June 09, 2022

U.K. Employment Law Update: Worker Status, Non-Compete Restrictions and COVID-19 Dismissal

Clarification on Worker Status

In Nursing and Midwifery Council v Somerville [2022] EWCA Civ 229, the Court of Appeal (CoA) considered whether an obligation on the part of a worker to perform a minimum amount of work was a prerequisite for worker status.

Mr. Somerville was appointed by the Nursing Midwifery Council (NMC) as a member and chair of its Fitness to Practice Committee. Under the terms of the contracts appointing him, Mr. Somerville had the status of an independent contractor, the NMC was not obliged to offer him work, and he was not obliged to accept any work offered to him. He brought a claim for holiday pay on the basis that he was a worker.

The CoA held that Mr. Somerville was a worker on the basis that he was required to perform personally any work that he accepted and the NMC was not a client or customer of Mr. Somerville’s business.  It was not a prerequisite to a finding of worker status that there should be an obligation to perform a minimum amount of work.

Following the Supreme Court’s decision in Uber BV and others v Aslam and others, this case provides further clarity on the test for worker status. This is an important consideration for employers as workers have certain entitlements, such as to the National Minimum Wage and paid holiday.

Enforceability of 12-Month Non-Compete Restrictions

In Law By Design Ltd v Ali [2022] EWHC 426 (QB), the High Court (HC) considered the enforceability of 12-month non-compete restrictions contained in a service agreement and a shareholders’ agreement.

Ms. Ali was employed as a solicitor by a law firm, Law By Design Ltd (LBD). She entered into a service agreement and a shareholders’ agreement with LBD, both of which contained 12-month post-termination non-compete restrictions. The service agreement prohibited Ms. Ali from competing with those parts of LBD’s business with which she was involved to a material extent in the 12 months prior to her termination. The shareholders’ agreement prohibited her from competing with a business of LBD as operated at any time in the 12 months prior to her termination in a territory in which LBD had operated such business. When Ms. Ali resigned with the intention of joining a competing law firm, LBD applied for an injunction to enforce the restrictions.

The HC upheld the non-compete restriction in the service agreement on the basis that it was no wider than was reasonably necessary to protect LBD’s legitimate business interests. However, the HC found that although the restriction in the shareholders' agreement sought to protect legitimate business interests, it was wider than reasonably necessary to protect those interests and therefore unenforceable. This was because it would prevent Ms. Ali from being involved with any law firm in England and Wales that competed with any part of LBD’s business as operated in the 12 months prior to Ms. Ali’s termination, irrespective of whether or not she had any involvement with that part of the business.

Notably, as the parties to the shareholders' agreement were not involved in a commercial arrangement, the HC refused to assess the restriction in that agreement less stringently than the restriction in the service agreement.

COVID-19 Dismissal

In Rodgers v Leeds Laser Cutting Ltd [2022] EAT 69, the Employment Appeal Tribunal (EAT) considered whether an employee who did not return to work because of concerns over COVID-19 had been automatically unfairly dismissed.

Mr. Rodgers worked in a large warehouse as a laser operator. During the first U.K. COVID-19 lockdown in March 2020, the employer remained open for business. A risk assessment was carried out by external professionals and various safety measures implemented, such as social distancing. This was clearly communicated and discussed with staff. At the end of March 2020, Mr. Rodgers self-isolated at home due to a cough and informed his employer that he had no alternative but to stay off work until the lockdown had eased as his children were vulnerable. Mr. Rodgers was dismissed a month later. Mr. Rodgers asserted that his dismissal was automatically unfair.

The EAT held that, in principle, the pandemic could give rise to circumstances of danger that an employee could reasonably believe to be serious and imminent. However, Mr. Rodgers’ refusal to return to work was not directly linked to his working conditions but was rooted in a general concern about the virus. Mr. Rodgers continued to drive his friend to the hospital during his self-isolation period and worked in a pub during lockdown. Further, Mr. Rodgers could have been expected to take reasonable steps to avoid such danger, such as wearing a mask, observing social distancing within the large warehouse and sanitising his hands. As such, Mr. Rodgers’ dismissal was not automatically unfair.

Although this case concerned a dismissal at the start of the COVID-19 pandemic, employers should continue to ensure that they take reasonable steps to mitigate the risk of COVID-19 in the workplace.

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