Tag: UK

January 2016 UK Immigration Update

United Kingdom ButtonNew developments include the Migration Advisory Committee announcing its findings regarding Tier 2 of the Points-Based System, a requirement for private landlords to conduct right-to-rent checks, and changes to UK immigration application fees.

MAC Announces Its Findings Regarding Tier 2

The UK Government’s Migration Advisory Committee (MAC) has published its findings on Tier 2 of the Points-Based System. In reviewing Tier 2, the MAC sought to balance the Government’s objective to reduce volumes with its desire to ensure that Tier 2 remains open to the “brightest and best workers who will help Britain succeed”.

The MAC has made the following recommendations to the Government:

  • The best way for the Government to achieve its aim to restrict volumes under Tier 2 and focus on more highly skilled migrants is through salary thresholds, and the minimum salary threshold for Tier 2 should be increased from £20,800 to £30,000

  • The minimum qualifying period for Tier 2 long-term and short-term Intra-Company Transfers should be increased from 12 months to 24 months

  • The cost of Tier 2 recruitment should be raised by introducing an annual Immigration Skills Charge that would be payable by Tier 2 Sponsor Licence holders

  • The use of the Tier 2 (Intra-Company Transfer) route for third-party contracting should be moved into a separate immigration category with a higher salary threshold of £41,500

  • Tier 2 (General) is not restricted only to occupations on an expanded shortage occupation list

  • The Government should not restrict automatic work rights for dependants or an automatic sun-setting of occupations on the shortage occupation list

We are waiting to hear whether the Government will adopt these recommendations in full and how they will apply to Tier 2 migrants in practice. We will release an additional LawFlash once the Government announces the changes to the immigration rules.

Right-to-Rent Checks

Starting 1 February 2016, all private landlords will be required to conduct right-to-rent checks and to request documents that confirm prospective tenants’ right to reside in the UK. Individuals must provide evidence of their right to rent in the UK up to 28 days before their tenancy’s start date.

Where employees move or transfer from overseas and have not yet travelled to the UK, a landlord can elect to enter into a “conditional agreement” in which an individual provides evidence of his or her right to rent after arrival and before occupying a property. Individuals who provide a Biometric Residence Permit as evidence of their right to rent in the UK will need to present the permit to their landlord before they can occupy a property.

The following agreements will be exempt from the right-to-rent checks:

  • Long leases that grant a right of occupation for a term of seven or more years

  • Existing tenants and occupiers who moved in before the requirements were introduced

  • Tenancies renewed between the same parties at the same property without a break, where the start of a tenancy predates the requirements

Changes to UK Immigration Application Fees

The UK Government recently set out proposed changes that will take effect beginning 6 April 2016 to the fees for visas, immigration and nationality applications, and associated premium services, with the aim to make the services self-funded by those who use them over the next four years. The changes include the following:

  • Entry clearance fees for Tier 2 will rise from £564 to £575 for a three-year visa and from £1,128 to £1,151 for a five-year visa

  • In-country further leave to remain will rise from £651 to £664 for a three-year visa and from £1,302 to £1,328 for a five-year visa; the same fees will be charged for each dependant

  • Same-day processing for in-country applications will increase from £400 to £500

  • Fees for indefinite leave to remain (settlement) will rise from £1,500 to £1,875 per applicant—if same-day processing is required, each applicant will now need to pay £2,375

  • Fees for all sponsor licensing applications will stay at the current rates

Fees for all sponsor licensing applications will remain at the current rates.

View a comprehensive table that details of the indicative fees.

Article By Tracy Evlogidis of Morgan, Lewis & Bockius LLP

Copyright © 2016 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

UK Holiday Pay Inactivity – Inertia or Strategy?

We were in the hallowed legal portals of Farringdon’s Bleeding Heart Restaurant last week for a client dinner on the still vexed issue of holiday pay. “Hallowed legal portals”, because so far as I know, no other restaurant has been cited so frequently in the employment law reports as just the only place to go for a decent spot of covenant-busting and a little post-prandial breach of fiduciary duties.  They also do a very good coffee.

