Member News

A recent Court of Appeal decision highlights the increasingly far reaching liability of employers for the actions of their employees.

Judgment in JGE v The Trustees of the Portsmouth Roman Catholic Diocesan Trust was handed down on 12 July 2012. The question before the court was whether the church should be responsible for paying damages to a child who was abused by the priest at the church in the 70’s. The court said yes, the (now grown up) victim should be compensated by the church.

To many, it would seem intuitive that a victim of child abuse should be able to recover compensation from the wrongdoing organisation. However, the case actually threw up two key issues, namely: can sexual abuse ever fall within the course of the priest’s duties, and should the church be liable for the priest’s actions?

The first question was relatively straightforward to answer, thanks to a recent decision of the higher court. To be clear, an employer is not merely responsible for what its employees do under direct instruction from the employer. An employer is responsible for all actions which the employee takes which have a sufficiently close connection to the employee’s employment.

So in a 2001 case, Lister v Hesley Hall, the House of Lords confirmed that if an employee was entrusted to look after children, the employer would be liable for sexual abuse by the employee when he was supposed to be looking after them, and the victims could obtain damages from the employer. This was despite sexual abuse clearly being outside of the employee’s duties; his actions were sufficiently closely connected to his employment to pin liability on his employer.

So, in JGE v The Trustees of the Portsmouth Roman Catholic Diocesan Trust, a victim of sexual abuse at the hands of the priest at the church was, in principle, able to claim damages against the bishop to whom the priest answered.

However, the church employed a further argument to avoid liability. The court took expert advice from Roman Catholic academics and found that the priest was not actually an employee (their relationship was intended to be determined by canon law, not civil law, so no employment relationship arose). The court therefore had to decide whether they could extend liability to a situation which was “akin to employment”.

In JGE, the Court of Appeal explicitly said “I confess I have found this difficult to decide”. Although the legal framework is a very real constraint on the court, the judges must have felt huge reluctance to find that a victim of child abuse should not be able to recover damages, particularly when even the barrister for the church described the priest’s actions as “abhorrent”, and rightly too.

The court therefore confirmed that liability in relationships “akin to employment” can be found under specific circumstances, and indeed found such liability in this situation. So, even though the priest was specifically held to not be an employee, the church could still be liable for his actions because he was in a position which was “akin to employment”; the key question being one of control.

This decision does, of course, have huge implications for a modern economy. A business (or, indeed, charitable organisation) can no longer absolve itself of the wrongdoings of another simply because that other is not an employee. A business must ensure that all individuals over whom they exercise sufficient control take proper care in the exercise of their duties (and should probably obtain appropriate insurance), even if the business does not employ them.

Conversely, an injured victim may now be able to obtain compensation from the organisation which had actual control of a situation, and the organisation which might more properly be expected to be insured.

The church has been refused permission to appeal to the Supreme Court, but specifically because that court is due to give judgment in a similar case, Various Claimants v The Catholic Child Welfare Society and the Institute of Brothers of the Christian Schools & ors, very soon (the hearing was on 23 July 2012). That case may provide further clarity.

It may surprise some readers to learn that the above cases have almost no bearing whatsoever on employment law and the rights and obligations as between employers and employees. This fact serves only to show how complex the law of both employment and personal injury is, and proper advice should be sought if in any doubt whatsoever.

With injunctions being served by Facebook, and the first “Twibel” case in the UK (libel duty comments made by Twitter) being won, a recent case regarding contracts made by email highlights how the law is attempting to keep pace with our ever changing forms of media.

Golden Ocean case

The case of Golden Ocean came to the Court of Appeal earlier this year. Golden Ocean claimed that a charterer had failed to honour its obligations to take delivery of the vessel under a guarantee worth in excess of $50 million. The defendants claimed there was no contract or guarantee in existence despite oral communication and an extensive chain of emails. Relying on section 4 of the Statute of Frauds 1677 (which requires that certain types of contracts must be recorded in writing with sufficient detail in order to be legally binding), the defendants argued that the guarantee was incomplete as it was contained over a number of emails which could not be patched together sufficiently, the names could not constitute signatures and that the final email referred to a formal contract being produced which never materialised.

The Court of Appeal, however, agreed with the claimants and the High Court, confirming that the string of negotiated emails promptly signed, albeit even if informally, such as by first name, initials or nickname, would constitute an enforceable guarantee. The key was that the parties intended to be bound by the arrangement irrespective of the fact that the formal document which was expected to be drafted was never actually produced.

