UPDATE: The European Commission sound a retreat on boardroom gender diversity

Following on from my blog ‘Women's Rights Storm the Rickety Workplace Citadel’, the European Commission have succumbed to pressure from Member States, most notably the United Kingdom, and altered initial plans to force a mandatory quota for gender balance in the boardroom.

 A draft Directive setting a quota for boardroom gender balance and rumoured to introduce Draconian penalties for non-compliant companies, was due to be published in October 2012 but after much furore the debate was extended into November 2012. The Commission have now published a much amended draft Directive, which proposes an objective for all EU listed companies to have 40% representation of the ‘under-represented sex’ on each board by non-executive directors (‘NEDs’), by 1 January 2020 or 1 January 2018 for companies predominantly owned or influenced by public bodies.

The Directive requires companies to put into place recruitment measures which give preference to female candidates, but only if they hold the same qualifications and credentials as male candidates. In addition, companies that are caught by the Directive must report to their relevant national authorities and print on their website details of the gender ratio on their boards. If they fail to meet the quota they must explain to the authorities why this is the case and also outline which measures they have adopted to remedy the situation.

Interestingly, the new Directive is relatively toothless as sanctions will only be enforced upon those companies that fail to introduce the necessary recruitment measures or fail to adhere to reporting requirements, which also include publishing quota gender targets for NEDs.

However, the measures only relate to companies which are incorporated in a Member State and have securities listed for trading on a regulated market in a Member State. The Directive does not apply to SME’s, which are those companies that employ less than 250 people and have an annual turnover of less than €50 million.

The Directive is currently passing through the EU legislative process after which time each Member State will have two years to implement the new legislation into national law.

There is no doubt that this is a step in the right direction regarding the long battle for boardroom gender equality, however, it serves as a mere pyrrhic victory with the final foray to be decided when companies are ‘forced’ to adopt the measures in 2020.

LinkedIn or Locked-Out? Employment Law Implications of LinkedIn

The recent decision of the Employment Tribunal in Flexman v BG Group (unreported) has once again placed the popular professional networking site LinkedIn in the spotlight in relation to employment law.

The case concerns John Flexman, an HR Manager on £68,000 a year who claimed constructive dismissal against his employer, the gas exploration company BG Group. BG Group had contacted Flexman while he was on holiday to order him to remove any mention of the company on his LinkedIn profile, apart from the dates that he had worked there.

The company claimed that Flexman had contravened their Social Media policies by uploading his CV onto LinkedIn. BG Group further claimed that by selecting the 'career opportunities' tick-box on his LinkedIn profile he had also breached their policies. Finally, the company accused Flexman of compromising their confidentiality by mentioning in his online CV that he was aiding the company in reducing their 'attrition rate'.

This fallout led to an internal disciplinary investigation and a subsequent hearing against Flexman in April 2011, where he was informed that he was at risk of dismissal. Relations degenerated so badly from this point onwards that Flexman resigned in June 2011, claiming constructive unfair dismissal against BG Group. This is the first instance in the UK of an employee being dismissed due to LinkedIn (although there have been a number of dismissals and subsequent court cases concerning employee use of Facebook).

The Employment Tribunal have recently held (after the case going part heard in February 2012) that Flexman was correct in resigning and claiming constructive unfair dismissal as BG Group were guilty of a 'serious breach' of contract. The company's breach was due to their unacceptable delay in dealing with the case and, secondly, their failure to address a grievance raised by Flexman that was linked to the incident (whereby Flexman demanded, among other things, to know the identity of the Judas who had alerted the company to his LinkedIn profile).

There is already precedent for legal action in the UK regarding LinkedIn and employment. In Hays Specialist Recruitment (Holdings) Ltd v Ions [2008] IRLR 904, an employer successfully secured an injunction to force an employee to give them his LinkedIn password so that they could remove confidential information that he has uploaded to his profile from a work database. Interestingly, contacts that the employee had made on LinkedIn while he worked at the company were held to be his property rather than the employers. This was despite these contacts being garnered 'in the course of employment', which is the usual legal test when considering who owns employee work that is created as part of their job.

