This school principal went to the High Court to seek an order
quashing the decision by the Board of Management of a national school from
terminating her employment as a school principal and teacher.
The allegations against the school principal involved
allegations of inappropriate behaviour towards two pupils, made against her by
a special needs assistant. The school was a small one with only two teachers, including
the principal.
The school principal had been dismissed in March 2018 and appealed
the decision to the Disciplinary Appeals Panel. The Disciplinary Appeals Panel
(DAP) recommended that the teacher be immediately reinstated to her position as
principal. The Board of Management rejected this recommendation.
The teacher’s case to the High Court was that the
investigation leading up to, and the decision to terminate her employment was
fundamentally flawed and legally indefensible. The core of her argument,
however, was that the failure by the Board of Management to give any, or any
adequate, reasons for the decision to dismiss her was irrational and unreasonable.
She argued that there was no proper evaluation of the
evidence against her, nor had she been told what allegations had actually been
found as having been proven against her.
Thus, she argued that the decision was bad at law for having
failed to giver reasons for the decision.
She also argued that the decision to ignore the
recommendation of the DAP was bad at law having regard to the established case
law as to the circumstances where a Board could lawfully depart from the
recommendations of the DAP.
High Court Decision
The High Court, Barr J, held that the Board of Management
had acted rationally and fairly in the investigation and disciplinary stage of
the process.
Where it went wrong, however, was in engaging with the
evidence against the Principal and deciding which, if any, allegations were
proven against her. The Board had to engage with the evidence in a fair and
rational manner and this could only be shown if they could give reasons for
their decision.
They had failed to do this.
They also failed to give due regard to the recommendation of
the DAP and there was no logical or constructive engagement with the DAP
recommendation. For these reasons the High Court set aside the decision of the
Board to terminate the Principal’s employment and quashed the decision.
Are you concerned about the use of cameras in the workplace?
Hidden cameras?
If you are a recent European Court of Human Rights decision
will disappoint and dismay you.
The case López Ribalda and others v Spain was
an appeal from decision of the lower Chamber that the Convention for the
Protection of Human Rights and Fundamental Freedoms had been breached.
Article 8 of the Convention provides for respect for the
person’s private and family life:
Article 8 – Right to respect for private and family life
1. Everyone has the right to respect for his private and
family life, his home and his correspondence.
2. There shall be no interference by a public authority
with the exercise of this right except such as is in accordance with the law
and is necessary in a democratic society in the interests of national security,
public safety or the economic well-being of the country, for the prevention of
disorder or crime, for the protection of health or morals, or for the
protection of the rights and freedoms of others.
In this Spanish case five workers had brought a case to
Europe that their right to privacy was breached when they discovered there was
hidden surveillance cameras in their shop.
The footage gathered by the covert cameras formed the basis
for the dismissal of the employees due to losses and theft in the business.
The European Court of Human Rights decided that the rights
of the workers were not breached and there was “weighty justification” for the
use of the hidden cameras.
The Court also stated that it was for individual states to
decide on laws, if any, covering the topic of video surveillance in the workplace.
The legal principles involving video surveillance in the workplace
The court said that the principles set out in the Barbulescu
v Romania case were the correct principles to apply when it came to video
surveillance. These principles involve 6 questions:
Has the employee been notified of the video
surveillance?
What is the extent of the monitoring?
Are there legitimate reasons for the cameras?
Are there less intrusive ways of achieving the employer’s
legitimate objective?
What are the consequences of monitoring the
employee?
Are there safeguards for the employee?
In the López Ribalda and others v Spain case the
monitoring of the employees was at an area of the shop where the general public
was being monitored-the checkout area-and it was not unreasonable to monitor
such an area where the employee’s expectation of privacy would not be the same as,
for example, in toilets or employee’s locker areas.
It was also noted that the surveillance only lasted 10 days
and ceased as soon as the objective was achieved-this was to identify which
employees were responsible for the theft and losses occurring.