We had to open with an acknowledgement – that despite the absolute nature of my recollection, Peter O’Toole had not said in the film Lawrence of Arabia that “doing nothing was generally best”. Apparently it was Anthony Quayle.  Pressing on despite this setback, our dinner guests considered with the kind contribution of a senior member of the Engineering Employers Federation’s Employment Policy Team whether doing nothing could really remain a sensible holiday pay position at this stage, a full year after the EAT’s decision in Bear Scotland.

Despite the breadth of sectors represented, including retail, financial services, recruitment and advertising, there was a remarkable commonality of view. While it was of course sensible to be providing behind the scenes for some possible accrued holiday pay liability, none of our guest organisations had yet sought any negotiation or reached any agreement with staff representatives (unionised or not) about the inclusion of overtime or commissions in holiday pay calculations.   Despite this inaction, only one of our attendees had had a Tribunal claim on the point.  This is a function perhaps of the relatively limited quantum of most holiday pay claims per individual, a sum which will often be less than the Tribunal fees incurred in making the claim in the first place.

We floated the proposition that an employee’s entitlement to an allowance for commission or overtime in his holiday pay should depend upon his being able to show (at least on a balance of probabilities) that he would have earned that extra money had he not been on leave, i.e. that he had suffered some actual loss. Most of our attendees seemed willing to take that loss as a given based on recent average overtime or commissions rates. Where such extra earnings are pretty regular and pretty consistent, that might well be a sensible approach.  However, the financial services attendee, being from a sector which pays fewer but larger supplementary sums above salary, could see some mileage in this argument.  If such a lumpy payment fell within the reference period for the holiday pay calculation, it could seriously distort the figure and turn it into a number wholly unconnected with what the employee would actually have earned had he not been on leave.  None of the cases or commentaries have yet mentioned this possibility (apart from the most throw-away line in the Acas Guidance http://www.acas.org.uk/holidaypay). Nonetheless, it will surely gain new legs as an idea if and when the Government confronts the reality of drafting legislation to define a “normal pay” formula which works equally well over the myriad different shapes and sizes of supplementary payment arrangements in the UK market.

Might some clarity on this be derived from Mr Cameron’s impending begging session in Europe? His original podium-thumping was about procuring material changes to the Working Time Directive as applicable to the UK, but his formal overture was watered down to a gripe about lessening employer red tape.  The collective view around our table was that the EU will listen politely to Mr C and give him nothing.  The more cynical among our guests (that is to say, all of them) considered that he would then introduce some “clarificatory” amendments to the Working Time Regulations which would make little or no actual impact on employers but could be presented to a puzzled electorate as an indication of the merits of his tough stance in Europe.

I asked our guests at the outset of the dinner what they wanted from it. Almost exclusively it was reassurance that they were not alone or acting foolishly in doing nothing about holiday pay at this stage.  In cases where there are no unions, no pressing reputational issues and no easy means of determining what supplement to holiday pay would be appropriate anyway, it was reassurance which we were happy to give.

Article By David Whincup of Squire Patton Boggs (US) LLP

© Copyright 2015 Squire Patton Boggs (US) LLP

Customs and Border Protection Announces Expansion of Global Entry to UK Citizens

On November 3, the US Customs and Border Protection (CBP) commissioner announced the expansion of Global Entry to UK citizens. Global Entry, a CBP Trusted Traveler program, allows for expedited clearance of preapproved, low-risk travelers. As an added benefit, Global Entry members are also eligible to participate in the TSA Pre✓ expedited screening program.

The registration process is quite straightforward. UK citizens will apply through the UK Home Office’s website and pay a £42 processing fee. Successful applicants will receive an access code to enter when applying for Global Entry through CBP’s Global Online Enrollment System. The nonrefundable application fee for a five-year Global Entry membership is $100, and applications must be made online. Once an application is approved, a CBP officer will conduct a scheduled interview with the applicant and make a final eligibility determination. Although no traveler is guaranteed expedited screening, this expansion should facilitate travel for low-risk travelers from the UK significantly.

