UK Employment Law Coffee Break | Non-competes, anxiety and long-term impairments and our latest GDPR newsletter and HR pensions spotlight for May

Non-competes: an update

We reported in our earlier Coffee Break that the government is proposing to introduce legislation "when parliamentary time allows" to cap the duration of non-compete provisions in employment contracts at three months.

The government has now published a response to its earlier consultation on the use of non-competition clauses in employment documentation (which closed at the start of 2021). The formal consultation response confirms that the government:

• will apply this three-month limit to non-compete clauses in contracts of employment and "limb (b)" worker contracts only (the government states in the response that clauses in workers' contracts are unlikely to be enforceable). The cap will not be applied to non-compete clauses in "wider workplace" contracts such as partnership agreements, limited liability partnership agreements and shareholder agreements;
• will not be moving forward with introducing mandatory compensation for the period of a non-compete clause or requiring employers to set out the terms of a non-compete in a separate form given that they are usually contained in an employment contract;
• does not intend to change the existing legal position that employers can unilaterally waive a non-compete.

The response does confirm that the government will be publishing guidance to enhance "transparency" and that the common law principles of enforceability will continue to apply to non-compete clauses that do not exceed three months; that is, the non-compete provision should protect the employer's legitimate business interests and go no further than is necessary to protect those interests.

It is unclear when the government proposes to introduce draft legislation, which will then need to pass through the parliamentary process. Any legislative reform will therefore inevitably be some way off. Non-compete provisions are currently an important contractual term for businesses in some sectors and particularly where businesses are looking to protect their important interests following the departure of senior or highly skilled employees. The government's proposals do not change the current status quo and employers should continue to consider what measures they need to introduce in the employment contract to protect their business in the usual way.

However, the proposals do bring into sharp focus the scrutiny that non-compete and other business protection measures will inevitably face. Real care should be taken in determining what measures are appropriate in the particular circumstances and ensuring that they reflect the current market for the sector in which the business is operating and each individuals working practice and how these would sit with any future reforms. The consultation response also emphasises the importance of keeping any such measures under review to reflect changing circumstances.

If you would like to discuss the impact of the government's proposals on the post-termination provisions for particular employees and directors, please do speak to your usual OC Contact.

EAT considers whether anxiety was 'likely' to be long term for disability discrimination purposes

The Employment Appeal Tribunal (EAT) has provided guidance on whether an impairment, in this case anxiety, was 'likely" to be long term and therefore qualified as a disability for the purposes of the Equality Act 2010.

The claimant brought a disability discrimination in the Employment Tribunal (ET) alleging she had been discriminated against due to her anxiety. Her anxiety was centred on her issue with her workplace and the demands of her job. While the ET accepted that her anxiety was an impairment which had a substantial impact on her ability to carry out normal day-to-day activities, it did not accept that it was long term, which was a necessary requirement to meet the test for disability in the Equality Act 2010. To be long term, an impairment must have lasted or be "likely" to last more than 12 months. The ET found that her anxiety had lasted only a few months before her employment was terminated in September 2019; in light of the fact that her anxiety was centred around her work, the evidence did not suggest her condition was likely to last 12 months. It therefore held that she was not disabled.    

In line with existing EAT authority, the EAT held that the ET had been wrong to find that her anxiety was not likely to last 12 months due to the fact that she had left employment. The question of likelihood (that is, whether it could well happen) that the effect of the impairment would last at least 12 months, or recur at the time, needed to be determined at the time at which the relevant alleged discriminatory decisions were made and which here was before the implementation of the decision to dismiss.

The EAT noted that the threshold for likelihood in determining whether the impairment was likely to last 12 months was "a low one". If there had been no cessation of the effects prior to the termination date the "relevant questions for the tribunal to consider in assessing likelihood would be factors such as if the substantial adverse effect was persisting, when it would have been likely to have ceased and what would have made it cease". The EAT did not have the evidence before it to answer these questions; therefore, the case has been remitted back to the ET. The EAT has noted that there was no rule of law that it is necessary to have medical evidence in any given case and it is a matter of factual assessment for the tribunal on the evidence before it as to whether or not a particular effect is likely to persist.  

What does this mean for employers?

This judgement highlights the difficulties employers face when assessing whether conditions such as anxiety amount to a disability both in determining whether they have a substantial effect on day to day activities and when assessing the likely duration of their impact. Medical evidence, is in most cases, needed to make any informed decision on this; however, given the continued focus on employee wellbeing in the workplace, employers are perhaps best to focus on any measures and adjustments to help an employee continue work or return to work rather than narrowly focusing on only doing so only where there is a disability under the Equality Act.

The question of whether a condition meets the requirements of the Equality Act is of course important when it comes to defending tribunal proceedings – this case reinforces the low threshold for mental health conditions meeting the definition of a disability and, therefore, employers should always err on the side of caution when considering whether the duty to make reasonable adjustments and other protections are triggered.    

It is an undesirable argument to say that termination cuts off the ability for something to amount to a disability as this would enable less scrupulous employers to terminate the employment of those with mental health conditions such as anxiety and stress at an early stage in an attempt to bypass disability discrimination liabilities. With the increased prevalence of mental wellbeing issues at work and lost working days to these associated conditions, employers should focus on measures to support and address any difficulties employees are experiencing through comprehensive strategies supported by policies, training, employee assistance programmes and other measures to create a more supportive and inclusive workplace.  

HR pensions spotlight for May: ED&I, the right to paid time off to perform trustee duties and final call for survey responses 

In our September 2022 HR pensions spotlight, we asked whether employers who had employees who were pension scheme trustees should have a policy on paid time off to perform trustee duties. The Pensions Regulator has now issued guidance for employers on why they should and how they can help to improve equality, diversity and inclusion (ED&I) on the trustee board. This includes a section on the employment protections for trustees and says what the Pensions Regulator expects employers to do in order to make sure that employees who are trustees have enough time to carry out their trustee role. In our Insight, we take a look at the ED&I guidance and suggest actions for employers. The actions include putting in place a policy on paid time off to perform trustee duties.

And, finally, we would be grateful if you could spare a minute to complete our short survey (10 questions and only "yes" or "no" answers required) on how the cost-of-living crisis is affecting your employees. Responses will remain anonymous. You can complete the survey here.

Our latest GDPR for HR newsletter 

Our latest GDPR for HR newsletter this month looks, among other issues, at new guidance on artificial intelligence and data protection from the UK Information Commissioner's Office. If you missed our latest Eating for Compliance webinar focusing on data subject access requests (Tuesday 2 May 2023), you can still access the link to listen to the recording.

If you have any questions arising from our newsletter or webinar, please contact partner, Olivia Sinfield, who heads up our GDPR for HR team.