This judgment is, perhaps, not all that controversial, as it has long been established that contracts can be formed over email and through other means of instantaneous communication. However, what is clear from Golden Ocean is that if parties show intent to be legally bound to one another, they will be. Stating “Subject to Contract” on the top of all communications and draft documentation can be a useful way of clearly indicating that you do not want the content to be legally binding.

Looking ahead

It is increasingly clear that the law needs to adapt to keep up with the ever moving world of media and social networking. It is expected that the Parliamentary Joint Committee on Privacy Injunctions will recommend that social networks, such as Facebook and Twitter, be subject to injunctions and in doing so force sights to remove libelous comments. The same Committee may also request that Google censors search results in order to block such material from being accessed.

The ways in which businesses choose to communicate with each other are changing and as they do we need to look to see how the law applies to new forms of media. What Golden Ocean shows us is that laws that are centuries old can be applied to the media reality of today. Whilst the method may be different, the same rules can still apply – statements made through new media will be taken as seriously as those made by traditional forms.

Some advice

In conclusion here are three top tips to bear in mind when you are negotiating a legal arrangement:

1.Complete a formal agreement: if you do wish to formally document an arrangement then you should take it upon yourself to draft (or indeed have a suitably qualified lawyer draft) the appropriate agreement and not start trading with a counter-party until such agreement is finalised.

2.“Subject to Contract”: clearly write the term “subject to contract” on the top of all communications and draft documentation which you do not wish to be binding.

3.Don’t be fooled by modern media: do not be naive and think that by using email, Twitter, Facebook and various other forms of modern media that you are somehow out of the reach of the law.

Leathes Prior’s Sports Team has continued to develop its expertise in assisting football clubs to survive in the difficult economic climate by advising Welling United of the Blue Square South division on its successful conversion to a Community Interest Company. See www.wellingunited.com for further details.

Full Contact’s Dan Chapman, assisted by Leathes Prior corporate lawyer Richard Guthrie, have advised Welling United throughout on their transfer from an unincorporated entity to a limited company which also has CIC status. Believed to be one of the first football clubs to have achieved such status, Welling may now become an example for other clubs to follow.

Richard Guthrie commented: “There is a growing trend for companies who have a real focus on supporting and being supported by their local community to seek CIC status, which is a relatively recent vehicle introduced in 2005 under the Companies (Audit, Investigation and Community Enterprise) Act 2004. Leathes Prior is able to advise companies in all sectors, sporting or otherwise, of the potential benefits of a conversion, taking into account other options such as CASC and charitable status”.

Dan Chapman added: “In an era where, quite rightly, more football clubs are considering passing some or all of their control to their fans, the community, supporters trusts and other such stakeholders it is vital that clubs take proper advice as to the best way to structure themselves. The CIC status was right for Welling United for a number of reasons, and we very much hope it is the start of a new era for this club which already does a lot for its local community. In a time when so many are commenting on the riches which are at play in the upper echelons of the football game, it is rewarding to be involved also in the real heartbeat of the game.”

One of the most notable features of a CIC is that it must operate at all times for the benefit of the community, and it is protected by an ‘asset lock’ which ensures (in the case of a football club) that decisions cannot ever be taken for private gain.

We are delighted to announce that complimentary room hire will be offered to all customers looking to hold a three-course dinner with us at Norwich City Football Club*. Choose from one of our stylish function rooms for your next awards dinner, anniversary party or wedding and our experienced Event Co-ordinators will work with you to find a menu that’s right for you.

To take advantage of this fantastic offer call Canary Catering now on 01603 218704 or e-mail canary.catering@ncfc-canaries.co.uk.

*This offer excludes bookings taking place throughout the month of December and minimum numbers will apply.

Due to expansion and emerging market opportunities CTS Ltd are looking for a dynamic business focussed individual to become CEO and to join the Directors and Management team. The role will include the implementation of the company’s strategic plan to complete business objectives and continue future growth.

The right candidate will receive salary and equity incentives in line with company targets. Please apply in writing with a current CV to

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Tel: 01603 610586 | Fax: 01603 612245 | E-mail: info@construction-training.comweb: www.construction-training.com

Ed Savory, an Associate in Leathes Prior’s Franchising Team, attended the bfa London & South East Regional Forum. Each quarter, franchisors and advisers in the Franchise Industry meet to discuss the current “hot topics” in the market.