Similarly, US citizens are eligible to apply for the UK’s trusted traveler program, Registered Traveller. Members enrolled in Registered Traveller may use e-gates at airports in the UK. The service costs £70 to apply and an additional £50 a year thereafter. If an application is unsuccessful, the applicant will receive £50 back. To qualify for Registered Traveller, a US citizen must make four trips to the UK per year.

Article By Eleanor Pelta, Eric S. Bord, A. James Vázquez-Azpiri, Lisa Stephanian Burton, Tracy Evlogidis & Roland C. Lechner of Morgan, Lewis & Bockius LLP

Copyright © 2015 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

Lawrence of Arabia Makes Surprise Contribution to UK Holiday Pay Debate

There is a line in, I think, Lawrence of Arabia where a terrified young soldier trapped under fire with a small group of his colleagues asks Peter O’Toole as Lawrence what they  are going to do.  “Nothing”, drawls O’Toole languidly, “After all, it’s generally best”.

And so by a tenuous little link to the question of amending your holiday pay calculations to reflect the new jurisprudence around including an allowance for overtime and/or commission.  Have you been sitting in your office wondering why no one seems able to tell you exactly what you need to do?  Have you been approached for a deal by your union on the basis that everyone else has sorted it out and only your company still has its head over the parapet?

You are not as alone as you may feel.  A survey of over 1,000 companies of a wide variety of sizes, sectors and employee representation structures provides the answers and a number of interesting statistics:-

  • Of all respondents, a full 73% have yet to take any steps to amend their holiday pay calculations. Those union claims may perhaps be taken with a pinch of salt.

  • Of the 27% who have changed their holiday pay arrangements, only a small majority (less than 60%) have unionised workforces.

  • Where changes to holiday pay include use of a reference period, the period invariably picked has been twelve weeks. That is even though that period has yet to be enshrined in law and even though those responses came from sectors as diverse as construction, aviation, retail and banking.  Employee numbers in those businesses ranged from less than 100 to over 45,000.  It therefore appears that for all the uncertainties and injustices both ways which such a reference period can generate (and despite the enormous spread of overtime and commission schemes in use over that population) twelve weeks will likely be the default position for voluntary holiday pay agreements.

  • Where respondents have reached agreements with their workforces about alterations to holiday pay calculations, these have all been forward-looking. None of respondents refer to any accommodation being reached in relation to any notional arrears.

  • The principal factors leading to changes in those 27% of employers were (i) awareness of the case law (i.e. the perceived inevitability of having to do something at some stage) followed by (ii) union/employee pressure (though of the 73% who had made no change, only one admitted to receipt of a Tribunal claim), and (iii) brand/reputational factors.

  • Where changes have been made, half had applied them to the full UK 5.6 week holiday entitlement. About a quarter of respondents had limited the changes to the Working Time Directive four week minimum and a further quarter did not specify which.

  • Of those cases where changes had not been made, nearly 85% of employers had also taken no steps to amend their commission/overtime structures to minimise the scope for employee claims.

So in other words, whether or not it is generally best, doing nothing does seem thus far to be the principal employer response to the holiday pay question.  There are good objective reasons to support such a stance at this point, including in particular the absence of Government guidance, the uncertain direction (in matters of detail, at any rate) of the case law, and the relatively limited number of unions willing to undertake the colossal logistical exercise of collective Tribunal claims.  There is no reason to expect much change in the first two factors in the near future, but whether that last point will remain valid if employer indifference persists at such a high rate is an open question.

Article By David Whincup of Squire Patton Boggs (US) LLP

© Copyright 2015 Squire Patton Boggs (US) LLP

U.S., U.K. Governments Seek Cyber Innovations from Private Sector

The private sector is likely to produce critical cyber innovations—at least, that is what the U.S. Defense Advanced Research Projects Agency (“DARPA”) and the U.K. Centre for Defence Enterprise (“CDE”) would like to see.

