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Commercial Law Update 2011

Wed, Nov 02, 2011

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Case Study:  Employee unfairly dismissed for making derogatory Facebook comments

In Whitham v Club 24 Ltd t/a Ventura an employee who posted relatively minor comments about her workplace on Facebook was unfairly dismissed.

Facts:

Mrs Whitham was employed by Club 24 Ltd as a Team Leader for Skoda, part of the Volkswagen group and a client of Club 24. Her colleagues included employees of Club 24 and employees of Volkswagen/Skoda. She was promoted to team leader two years into her employment and appeared to be an exemplary employee.

Mrs Whitham was a member of Facebook and a number of her Facebook friends were colleagues. While at home, having had a difficult day at work, Mrs Whitham posted a comment on her Facebook account (which was visible to her Facebook friends but not other members of the public). This led to the following exchange set out in the box below.

  • Mrs Whitham stated: "I think I work in a nursery and I do not mean working with plants."
  • Immediately afterwards, in response to an e-mail from a colleague and Facebook friend, she wrote:  "Don't worry, takes a lot for the bastards to grind me down."
  • An ex-employee of the Respondent then wrote "Ya, work with a lot of planks though!"
  • Mrs Whitham responded with "2 true."

Disciplinary investigation and dismissal:

Two of Mrs Whitham's colleagues (who were also Facebook friends) reported this exchange to her line manager. He was concerned that the comments posted could have a detrimental effect on the relationship between the employer and Volkswagen. Mrs Whitham was suspended and disciplinary proceedings followed.

Mrs Whitham was dismissed for misconduct, despite having sent a contrite letter of apology. The main basis for her dismissal was that her comments could have damaged the relationship between the employer and Volkswagen and had put the employer's reputation at risk. The employer relied on a policy which warned employees against posting information about their job on the internet as to do so might constitute a breach of confidence.

Mrs Whitham appealed against her dismissal. The manager dealing with the appeal initially took the view that a warning might have been more appropriate than dismissal, given that the remarks left on Facebook were "not too horrendous". She also highlighted possible mitigating factors, namely health and relationship issues, which had not been explored. However, in the end she decided to confirm the dismissal and dismiss the appeal. The appeal manager indicated that she would have demoted Mrs Whitham as an alternative to dismissal, if there had been the contractual right to do so.

Decision:

The employment tribunal decided that Mrs Whitham had been unfairly dismissed as the sanction of dismissal for a relatively mild comment on Facebook fell outside the band of reasonable responses. The tribunal noted that the comments on Facebook did not specifically refer to a client and nor was there any evidence of any actual or likely harm to the relationship. Also, it was not reasonable to ignore Mrs Whitham's previously exemplary record and mitigating factors to do with her health and personal circumstances.

The tribunal commented that "it would be a very strange world in which a company the size of Volkswagen, working with a company the size of Club 24, would terminate an important commercial agreement of that sort because of a number of relatively mild comments made by a relatively junior employee of the Respondent and which do not, in any manner, directly refer to VW in any event."

Comment:

This case is a useful example for employees who have made ill-judged remarks on Facebook or other social media. It suggests that employers will not always be able to rely on the assertion that their reputation may be damaged by such remarks, but rather they should make some attempt to assess the risk of harm. In this case, that would have involved speaking to the client whose goodwill it considered at risk. Arguably though, in most cases the risk of harm to an employer's reputation will be evident from the content.

For employers, there is clearly the need to investigate matters involving social media thoroughly, and not have a "knee-jerk reaction" to comments that have a derogatory element. 

Bribery Act 2010: first prosecution

A court clerk facing allegations of misconduct has become the first person to be charged under the Bribery Act 2010. Munir Yakub Patel will be prosecuted for "requesting and receiving a bribe intending to improperly perform his functions".  He appeared before Southwark Crown Court on 14 October 2011 and is currently awaiting sentencing.

This guidance note outlines the new offences introduced by the Bribery Act 2010 and the penalties for committing them. It also highlights practical steps that businesses can take to help avoid breaching the legislation.

Intellectual Property Office guide on intellectual property rights infringement in the workplace

The Intellectual Property Office (IPO) has published a guide for businesses on dealing with infringement of intellectual property (IP) rights in the workplace. The guide is designed to help businesses assess the risks infringement poses, including legal and security risks, and to develop an appropriate response. It highlights areas where infringement can occur and how to spot it, such as not having the correct licence to support certain activities.

For a copy of the published guide, please visit the IPO website.

Disability discrimination: reasonable adjustments

A recent Employment Appeal Tribunal (EAT) decision has provided a useful reminder for businesses of the limitations of the duty to make reasonable adjustments. The EAT held that:

  • The duty is limited to steps which would alleviate the disadvantage caused to the disabled person (and not to other people) by a provision, criterion or practice by the employer.
  • Consultations, investigations and trial periods do not themselves alleviate the disadvantage and therefore do not qualify as reasonable adjustments.
  • Reasonable adjustments are primarily concerned with enabling the individual to remain in work or (where they are on sick leave) return to work.
  • Steps in the process of getting an employee back to work, however reasonable or helpful, are not necessarily a "reasonable adjustment".