The following issues were discussed:

Updating franchise documentation – how, when & why? It is important to keep documentation under constant review and this does not just mean the Franchise Agreement. In particular, think about marketing materials, website, Franchise Information Memorandum (FIM) and Manual. The risk for franchisors is being sued by a franchisee for over selling the business proposition. This is not helped by any provisions of the Franchise Agreement which are out of date being unenforceable.

Franchisors would be well advised to appoint one person to be responsible for reviewing and updating documentation and, of course, advice from their solicitors should be at hand.

Protection of franchisor Intellectual Property (IP) First of all a reminder was given of exactly what IP is – essentially the brand and the unique franchised business system, all know how as set out in the operations manual. The registration of trademark(s) is an important initial step – remember that the correct class(es) should be applied in order to make the registration fully effective. If your business used a designer (or some other third party) to create the brand then you should ensure that all rights in the design rights have been duly assigned. The franchisee’s employment contracts should also contain relevant restrictions.

Franchisee improvements – embrace or dismiss? Franchise success is about both consistency and constant development. Whilst all franchisees must adhere to the system if any of them have any suggestions for improvements then these should be embraced. Furthermore, the proposing franchisee can act as a guinea pig for trying out a certain idea before full roll-out across the network.

How to educate the general public about franchising The bfa is looking closely at how to educate the general public about franchising – that is business format franchising. The next bfa Chairman (Sir Bernard Ingham retired this year) should be a generally recognisable figurehead. Franchisee membership should also assist.

Franchisee recruitment – what are franchisors experiencing? The evolution of online marketing has meant that most franchises are now using a “mix of media” in order to promote sales both in terms of new franchisees and business generally. The current market trend is that the time taken to recruit is slowing as prospective franchisees are more cautious about taking the leap.

bfa Natwest survey The bfa survey (as previously reported on) shows that the franchising industry in the UK is stable and growing. 80% of franchisees are generally happy, 929 franchises in operation in the UK with franchisees in 40,000 locations with a total turnover of £13.5bn.

Section 73 of the Charities Act 2006 (CA 2006) requires the Minister for the Cabinet Office to appoint a person to review the operation of CA 2006 within five years of its commencement. Lord Hodgson of Astley Abbotts was appointed as the reviewer and on 16 July 2012 his report, Trusted and Independent: Giving charity back to charities, was published and presented to Parliament. The 159 page report contains over of 100 detailed recommendations.

Insofar as disposals – the sale, leasing or mortgaging – of land or property by charities are concerned, the report has concluded that the current regime is disproportionate. It recommends complete deregulation, leaving charity trustees to instead act under their general duty of care and with reference to Charity Commission guidance. However, sensibly, it has also recommended that charities continue to obtain the Charity Commission’s consent for the sale or leasing of charity land and the granting mortgages and other charges to “connected persons”.

While most practitioners will agree that the current restrictions on disposing of charity land and mortgaging can be cumbersome and add unnecessary time delays and costs to transactions, Lord Hodgson’s proposal to entirely deregulate these areas is a little surprising. Deregulation may give practitioners freedom to give more appropriate and proportionate advice on charity land transactions, but it would also scrap rules that help to reinforce the duty of charity trustees to make properly informed decisions before committing to transactions that are often vital to their charity’s activities.

It remains to be seen which of Lord Hodgson’s recommendations are implemented and how quickly, but watch this space.

Steeles Law’s Michael Fahy looks at some of the more contentious property aspects surrounding wind farms.

Click here to view the article in full published by Local Government Lawyer.

Do you know the latest position on sickness absence and holiday entitlement? When it is safe to dismiss an employee accused of criminal activities? Are you confident about when and how to hold ‘without prejudice’ discussions with your employees?

Steeles Law is proud to be sponsoring and hosting the Norfolk Chamber of Commerce HR Forum on Wednesday, 12 September 2012. Expert speakers from the Steeles Law employment team will be covering a number of notoriously tricky issues in the workplace at this HR Forum:

• Sickness absence and holiday: the latest position on holiday entitlement during sickness absence, including the latest court rulings and proposals for amending the Working Time Regulations 1998.• ‘Without prejudice’ conversations: when and how to go about holding these difficult conversations, including new proposals for ‘protected conversations’ under the Enterprise and Regulatory Reform Bill.• Bonuses and maternity leave: considering the legal position in relation to the entitlement to bonuses of women on maternity leave.• Criminal activities: dealing fairly with an employee accused of a criminal offence outside the workplace.• Bank holidays: how to calculate bank holiday entitlement for part time employees• IVF treatment: looking at the legal position in relation to female employees undergoing IVF treatment.