In the United States, although the internet may have been invented at DARPA, DARPA is turning to a private sector competition to protect it.  In March 2014, DARPA solicited a “Cyber Security Grand Challenge”: an open competition to devise automated security systems that can defend against cyberattacks as fast as they are launched.  DARPA pitched the Grand Challenge as a “first of its kind,” “capture the flag”-style competition for computer security experts in academia, industry, and the broader security community.  Over 100 teams registered to compete.  Some likely saw the cash prizes—$2 million for first place, $1 million for second, and $750,000 for third—as nominal incentives compared to the value of shaping future cybersecurity efforts.  On July 8, 2015, DARPA announced its selection of seven finalists for the final round of the competition.  The finalists include computer security experts from industry, start-up incubators, and academia.

Not one of DARPA’s Grand Challenge finalists?  Take heart: DARPA is said to be developing technology that would allow spectators to watch the final contest in real time.  Or better yet, look to the United Kingdom, where the CDE has an open competition seeking “novel approaches to human interaction with cyberspace to increase military situational awareness.”  CDE is asking for “revolutionary approaches” to “rapidly convey” cyberspace information, events, and courses of action to military commanders, analysts, and decision-makers.  Just as DARPA officials acknowledged the limitations of existing cybersecurity strategy and technology, CDE officials have recognized that “the traditional human-computer interface” is inadequate for “current military information processing and sense-making in the cyber domain.”  Up to £500,000 in research funding will be awarded.  A July 9, 2015 presentation given by CDE is available online; slides from a July 16, 2015 webinar soon could be available, as well.  The competition closes on September 3, 2015.  Proposals must be submitted through CDE’s online portal.

ARTICLE BY Jade C. Totman & Alan A. Pemberton of Covington & Burling LLP

© 2015 Covington & Burling LLP

Part Three: An Overview of the Legal Mechanisms for Challenge and Redress by Those Potentially Affected by the Early Closure of the Renewables Obligation

In the first two parts of this series, we considered how the RO operates, possible plans to close the RO in 2016, and the potential impact of those plans upon the onshore wind industry. In this final post, we outline two possible legal avenues for challenge and redress by those who may be affected by the early closure of the RO: through the national courts and under international investment treaties.

windmill vertical

The first possibility is to challenge the Government’s actions through the national courts. This route recently has been used by the solar industry, with mixed results. In 2012, the Supreme Court refused the Government’s appeal to cut solar feed-in-tariffs before the completion of a consultation on the matter. However, in November 2014, the High Court refused an application for judicial review against the Government’s decision to close the RO to ground and building mounted solar photovoltaic capacity above 5 megawatts in 2015 rather than 2017.

Affected investors could also consider commencing international arbitration proceedings under an investment treaty. If successful, an investor could obtain compensation for the loss of their investment as a result of measures introduced by the Government. However, this option would only be available to foreign investors from member States that have an investment treaty in place with the UK, and who have made a qualifying investment in the UK, as defined by the applicable treaty.

A number of European states, including Spain, are currently being sued by foreign investors under the Energy Charter Treaty as a result of changes to national solar subsidies. Marcus Trinick QC, representing Renewables UK, has warned Energy Minister Amber Rudd to “be aware of the dangers of state aid discrimination and look at what is happening in international energy arbitration across Europe. In such a position we could not afford not to fight, especially if action is taken to interfere retrospectively.”

Media reports suggest that, given the extent of industry opposition, DECC is delaying an announcement to allow for further refinement of the proposed measures and their impact, in order to reduce the scope for legal challenges. Marcus Trinick QC has emphasised the need for dialogue between the industry and the Government before action is taken, which could reduce the risk of legal challenges arising.

The message from industry representatives is clear: the early closure of the RO would be a major blow to the future of onshore wind in the UK, which could spark a legal battle with the UK Government. As Maf Smith, deputy chief executive of RenewableUK, has stated, “[t]he industry will fight against any attempts to bring in drastic and unfair changes utilising the full range of options open, including legal means if appropriate.”

Part One: An Overview of the Renewables Obligation and Plans for Its Early Closure

Part Two: How Would the Renewables Obligation’s Early Closure Affect the UK Onshore Wind Industry?

ARTICLE BY William Lowery & Catherine Karia of Covington & Burling LLP

© 2015 Covington & Burling LLP

Part Two: How Would the Renewables Obligation’s Early Closure Affect the UK Onshore Wind Industry?

