by a contractor is brought in-house or, as in this case, where a contract is re-assigned from an old to a new contractor.

In order for TUPE to apply on a change of service provision the activity carried on by the previous provider must continue to be carried on by the new provider, and 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 transferee.

In this case, the new provider said that splitting the old provider's activities into two and giving each activity to a separate service provider meant the original activity did not continue under the new arrangements. TUPE did not therefore apply.

However, the Employment Appeal Tribunal (EAT) disagreed: it was not necessary that all activities carried out by an old provider should transfer to a single new provider in order for TUPE to apply. It could apply even if only part of the activity was transferred. The case management work had been carried out by the old provider and was now being carried out by the new provider. It therefore 'continued' as required under TUPE – and the TUPE rules therefore applied.

The EAT also found that there were two organised groupings of employees at the old provider, each of which had carried out case management activities and each of which could therefore transfer to the new provider.

It probably did not help the new provider's case that the successful tenderer for the intervention work accepted from the outset that the previous provider's staff doing that work should transfer to it.

Operative date

  • Now


  • Businesses taking over only part of the services provided to a client by a previous service provider should check whether TUPE applies, meaning they must take on the previous provider's staff on the same terms.

Case ref: Arch Initiatives v Greater Manchester West Mental Health NHS Foundation Trust & Others UKEAT/0267/15/RN


New guidance: Competition and Markets Authority publishes guides on unfair contract law for small businesses selling to consumers

Small businesses dealing with consumers will welcome new guides to the most recent consumer protection law.

The Competition and Markets Authority has published a series of short guides on the latest consumer protection law, to help small businesses ensure their contracts and terms of business, and notices to consumers, are clear and lawful.

They cover issues arising under new consumer rights laws introduced in October 2015.  The Consumer Rights Act imposes various requirements on businesses who sell goods and services to consumers, including to ensure their terms of business are fair, understandable and 'up-front'.

The guides cover the following:

  • what 'unfair' means;
  • common myths about contract terms;
  • top tips when writing your contract terms;
  • deposits, advance payment and cancellation charges;
  • excessive charges and disproportionate sanctions;
  • cancelling a contract: when and how;
  • responsibility if things go wrong;
  • changing the terms of a contract;
  • subscriptions and automatic rollovers;
  • other terms that may be unfair.

Operative date

  • Now



New guidance: Information Commissioner's Office updates data protection IT security guide for businesses

The ICO has published an updated IT security guide for small businesses to help them keep their IT systems secure for data protection purposes.

The guide, Data protection. A practical guide to IT security. Ideal for the small business, has been extended to cover new IT security threats that have arisen since the last version of the guide in 2012, including in the areas of mobile devices and cloud-based services.

Operative date

  • Now



Case law: Court clarifies legal rights to stop noisy neighbour nuisance

People seeking to stop noise from neighbouring or nearby land, whether residential or commercial, will welcome clarification from the court on the legal issues affecting their ability to stop or limit the noise.

A homeowner lived near an aerodrome where helicopters were active. She claimed the noise they made was excessive and unreasonable, and amounted to 'nuisance' in law. She applied for an injunction to stop or limit the use of the aerodrome by helicopters.

The aerodrome said helicopters had been using the runway since the early 1960s and it had therefore acquired a legal right (an 'easement') by prescription for helicopters to make a noise. The court said that the aerodrome could only claim it had acquired a right to cause a noise nuisance by prescription if it could:

  • show the noise had been continuous for 20 years (starting from the date it first amounted to a nuisance);
  • establish the precise extent of the right, ie produce evidence supporting its claim to make the noise it said it was entitled to make now, given the levels of noise over the 20-year period.

The court found that the noise from the helicopters was an unreasonable nuisance and an unreasonable interference with the homeowner's use of her home and garden, and granted an injunction limiting helicopter noise to two specified days, at 15 minutes per day.

As to the claim to prescription rights, the court said that there had been protests about the noise over the years which the aerodrome had not dealt with. This meant there had not been continuous use for 20 years and there was, therefore, no easement. Also, the aerodrome had not provided evidence of the extent of the helicopter noise prior to 2014, even though helicopters in previous decades had been very different from modern helicopters. It had not therefore shown how much noise it was able to make now under the alleged right, given the extent of helicopter noise over the 20-year period.

Operative date

  • Now


  • Someone claiming an easement by prescription must be able to show when the right began and the precise extent of the right.
  • If anyone has objected to their purported right they must have dealt with, or deal with the objections or the court will find no right by prescription as the right has not been exercised continuously.