Lorna Townsend, Principal in the Steeles Law employment team comments: “HR professionals frequently have to grapple with tricky areas of law for which there is not necessarily a black and white answer. At this Forum, through a number of practical case studies, we will tackle some of the tricky questions on which we have previously been asked to advise by our clients. We hope to provide some clear, practical advice on these topics together with the most up to date legal position, including future proposals for reform”.

The HR Forum will be held at Dunston Hall near Norwich, from 2.00pm to 5.00pm on 12 September 2012. Further information, including details of how to book, is available from the Chamber of Commerce website

Lexia Media is celebrating a successful start to the summer with new client wins.

The company has been selected by Echo Barrier to help enhance the company’s trade and national profile.

Echo Barrier is at the forefront of noise-reduction and is becoming internationally recognised for its acoustic barrier technology. The company’s product designs are helping construction and high footfall sites throughout the UK to achieve significantly reduced noise issues – benefiting both contractor and nearby communities.

The firm approached Lexia Media to take part in a competitive tender, before selecting them for the creativity of their proposals and their established credentials with trade and national PR.

Lexia has also been selected by SO ACTIVE, a social enterprise that helps people with their physical and mental health through sport, outdoor and leisure activities. Lexia will be helping SO ACTIVE increase brand awareness across Suffolk and throughout the UK, as they continue their successful growth.

Managing director Deborah Watson said: “We are very excited to be increasing our portfolio of clients with a range of national and local, trade and consumer clients. The team is looking forward to implementing some creative campaigns for these organisations. We’re delighted to have been chosen for these contracts and we’re excited to get started.”

Employment Principal Lorna Townsend considers a recent decision of the Employment Appeal Tribunal (EAT), in which it was held that a diminution in work alone did not result in a redundancy situation when there was no reduction in the number of employees required to carry out the work.

In this case (Welch v Taxi Owners Association (Grangemouth) Ltd), the claimant, a radio controller, brought a claim for constructive dismissal after her employer sought to impose a reduction in her hours. She argued before the tribunal that her employer should have approached the issue as a redundancy situation.

The tribunal hearing her claim concluded that there was no redundancy situation, since the company’s requirements for radio controllers had neither ceased nor diminished at the relevant time. It held that the claimant’s dismissal had been fair for ‘some other substantial reason’, namely the company’s genuine business need to reduce the hours of its radio controllers following a downturn in business.

The EAT has since upheld this decision, confirming that the claimant’s dismissal was not by reason of redundancy. In accordance with long-established case law authority, it was satisfied that for a redundancy situation to arise there must a diminution or cessation in the employer’s requirement for employees (i.e. the number of employees) to carry out the work in question, rather than merely a diminution in the work itself.

Comment

The difficulty with this decision is that it appears to directly conflict with the recent EAT decision in Packman t/a Packman Lucas Associates v Fauchon (see our previous briefing). In that case, a different division of the EAT concluded that an individual who was dismissed as a result of refusing to accept a significant reduction in hours was redundant, regardless of the fact that there was no reduction in the requirement for the number employees to carry out the work.

However, the present case was principally concerned with whether the claimant had been constructively dismissed, rather than the EAT considering in any detail the question of whether it could be interpreted as a redundancy situation.

In light of the apparent conflict between these two EAT decisions, an appeal to the Court of Appeal in either or both cases is desirable in order to clarify the position. In the meantime, employers should exercise caution in seeking to make any significant reduction in hours and be prepared for affected employees claiming a redundancy payment.

A copy of the EAT judgment is available here

Acas has issued new guidance for employers on managing redundancy for pregnant employees or those on maternity leave. Employment solicitor Sam Greenhalgh reports.

The new guidance, issued in conjunction with the Equality and Human Rights Commission, is a ‘good practice guide’ that is intended to dispel some of the myths that exist about making pregnant employees (or those absent on maternity leave) redundant.

This can be a tricky area for employers to negotiate their way through. The guide makes it clear that provided a fair procedure is followed, with appropriate criteria for selection and proper consultation carried out (adapted if necessary to take account of an employee’s absence), it is possible to carry out a fair redundancy process for those who are pregnant or on maternity leave.

The guidance highlights some of the necessary considerations to take into account in relation to pregnant employees and those on maternity leave, including the requirement to offer such employees any suitable alternative employment that may be available, in preference to other employees.

A copy of the new guidance is available here