It was accepted by the Spanish court, and the European court
of human rights, that it would have defeated the purpose of the surveillance if
the employees were advised about it in advance. Therefor the right of the employee
to be told must be counterbalanced by the legitimate objective of the employer
to find out who is responsible for theft.
The Court also decided that this right to be told was only
one factor when the decision had to be made about the proportionality of the
employer’s action was to be assessed.
Takeaway
The employee’s right to privacy in the workplace
is not absolute
The employer’s action must be viewed in the
light of the specific facts of the case and whether the steps taken by the
employer were in pursuit of a legitimate aim and were necessary and
proportionate.
The High Court case between Ryanair DAC and
Peter Bellew is an important one because it gives us further guidance in the
area of restrictive covenants in the contract of employment. A restrictive
covenant is basically a covenant in a contract of employment preventing a
departing employee from working for a competitor for a certain period of time
after departing from his employment.
In Ryanair DAC the airline sought to
prevent Mr Bellew from working for a competitor in any capacity for a period of
12 months after leaving Ryanair. This was what Mr Bellew had signed up for when
he signed his contract of employment.
Ryanair sought to prevent him from taking
up employment with Easyjet and sought an injunction in the High Court to
enforce the covenants in his contract of employment with Ryanair. One of those
covenants was as follows:
For a period of 12
months after the termination of your employment you shall not, without the
prior written consent of the Company, directly or indirectly in any capacity
either on your own behalf or in conjunction with or on behalf of any other
Person;
a. be employed,
engaged, concerned or interested in any capacity in any business wholly or
partly in competition with the Company for air passenger services in any
market;
b. solicit or
entice or endeavour to solicit or entice away from the Company any person who
was employed within in (sic.) a senior executive, managerial, or technical
capacity by the Company.
1.2 If you receive
an offer of employment or engagement during your employment with the Company,
or before the expiry of the restriction period set out in this clause, you
shall give the person or entity making the offer a copy of this clause.
The defendant in this matter fully admits
that he freely signed the covenant and at the time of signing he fully
understood its meaning and purpose but makes the case that he is not bound by
said covenant.
The case law in this regard provides to be
useful and instructive as to the approach adopted by the Irish Courts in
relation to restrictive covenants.
Macken
v. O’Reilly 1979 I.L.R.M 79
Although this case is not as recent as the
case law outlined in the rest of this article, the holding of the court in
relation to the matter at hand is helpful. A synopsis of this could be read as
follows all interference with a person’s freedom of action to trade is contrary
to public policy and therefore are void. Generally, this is the case, however
it has opined in some case law if the restriction is justified by
reasonableness and necessity to serve public interests, such as instances
involving trade secrets or confidential information the restriction may be
allowed and held as binding.
Murgitroy
& Company Ltd v. Purdy 2005 IEHC 159
This a much more recent decision where the
Chief Justice Clarke J. outlined that a restrictive term will not be
implemented unless it satisfies the limbs of the following test
The restriction is reasonable between the
parties
The restriction is consistent with the interests
of public policy
The facts of Murgitroy are as follows. A restrictive covenant in a contract of
employment restricted a Patent Lawyer from working in same sector for a period
of twelve months in the Republic of Ireland. Clarke CJ. Found the restriction in relation to the
geographical nature (not working in Ireland) and the length of the restriction
was reasonable and justified based on the nature of the employers business.
However Clarke J. found that the result of allowing the aforementioned
restrictions would create another, being the restriction to approach clients
who are not pre-existing clients of the employer from being engaged by the
ex-employee was too restrictive. The position of this case was affirmed in the
more recent example of Net Affinity v
Conaghan 2012 3 I.R 67.
Stenhouse
ltd v. Philips 1974 A.C 391
The covenant entered into needs to be
reasonable between the parties. The holding of this case outlines that the
restriction sought must be a reasonable one and cannot restrict an employee
from using his skill and knowledge in future endeavors. However, the employer
can restrict the employee from using assets or ‘insider knowledge’ that must be
regarded as company property.