Case ref: Lorna Grace Peires v Bickerton Aerodromes Ltd [2016] EWHC 560


Case law: Court gives guidance to help landlords avoid inadvertently accepting surrender of a lease

A landlord wishing to avoid allegations that its conduct inadvertently amounts to accepting surrender of a lease should ensure it has records showing why, for example, it is accepting the return of keys and on what terms; and should respond to letters and record phone calls to make its position clear, a court has ruled.

A company had acted as guarantor for a tenant under a lease. When the tenant went into administration the landlord argued that the tenant's guarantor had to take over the lease instead. The guarantor argued that the tenant had surrendered its lease automatically by 'operation of law', and the landlord had, by its conduct, accepted the surrender. If there had been a surrender, the guarantor had no obligation to take over the lease.

There is a surrender by operation of law if there is unequivocal conduct by both landlord and tenant which is inconsistent with continuation of the relevant lease, and which evidences an intention by the landlord to take back possession of the premises.

The circumstances were that the administrators had, after vacating the property, sent the keys to the landlord and offered to surrender the lease. The landlord took receipt of the keys (but without responding to the letter enclosing them), changed the locks to secure the property, and marketed it. While doing so, it entered into several phone calls about a possible surrender, although these had not been adequately recorded.

The High Court found that looking at the landlord's behaviour as a whole, it had not accepted the surrender. It had merely been protecting its interest in the property, and had told the administrators what it was doing. The lease therefore continued and the guarantor had to take it on under the terms of its guarantee, and pay compensation.

Operative date

  • Now


  • A landlord wishing to avoid allegations that its conduct may amount to acceptance of the surrender of a lease should ensure it has records showing, for example, why it is accepting the return of keys and on what terms, and should respond to letters and record phone calls to make its position clear.

Case ref: Padwick Properties Limited v Punj Lloyd Limited [2016] EWHC 502


Case law: One employee's conditions or terms of employment can be a matter of 'public interest' for purposes of whistleblowing claim

Employers should be aware that failure to address the complaint of one employee about their own working conditions or terms of employment can still be a matter of public interest, enabling the employee to bring a whistleblowing claim.

An employee of a charity complained several times about her cramped working conditions, saying they breached health and safety laws.  Her complaints were verbal, by email and in a Safeguarding Reporting Form. She resigned when she felt she was not being listened to, and claimed unfair dismissal. One of her arguments was that her 'dismissal' was automatically unfair because it was prompted by her complaints which were 'protected disclosures' under whistleblowing laws.

Workers are protected against dismissal (or any other 'detriment') under UK whistleblowing laws if the dismissal is for making a 'protected disclosure'. However, the protections only apply if the worker reasonably believes the disclosure was in the public interest.

The employer applied for her claim to be struck out, arguing that disclosure by just one employee of her working conditions could not be a matter of public interest. For a claim to be struck out the employer must show it has no reasonable prospect of success.

Historically, disclosures relating to a worker's own terms of employment have not been treated as in the public interest. However, recent legal decisions have indicated they sometimes can. In this case the employee argued that:

  • it was in the public interest for the public to know about the employees' working conditions and the charity's approach to health and safety matters;
  • the conditions she objected to were also of concern to other employees.

The Employment Appeal Tribunal ruled that it was reasonably arguable that complaints by just one employee about, for instance, their own health and safety at work, could be in the public interest if they were in the wider interests of employees generally. Therefore, while the employee in this case might ultimately lose at a full trial, the claim should not be struck out at this stage. It remitted the case back to the Employment Tribunal for a substantive hearing.

Operative date

  • Now


  • Employers should be aware that failure to address one employee's complaints about their own working conditions or terms of employment can be a matter of public interest, enabling the employee to bring a whistleblowing claim.

Case ref: Morgan v Royal Mencap Society UKEAT/0272/15/LA


Case law: Courts clarify when deletions in drafts can be used to interpret final contracts

Parties to a contract should ensure it contains no ambiguities or they risk the courts looking at draft versions - including any deletions which indicate what the parties did not intend - to help decide what they did intend the contract to say.

Words in a draft contract relating to a proposed individual voluntary arrangement (IVA) by a debtor were deleted and did not appear in the final version. The debtor argued that the final contract was ambiguous and the Court should use the deleted words in the draft as a guide to the parties' intentions.

In considering this argument, the Court of Appeal ruled that if the words of a final contract are different from draft versions, but there is no ambiguity in the final contract, the deletions in the draft are irrelevant.  However, if they are ambiguous, the Court can look at the deletions to see what the parties clearly did not agree – as part of the process of deciding what they did agree.

Operative date

  • Now


  • Parties to a contract should ensure it contains no ambiguities, or risk the courts looking at draft versions, including any deletions which indicate what they did not intend, to help decide what the parties intended the contract to say.