Part One of this series outlined the RO scheme and the expected announcement to close the RO earlier than anticipated. In this second post, we consider the potential impact of such measures upon the onshore wind industry.

Until the consultation with devolved authorities (Scotland and Northern Ireland) is completed, and detailed proposals are published, the timing and nature of the impact on the industry will be uncertain.

There are currently around 3,000 new turbines with a combined capacity of more than 7 gigawatts seeking planning permission, many of which would have been expecting to secure accreditation under the RO. Bloomberg Energy Finance has estimated that, if the RO closes to new generating capacity in 2016 and onshore wind was not eligible for public subsidy under the Contracts for Difference scheme, less than half the capacity of projects in advanced stages of planning would benefit from subsidies.

The majority of the planned projects are due to be located in Scotland. Given the apparent tension between the Scottish First Minister and Prime Minister over the future of onshore wind (referred to in our first post in this series), there is currently uncertainty as to whether or not the applicable RO in Scotland would close in 2016. This is an important consideration regarding the possible impact of any proposed measures.

It is unclear whether there would be a ‘grace period’ in relation to the changes, which could enable projects that already have planning permission to be included under the RO scheme, and closing the RO for those that do not. Ian Marchant, chairman of wind developer Infinis Energy, said: “The Government’s alleged plans to close down the Renewable Obligation-regime early for onshore wind beggar belief. . . . If the RO is terminated early without reasonable grace periods in place, not a single energy or large scale infrastructure project in the UK will be safe going forward.”

The potential impact of such measures is giving rise to considerable uncertainty and concern over the future of the onshore wind industry. In our final post in this series, we will consider what action could be taken by industry participants who may be affected by the early closure of the RO.

Part One: An Overview of the Renewables Obligation and Plans for Its Early Closure

Part Three: An Overview of the Legal Mechanisms for Challenge and Redress by Those Potentially Affected by the Early Closure of the Renewables Obligation

ARTICLE BY William Lowery & Catherine Karia
Covington & Burling LLP

© 2015 Covington & Burling LLP

The Uncertain Future of the UK Renewables Obligation: A Three-Part Series

In early June 2015, the UK Department for Energy & Climate Change (“DECC”) was expected to announce plans to close the existing subsidy scheme for onshore wind, the Renewables Obligation (“RO”), to new generating capacity a year earlier than expected. This announcement has been delayed amid concerns that it could spark potential legal challenges from the industry and lead to a dispute with the Scottish Government over the future of onshore wind.

In this three-part series, we outline how the RO operates, the potential impact of the early closure of the RO upon the onshore wind industry, and the possible routes for challenge and redress for industry participants who may be affected.

Part One: An Overview of the Renewables Obligation and Plans for Its Early Closure

How does the RO operate?

The RO is designed to support renewable electricity projects in the UK. It obliges UK electricity suppliers to source a proportion of the electricity that they supply to customers from eligible renewable sources. The RO is currently set to close to all new generating capacity of any technology on 31 March 2017.

Ofgem, which administers the scheme, issues Renewable Obligation Certificates (“ROCs”) to electricity generators for the eligible renewable electricity they generate.  The ROCs are sold, either directly or indirectly, to electricity suppliers, who can use the ROCs to demonstrate their compliance with their annual obligations (i.e., “redeem” the ROCs against their RO). If a supplier does not present sufficient ROCs to meet its RO, it must pay a penalty known as the buy-out price. The funds collected by Ofgem from the buy-out price are redistributed on a pro-rata basis to suppliers who redeem ROCs.

What are the proposed changes to the RO?

Before winning the UK general election, the Conservative party pledged that it would end “any new public subsidies” for onshore wind farms on the basis that they “often fail to win public support and are unable by themselves to provide the firm capacity that a stable energy system requires”.

DECC is expected announce that it will close the RO to new generating capacity in April 2016, instead of April 2017. Such a move has been described as “going further” than the Conservative party’s pre-election pledge, by ending an existing subsidy a year earlier than expected. At present, DECC has reportedly declined to confirm the precise nature of the proposals.