This becomes especially necessary when
discussing trade secrets/ confidential information or market sensitive
information. Any property or assets of the company that the employee is leaving
must be protected by restrictive covenant because it is essentially, company
property. Even if the employee may have contributed to the ‘company property’
the employer will still be granted protection for what is ultimately their
property.
However, with regard to skill, knowledge
and essentially the employee’s property, no restrictive covenant can restrict
this movement. It must also be noted that if an employer is seeking to enforce
a restrictive covenant simply to protect himself from mere competition, this
will not be allowed.
in the Ryan
Air case, Allen J. opined that that covenants are generally never
reasonable unless if the competition was allowed it would take advantage of the
employers trade position.
The High Court also looked at Hernandez v. Vodafone Ireland LTD 2013 IEHC
70 andTillman
v Egon Zehnder Ltd from the United Kingdom Supreme Court.
High Court decision
The High
Court recognized the difficulty in practice of enforcing a confidentiality
clause and referred to Lord Denning in Littlewoods Organisation Limited v
Harris [1978]
“It is thus established that an employer can stipulate for protection
against having his confidential information passed on to a rival in trade. But
experience has shown that it is not satisfactory to have simply a covenant
against disclosing confidential information. The reason is because it is so
difficult to draw the line between information which is confidential and
information which is not; and it is very difficult to prove a breach when the
information is of such a character that a servant can carry it away in his
head. The difficulties are such that the only practicable solution is to take a
covenant from the servant by which he is not to go to work for a rival in
trade. Such a covenant may well be held to be reasonable if limited to a short
period.”
The High
Court had a difficulty with whether the restraint that Ryanair sought went further
than was necessary for the legitimate protection of its interests. It had no difficulty,
interestingly, with the time period of 12 months.
It noted
that it could, if the circumstances permitted, use the “blue pencil rule” to
remove an unenforceable provision if the character of the contract was not
changed as a consequence. However, the covenant in this case applies to “any
business wholly or partly in competition with Ryanair for air services”.
With considerable reluctance, but without
misgivings as to the applicable law, or my application of the law, I am driven
to the conclusion that the clause is void and unenforceable as an unjustified
restraint of trade. 195. The other provision of the restraint in this case
which troubled me was the prohibition on employment in any business in
competition with Ryanair “in any capacity”. It appeared to me that literally
construed it would restrain Mr. Bellew from taking up employment with another
airline as a pilot or air steward.
208. I find that the plaintiff has discharged the
onus of proving that it had a legitimate interest in exacting a covenant from
the defendant to protect the valuable sensitive and confidential commercial,
operational and financial information that would come to the defendant’s
knowledge in the course of his employment. For the reasons given, I find that
that interest has not been shown to extend beyond those airlines in competition
with the plaintiff in the low cost or low fare sector, to those airlines
operating in the legacy or flag or high cost sector.
209. I find that the covenant in this case,
properly construed, would prevent the defendant from taking up employment with
any European airline, including the legacy carriers, and so goes beyond what
the plaintiff has shown to be justified.
210. The legitimate interest of the plaintiff
in restraining the defendant from taking up alternative employment is limited
to roles which would risk the disclosure or use of its protectable information.
I find that the restraint on employment in any capacity goes beyond that
interest and has not been shown to be justifiable.
211. For the reasons given, I find that the
covenant to which the defendant, for valuable consideration, freely agreed is,
as a matter of law, void and unenforceable as an unjustified restraint of
trade.
Conclusion
Ryanair
DAC were refused their injunction because the High Court found
The restraint preventing the
departing employee from working “with any European airline” went beyond what
was justified
The restraint preventing Bellew
from taking up employment “in any capacity” goes beyond the legitimate interest
of Ryanair and was not justifiable.
For
these reasons the High Court decided the covenant was void and unenforceable
and an unjustified restraint of trade.
Takeaway for employers
Employers need to understand that any restrictive covenant is drafted to reflect the specific relationship between employer and employee in any particular circumstance and a “one size fits all approach” runs the risk of being found unenforceable. If it goes too far and is too wide it is unlikely be justified as being necessary to pursue a legitimate interest.