Co-incidentally, a test case regarding an employees's use of LinkedIn is about to be heard in the US and its outcome may well influence future decisions in the UK. The case concerns an employee who operated a LinkedIn account, partly in her spare time and partly in the course of employment. When she left the company her employer blocked her LinkedIn account claiming that it was their property. Watch this space for an update when this case is decided, after which the legal landscape should be somewhat clearer regarding who owns an employee's LinkedIn content, when some of such content was created in a work capacity.

LinkedIn now has over 100 million users worldwide and claims to have two new joiners every second. It has a global reach that is vital for the marketing efforts of companies and equally important to the career progression of employees. Employees need to be mindful of any company Social Media policies that they may fall foul of during their employment when utilising the site. They must also guard against breaching gardening leave restrictive covenants in compromise agreements by prematurely announcing on LinkedIn that they have either, ceased working somewhere or, are about to work somewhere else.

Conversely, employers must ensure they have Social Media policies to cover LinkedIn and protect their reputations as well as stop possible leaks of unwanted news concerning new and departing employees. Regarding compromise agreements when employees leave, the current thinking in employment law circles is that non-compete clauses are vital as non-solicit clauses will be almost impossible to police and enforce when it comes to LinkedIn. After all, work friendships are also formed and maintained via LinkedIn and what information is disclosed at little Jonny's first birthday party over a glass of Champers between former workmates cannot be guarded against, nor should it.

What is certain is that LinkedIn along with other Social Media sites, through their ubiquitous reach and ability to forge or flounder reputations, have ironically penetrated even the private contractual relationships between employer and employee. Employers fail to now have a Social Media policy at their own peril!

Women's Rights Storm the Rickety Workplace Citadel

The long fight for equality in the workplace has taken a significant step forward with a recent Supreme Court judgment extending the time-limit for equal pay claims and the European Union's announcement of an increased mandatory quota for the number of women directors who must sit on company boards, to be debated in November 2012.

The Supreme Court judgment relates to 174 former Birmingham City Council female workers who were employed in traditionally female roles such as cleaners, care staff and cooks. Their equal pay claim arose as men in equivalent roles, such as road workers, street cleaners and refuse collectors were given consistent bonuses of up to £15,000, despite them being on the same salary as their lady counter-parts.

Birmingham City Council appealed all the way up to the Supreme Court, arguing that the former employees should have lodged their claims with an Employment Tribunal within 6 months of the termination of their employment, as is the current legal standing under section 129(3) of the Equality Act 2010.

The Supreme Court rejected their rationale and has opened the door for all equal pay claims to be heard in the civil courts, which have a 6 year time-limit in which to bring a claim. This is a substantial increase on the previous 6 month time-limit in the Employment Tribunal. Fortuitously, it also offers the remedy of higher damages which are uncapped in the High Court, unlike in their Tribunal cousin.

While this is clearly a decision in the interests of justice and gender equality, it poses possible problems for employers. For example, if a former employee with a valid claim makes a late claim 5 or 6 years down the line, it may be difficult for employers to obtain the relevant records, which are often destroyed after a few years. This could in turn affect any negotiating power they may have and cost them more in settlement or damages. It will also effect forward planning in terms of having a company budget for prospective litigation, as well as the extra costs of retaining and storing staff records for 6 years. The worst case scenario for employers could be a tsunami of retrospective claims which could seriously de-rail smaller companies' finances and even lead to staff lay-offs, which would certainly be darkly ironic.

In a related development, following on from Lord Davies report 'Women on Boards' published in February 2012, which recommended that FTSE companies should aim to have 25% of their boards composed of women by 2015, the rightful furore has reached the hallowed halls of the European Union.

The EU has proposed a Directive that would make it mandatory for Members States to ensure that 40% of all boardrooms are composed of female directors, with eye-watering sanctions for those who do not comply. This has been inspired in part by similar national laws in various Scandinavian countries, such as Norway, who have gallantly led the troops in the battle for all-encompassing gender equality in western society.