The majority Conservative Government disclosed in late May 2015 that it would “be announcing measures to deliver this soon”, after conducting a consultation with the devolved administrations (Scotland and Northern Ireland) over the nature of the changes. However, at the time of writing, an announcement has not yet been made.

The basis for delaying the announcement of these measures appears to be twofold.

First, the Conservative Prime Minister, David Cameron, and Scottish First Minister and SNP leader, Nicola Sturgeon, have opposing opinions over the future of onshore wind. While Cameron has stated that “enough is enough” for onshore wind subsidies,  Sturgeon has demanded a veto on the Conservative’s plans. Energy Minster Amber Rudd stated that the consultation with devolved authorities would continue “until we have arrived at a firm policy”, and MPs would have to “bear with us a little longer”.

Second, trade bodies representing the onshore wind industry have vocally opposed the Conservative’s plans, due to their potentially significant effect on the future of onshore wind in the UK. The possible impact on the industry is considered in part two of this series.

Part Two: How Would the Renewables Obligation’s Early Closure Affect the UK Onshore Wind Industry?

Part Three: An Overview of the Legal Mechanisms for Challenge and Redress by Those Potentially Affected by the Early Closure of the Renewables Obligation

ARTICLE BY William Lowery & Catherine Karia of Covington & Burling LLP
© 2015 Covington & Burling LLP

UK Employment Tribunal Awards £3.2m To Woman Called “Crazy Miss Cokehead” By Colleagues

Squire Patton Boggs (US) LLP law firm

The woman who was called “Crazy Miss Cokehead” by her manager has been awarded nearly £3.2m by an Employment Tribunal for sexual harassment, reportedly including £44,000 for injury to feelings and a further £15,000 in aggravated damages.

We originally posted a blog on this story in November 2013 http://www.employmentlawworldview.com/crazy-miss-cokehead-when-banter-goes-too-far/.  Following the liability hearing, the Tribunal found in favour of Svetlana Lokhova who worked for the London branch of the Russian bank Sberbank CIB (UK) Ltd.

The Tribunal found that 19 out of her 22 allegations were not well founded.  However, on the main issues, it was found that Ms Lokhova’s former manager, David Longmuir, had bullied and harassed her on grounds of sex (even in emails), reportedly suggesting that she needed to visit a Nigerian tribesman for sex to “calm her down”.  Other such put-downs included saying that she had only been hired “because of her t***” and poking fun at her perceived privileged background.

In a stinging attack on the Bank, the Tribunal heavily criticised its conduct of the proceedings and said that there had been a “deliberate” attempt to bully her at the liability hearing in relation to an allegation that Ms Lokhova took drugs.  It said, “That allegation is completely without foundation and should never have been put to her in cross examination”.  In a Jeremy Kyle-style twist, Ms Lokhova was so “incensed and appalled” by the allegation that she took a drug test during the hearing, which was negative.

There were a number of other aggravating factors in this case.  Mr Longmuir was not disciplined at all despite the strength of the evidence and carried on working for the Bank for a further year after the bullying, receiving a £168,000 pay-off when he eventually did leave.  While I am sure that this of course had no bearing at all on the Tribunal’s ruling, you might be aware that with the benefit of the tax breaks applicable to severance payments, this is the equivalent of an Employment Judge’s salary for some 20 months.  No reason at all why thatpay-off should have irritated the Tribunal.

The Tribunal further criticised Paolo Zaniboni (who is still the CEO of the London office) who took no action against Mr Longmuir despite the evidence against him and whom the Tribunal also found to be guilty of unlawful victimisation.

The Tribunal’s attitude towards the Bank and its view of the aggravating features of this case is, perhaps, reflected in the reported awards of £44,000 and £15,000 for injury to feelings and aggravated damages respectively, which (if those reports are right) are very high awards indeed compared to previous cases.   The £44,000 figure would represent nearly a 50% uplift on the previously-understood ceiling for such awards.