Twelve months, as a temporal restraint, is acceptable and unproblematic.
Confidentiality clauses, whilst necessary and acceptable, are difficult to enforce in practice as confidential information can be used and abused without any evidence of the breach-for example in negotiating terms with competitors.
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This was the case of a medical doctor with his own practice
who claimed he was an employee in respect of his work for a training provider.
This is a common issue: whether an individual was an
employee or was self-employed, notwithstanding the statement in a contract that
the individual was not an employee.
All employment claims will depend on the claimant being an
employee. If the claimant falls at this hurdle any other claims-for example
terms of employment or unfair dismissal-will not be heard.
This case involved a medical practitioner who provide
training services for the respondent and brought a claim under the Terms of
Employment (Information) Act, 1994 seeking a written contract of employment. He
had received a contract dated April 1st 2006 which described his position as
being ‘an independent contractor’ and stated that he ‘shall not be an employee’
of the respondent.
The first question that arose, therefore, was whether the
complainant was an employee or an independent contractor.
The WRC Adjudication Officer noted that there is no one test
to determine whether a person is engaged on a contract of employment (contract
of service) or on a contractor contract (contract for services).
The AO referred to a UK case in which a number of tests were
set out as follows:
1) Does the
person performing the services supply his own equipment?
2) Can he hire
his own helpers?
3) Does he
carry any financial risks and to what extent?
4) What
opportunity does he have to make a profit?
5) To what
extent does he carry the responsibility for investment/management.
He referred also to the Revenue Commissioners approach and
their tests to determine employment or self-employment as follows:
1) Is under
the control of another person who directs as to how, when and here the work is
to be carried out,
2) Supplies
labour only,
3) Received a
fixed wage
4) Cannot
subcontract the work
5) Does not
supply materials for the job
6) Does not
provide equipment other than small tools of the trade
7) Is not
exposed to personal financial risk in carrying out the work
8) Works set
hours or a given number of hours
The AO was satisfied that the complainant in this case, a
medical doctor, satisfied the tests of the Revenue Commissioners. In short it
was recognised that the complainant received a fixed and regular income, was
fully integrated into the respondent’s activity, and satisfied the other tests
of the Revenue Commissioners.
The respondent in this case sought to connect the fact that
the complainant was also involved in other self-employed work-as a GP in his
own general practice-and was paid a locum allowance to undermine the argument
that he was an employee. However, the Adjudication Officer did not accept this
argument and said it had ‘no merit’.
“I do not accept therefore that the payment of a locum
allowance, whatever the recipient chooses to do with it, affects or alters the
substance of the employment relationship between an employee and an employer
which must be considered by reference to the tests set out above.”
He also found
In Hall (Inspector of Taxes v Lorimer [1994] IRLR 171 the
court endorsed an explanation approved by the lower court (whose judgement was
on appeal to it);
‘In order to decide whether a person carries on business
on his own account it is necessary to consider many different aspects of that
person’s work activity. This is not a mechanical exercise of running through
items on a checklist to see whether they are present in, or absent from a given
situation. The object of the exercise is to paint a picture from the
accumulation of detail. The overall effect can only be appreciated by standing
back from the detailed picture which has been painted, by viewing it from a
distance and by making an informed, considered, qualitative appreciation of the
whole. It is a matter of evaluation of the overall effect of the detail, which
is not necessarily the same as the sum total of the individual details.’
The Adjudication Officer had no hesitation in finding that
the complainant was an employee and was entitled to be given a written
statement of his terms of employment, in accordance with the Terms of
Employment (Information) Act 1994.
However, the Adjudication Officer did not consider it ‘just
and reasonable’ to make any order for compensation retrospectively as the ‘current
respondent whose breach of the Act arises for the first time as a consequence
of the finding in this case’. He did order that a statement of terms of
employment be given to the complainant.
This decision was issued on 18th December 2019
and you can read the whole decision here.
It is a useful reminder of the tests which will be applied to determine the
issue of employee versus independent contractor.