However, there has been substantial resistance, including from the UK, with many arguing that the measure will be too expensive and difficult to enforce for some less sophisticated Member States. Moreover, some female commentators have pointed out that the quotas do not address the real issue, which is often loss of female talent due to glass ceilings or family commitments. Thus, the real challenge may lie in employers removing barriers or offering more flexible working alternatives.

This resistance has led to the EU announcing that it is to postpone the vote on the Directive, which was mooted to take place in October 2012, and has extended the time for the enlivened debate to be heard in November 2012. Either way, this small delay does not represent a fatal re-routing of the path to the New World that awaits.

The Suffragettes would certainly be proud of the recent progress in equality of the sexes in the workplace, however, as with all movements for justified change, the cultures of old will need to be shaken and new thought given by employers to how this changed landscape will flourish for all, as it surely should.

Shares for Employment Rights. A Poisoned Chalice?

George Osbourne has skaken-up employment law by proposing shares be given to employees joining a new company in exchange for some of their entrenched and hard-earned employment rights. Is this a trap for naive but desperate-for-work employees or a progressive and innovative opportunity for the average Joe to gain a job as well as some corporate equity to boot?

The logic behind this move is to encourage businesses to employ more people, and thus help kick-start the economy, without the always-looming threat of redundancy payouts or employees making expensive and time-consuming claims for unfair dismissal. The carrot of tax-free shares in the company in exchange for foregoing such employment rights is deemed to be an attractive package for the forlorn job-seeker.

A general employment law shake-up is one of the Coalition's mantras and last week's proposal has been preceded by other significant changes, such as the period of continuous employment needed to bring an unfair dismissal claim in an employment tribunal being extended from 1 year's service to two year's service, as of employment post April 2012. Again this is a measure to protect employers and supposedly fuel recruitment.

While the new government's efforts to drag the country out of its economic pit are admirable, is this all at the expense of the employee? Shouldn't rights that underpin modern society be galvanised and consolidated rather than sold-off for tempting packages?

Certain potential problems do seem to emerge when the proposal is placed under the microscope. While Osbourne has effused that this mechanism would be attractive to big businesses, surely this could create problems with their current shareholders, who may, for example, choose to vote against the proposals and thus scupper any majority needed to alter the company's Articles of Association or Shareholder Agreements. Such shareholders may also be none too pleased at the potential dilution of their shareholder rights and share value.

It is also probable that shares offered to new employees could be defunct of any voting rights and furthermore be almost impossible to realise financially. This could especially be the case for small businesses if the powers that be decide to not release dividends due to a 'poor' quarter or refuse to accept acquisition offers which would increase share value. Some companies may also never grow large enough to float on a stock exchange nor generate enough profit to make such employee shareholding significant in terms of monetary value.

In reality, such shares may amount to less money than could be available for statutory redundancy pay or an award in an unfair dismissal claim. The government has said that the value of such shares via the new scheme could be between £2,000 and £50,000. Considering awards in an Employment Tribunal for unfair dismissal claims can be up to almost £80,000, such an offer may actually benefit the employer more than the employee.

Even the CGT tax break on the employee relieving themselves of such shares may be a pyrrhic victory of sorts, as if the shareholding is meagre such disposals would fall within the nil-rate band anyway, thus being a phantom benefit masquerading as a benefit already automatically acquired!

Osbourne's Marx-esque rallying cry of  'workers of the world unite', although intended to benefit employees (likely those employees who can negotiate a good shareholding in a solid corporate outfit with prospects), may turn out to be the damp squib that some commentators have predicted. Indeed, the Confederation of British Industry has described the move as 'a niche idea and not relevant to all businesses'. Just as Marx's socialist ideal hit the buffers when put into practice by the Politburo, let's hope that these new measures do not put too much power into the hands of the employer at the expense of the already long-suffering job seeker.