The Tribunal in this case found that Ms Lokhova, who earned £750,000 a year in salary and bonuses working in Equity Sales, “will never work in financial services again, on the basis of the medical evidence”.  They found that she was suffering from a moderately severe psychiatric illness and had been suffering from such since January 2012.  The bulk of her compensation therefore represented future loss of earnings.

Lessons for employers

An interesting point for employers arising out of this case is how to deal with a case like this to limit the potential financial sanctions.  In this case there were emails containing the abuse and therefore written evidence of it (however, in most cases there will not be).  It should have been obvious to the Bank that it was going to lose in relation to those allegations.  So what can you do by way of mitigation?

1.  In circumstances where internal investigations reveal that it is likely that the allegations of harassment are true, we suggest issuing an immediate apology to the complainant in relation to those allegations (and in extreme circumstances consider paying some money as compensation to the victim).

2.  If an individual brings a claim, give serious consideration also to conceding liability when it is obvious that the allegation is true (however, take legal advice before doing this). Continuing to defend allegations that are indefensible will increase your costs and could lead to the Tribunal finding that the complainant’s injury (either medical and/or to feelings) has been aggravated.  An early apology can improve your prospects of limiting the damage and you will be able to focus on the allegations that are, perhaps, capable of a defence.  A swift apology could limit the complainant’s ability to claim that stress and/or publicity had done fatal damage to his/her career path (especially in a small world like the City of London)  and so prevent such significant loss of earnings claims also.

3.  Further, think carefully what is put to a witness in Tribunal. There was no relevance of Ms Lokhova’s alleged drug habits to the main issues in this case (which was whether or not she had been bullied and harassed).  It is difficult to see how baiting her on the witness stand to try and “prove” that she was a drug addict was going to achieve anything and, in this case, the Bank scored a comprehensive own goal when she conclusively proved that she was not.

4.  Last, give visible consideration to the handling of any employee who is clearly guilty of inappropriate behaviours. It did not take the Tribunal decision to show the Bank that Mr Longmuir’s conduct should be regarded as unacceptable.  If an employer in those circumstances takes the decision not to act against an employee (for example because he/she is a real money-spinner or related to someone in senior management or a major client) then that is a judgment it is entitled to make but only once it has weighed that option against the additional compensation the harassed individual is likely to receive as a result.  A really scorching final warning would now seem to have been a better compromise.

5.  If there is a pay-off, make it as small as possible!

ARTICLE BY

Louise Martin
Squire Patton Boggs (US) LLP

United Kingdom: A Reminder About Careful Drafting of Confidentiality Clauses for Shareholders

Katten Muchin Law Firm

The recent decision by the High Court of England and Wales (Chancery Division) in Richmond Pharmacology Limited (Company) v. Chester Overseas Limited, et al. underscores the need to carefully draft confidentiality clauses and to incorporate specific exceptions where these exceptions are reasonably foreseeable in the future. The case involved a shareholders agreement which contained a standard confidentiality clause requiring the parties to treat as strictly confidential all commercially sensitive information concerning the company subject to certain prescribed exceptions. One of the exceptions allowed disclosure to a professional advisor provided that the advisor agrees to be bound by a similar confidentiality obligation. Unsurprisingly, however, there was no specific exception allowing disclosures to a potential third-party buyer. Under the terms of the clause as drafted, the shareholder was required to obtain consent to make the disclosures. 

Over time Chester Overseas Limited decided to sell its shares and engaged a corporate finance advisor (Advisor) to assist in facilitating the sale. After the initial discussions regarding a management buy-out fell through, the Advisor sought to generate interest from third parties. In doing so, the Advisor took care to obtain nondisclosure agreements from certain of these potential buyers prior to disclosing the sensitive information. 

In its decision, the High Court stated that while the shareholder was entitled to disclose the information to its Advisor pursuant to the professional advisor exception, it was not authorized to disclose the confidential information to third parties.   

While the High Court’s decision regarding the confidentiality clause may not come as a surprise, it does reinforce the need to carefully consider a client’s position in future transactions governed under English law.   

The High Court’s decision is available here.

ARTICLE BY

Neil Robson
 
OF 
Katten Muchin Rosenman LLP