Case ref: Narandas-Girdhar and Another v Bradstock [2016] EWCA Civ 88


New Code: Environment Agency updates England and Wales Code regarding the duty of care for businesses producing waste

Businesses in England and Wales producing waste of any kind will welcome an updated version of the Environment Agency's Code of Practice on how to discharge their legal duty of care in relation to waste.

The updated Code, Waste duty of care code of practice, deals with developments since the original Code was published in 1996, including use of electronic communications.

The Code applies to businesses (and others) who produce, carry, keep, dispose of, treat, import or have control of waste in England or Wales. 'Waste' includes commercial, industrial and household waste. Such businesses are required by law to keep their waste safe, and to make sure it is dealt with responsibly and only given to businesses authorised to take it.

If a business can show it has followed the Code, this helps it rebut any allegations that it has failed to discharge its duty of care in relation to waste, and avoid significant penalties that can be imposed for breach.

Scotland and Northern Ireland have their own separate Codes.

Operative date

  • Now


  • Download the new Code from the GOV.UK website.


New guidance: Information Commissioner's Office updates guide to electronic marketing

Organisations using email and e-newsletters, phone, texts or other forms of electronic communication to promote themselves will welcome updated guidance from the Information Commissioner's Office (ICO) to help them comply with anti-spam law and avoid significant penalties for breaches.

Anti-spam law restricts the sending of unsolicited electronic marketing ('spam') to individual subscribers. Electronic marketing can be done by telephone, fax, email, text and picture or video message, or by using an automated calling system. 'Individuals' includes sole traders and partners in business partnerships in England and Wales.

However, there are exceptions to the anti-spam rules.  For example, you can send electronic direct marketing messages to individual subscribers if they have 'opted in' to receiving them, without breaching the rules.

The ICO has issued updated, 50-page guidance, the Privacy and Electronic Communications Regulations: Direct Marketing, which includes a useful downloadable checklist to help them comply.

The main updates are to the legal requirements for obtaining consent to electronic marketing, and precautions to take when buying in a marketing list from a list broker or elsewhere. The ICO has said that an organisation will find it 'very difficult to use bought-in lists for text, email, or automated call campaigns' as these 'require very specific consent' from consumers before the organisation can market to them electronically. The guidance also provides more help for charities and not-for-profit bodies.

As well as the anti-spam rules, the guidance also covers the separate requirements of the Data Protection Act.

Operative date

  • Now


  • Download the updated guidance from the ICO website.
  • Review your website, e-newsletters, order forms and other means of collecting consent to electronic marketing, and your processes and procedures to ensure they comply with the new guidance.


New guidance: Information Commissioner's Office publishes data protection guide for organisations using Wi-Fi to track employees

Organisations using Wi-Fi to track the location of employees, contractors or suppliers from their smartphones or other Wi-Fi devices will welcome new guidance from the Information Commissioner's Office (ICO) on the data protection issues that arise.

The free guidance, Data protection. Wi-Fi location analytics, illustrates how organisations can use Wi-Fi for monitoring purposes and what they need to do to comply with data protection law.

Operative date

  • Now



New law: Unlisted trading companies and investors to benefit from new capital gains tax relief on investments from 17 March 2017

Unlisted trading companies, and potential investors (who are neither employees nor officers), should consider whether a new 'investors' relief' from capital gains tax could apply to investments in their companies' shares from 17 March 2017.

The Government proposes to introduce a new tax relief for investors by extending the existing entrepreneur relief scheme to cover external investors in non-listed trading companies.

The new 'investors' relief' means investors will only pay 10 per cent capital gains tax (CGT) on any gains they make on the disposal of qualifying ordinary shares issued to them by a company (provided they are neither employees nor officers of the relevant company).

The shares must be:

  • issued as new shares to the investor, for new consideration (for example, the shares cannot be issued as bonus shares, paid for from the company's profits);
  • unlisted trading company shares, or shares in the unlisted holding company of trading group;
  • issued by the company on or after 17 March 2016;
  • held continuously for at least three years from 6 April 2016.

There is an overall, lifetime cap of £10m per individual on the total gains eligible for the relief (separate from the £10m lifetime relief also available under the entrepreneurs' relief rules.

Operative date

  • 17 March 2017


  • Unlisted trading companies, and potential investors (who are neither employees nor officers), should consider whether a new 'investors' relief' from CGT could apply to investments in their companies' shares from 17 March 2017.


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Members seeking prompt advice on employment, company or commercial law can contact our legal helpline, Directors' Law Express, on 0870 241 3478, up to 25 times a year.

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