In this case, the EAT found that it was not a reasonable adjustment for an employer to offer a career break to an employee who was on long-term sick leave. Neither was it a reasonable adjustment to require the employer to put forward a proposal for rehabilitative non-productive work that the employee could put to her GP to get signed back to work.

This guidance note explains what reasonable adjustments are in the context of disability discrimination and identifies when a business may need to make them. 

Special Feature - Buying a Business

We provide an overview of the key issues and steps involved in buying a business.

Feed-In Tariffs: Imminent Review

 

Feed-in Tariffs, set up by the UK Government's Department for Energy and Climate Change offer fixed payments to micro-renewable generators that have a capacity of less than 5 MW.  The Department of Energy and Climate Change (DECC) will be reviewing Feed-in Tariffs before the end of 2011. They will assess all aspects of the scheme including tariff levels, administration and eligibility of technologies. Tariffs will not change until April 2012 unless the review reveals a need for greater urgency.

A fast-track review of solar PV and farm-based AD has already taken place and new tariffs for large-scale (over 50 kilowatts) and stand-alone solar PV came into force on 1 August 2011. These new tariffs also include new higher tariffs for farm-scale AD projects (up to and including 500 kilowatts) which have now been implemented and apply to installations with an eligibility date from 30 September 2011. The current tariff levels can be viewed at http://www.fitariffs.co.uk/eligible/levels/.

The rules on extension of installations have also been amended to prevent this being used a loophole following the fast-track review of the tariffs and these amendments came into force on 18th October 2011.

 

ROCs : An introduction and recent quotas

The Renewables Obligation Order (Scotland) Order came into effect in 2002.  It established a system designed to increase the proportion of renewable electricity produced by demanding that the major electricity companies obtain a set number of 'ROCs' (Renewables Obligation Certificates) depending on their overall level of supply.  These are issued by Ofgem, the electricity and gas regulator, to any accredited generator.  If a company fails to obtain their yearly quota they must pay a set 'buy-out' price for every ROC due. 

For the private landowner, or a developer with a renewable energy project, ROCs are obtained and traded (along with the energy that is produced) on the open market.  Market prices vary on a daily basis, and reflect the size of the difference between the percentage of renewable energy generated in the UK and the renewable obligation target. The bigger the shortfall the more expensive each ROC.   

The Obligation level for supplies to customers in Scotland for the period from 1st April 2011 to 31st March 2012 is 0.124 ROCs per MWh produced.  It was confirmed on 30th September 2011 that the obligation level for supplies to customers in Scotland for the period 2012/ 2013 will be 0.158 ROCs per MWh (megawatt hour) produced.  This figure corresponds to an ever increasing renewables target, and feed directly into ROC value.  This figure continues to be important in securing commercial viability and incentivising production.  

 

RHIs : Have been delayed

The UK Government had planned to launch the Renewable Heat Incentive (RHI) for non-domestic generators on 30th September 2011.  RHI is a scheme designed to incentivise electricity companies by providing financial rewards for installing technologies such as biomass, solar thermal and ground source heating.  This is one of the tools being used to achieve the government's target (under the 2009 EU Renewable Energy Directive) to generate 15% of power from renewable sources by 2015.  The criteria for eligibility is based on a variety of factors, and not every producer will be accredited.  Payments will be made depending on the type of renewable source used, the level of supply, and the exact type of technology.  Offgem, as the electricity and gas regulator, will be responsible for compliance. 

The scheme was set for implementation in October 2011, but has been delayed.  EU state aid approval was a necessary condition for the RHI scheme to proceed, and concerns were raised by them in relation to the large-scale (>1MW) biomass tariff being set too high.  The Department of Energy and Climate Change (DECC) have now received a letter from the European Commission granting state approval for the RHI, but this is subject to a reduction in the large-scale biomass tariff.  It is hoped that the scheme will be underway by the end of November 2011 once the final Regulations have passed through Parliamentary procedure.

Comment: Wave Farm Leasing and SDLT

The Energy Act 2004 gave right to The Crown Estate to grant leases for the continental shelf out to 200 nautical miles.  The Crown also own around half of the foreshore (between mean high and mean low water) and around half of the estuaries and tidal rivers in the UK.

Several new lease agreements have recently been put in place recently between the Crown Estate and developers over parts of the shelf.  Edinburgh based Nova Innovation now has the right to develop generators in Bluemull Sound.  If plans proceed it could become the UK's first tidal array.  Meanwhile Pelamis Wave Power has just agreed (October 2011) to develop a wave farm large enough to power 7,000 houses. The lease for a site located off the west coast of Lewis would become the Western Isles' first ever commercial wave farm

Whilst an array of incentives are available to such producers, we also note that the terms of the Stamp Duty Land Tax Manual (section headed 'The Tax - FA03/S42') contains the following statement:

"The tax is limited to the acquisition of land situated in the UK, the boundary being the low water mark of every part of the UK which borders the sea.  It does not extend to the bed of territorial sea but piers, jetties and similar structures with one end attached to the UK do comprise part of the UK."

Tenants should therefore note that if dealings relate exclusively to seabed, the government currently provides this 'one off' tax-break which, depending on the rent and duration, can run into a saving of thousands of pounds.

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