Welcome to this month's briefing for HR teams and in-house employment counsel – bringing you this month’s employment law highlights in an easy-to-read package.

Employment awards and rates

Figures for all sorts of employment data are updated annually. To keep track, we’ve produced a document for you to print out and staple to your desk. It has the new figures for unfair dismissal, injury to feelings, redundancy payments, maternity pay, sick pay, the national minimum wage, and all sorts of other useful bits and pieces.

Fiduciary relationships

Some positions carry such a high degree of trust that the law gives them a special name, and subjects them to special duties. Trustees of a trust, and directors of a company, are the two most common categories of fiduciary, but senior employees can sometimes also be within that category. Fiduciaries owe heightened duties of loyalty – to the beneficiaries of a trust, or to the company – and are not permitted to derive any personal profit unless this has been sanctioned in advance. For company directors, those rules are codified in sections 170-177 of the Companies Act 2006. For trustees, they are found in the common law, usually under titles like the "no conflict" rule and the "no secret profit" rule. For senior employees (and directors), individual contracts of employment also come into play when defining the scope of the relevant duties. 

One of the most important consequences of being a fiduciary is that, if you breach your duty by for instance, diverting a profitable new project from your company and taking it for yourself, you risk having to give over all the profits you make. This account of profits is an alternative to the traditional way of assessing damages, which ties to put the innocent party in the position they would have been in had the breach not occurred, or had the contract been fulfilled. To take an employment example, imagine a group of senior managers who want to set up a competitive firm. They discuss the plan amongst themselves, reach out to junior colleagues to gauge interest, and begin (discreetly) to approach clients. If they are fiduciaries, each of those steps will be a breach of duty so that, when their new venture is wildly successful and the clients they have persuaded to move have increased their spend exponentially, the managers risk having to give away all that profit, even if their old company would never have generated the equivalent.

The Supreme Court has recently reviewed the account of profits rule, with a panel of seven justices rather than the usual five because of the importance of the case. The Court had been invited to change the rule completely, in a way that would have materially reduced the risk to fiduciaries. That invitation was rejected, so the law remains unchanged. Fiduciaries should therefore continue to take great care as to their duties. For more detail on the case, see the article by our Litigation department.

Unfair dismissal

The Court of Appeal has re-emphasised the need for clear disciplinary policies, and for fair process, in the context of unfair dismissal. The facts involved a school inspector who decided to brush some rain off the head of a child during the inspection. The child felt uncomfortable, the school complained, the inspector was summarily dismissed. The Court of Appeal made three important observations.

• It is vital that employees understand what they can and cannot do. While some acts are so obviously prohibited that they do not need to be set out in a disciplinary policy (fighting, theft etc), for other offences the disciplinary policy need to make it clear what an employee might face dismissal for.
• Whether an employee shows remorse or contrition is of marginal relevance, and can only come into play where there is an act of misconduct to begin with.
• Fair process usually requires the employee facing disciplinary allegations to be shown the statements of those accusing them, as part of a wider entitlement to understand the case against them. That is not a universal rule, and there will be occasions where the need for confidentiality or anonymity affects the balance here.

It remains the law that employers have a margin of discretion in disciplinary matters, as reasonable people can reasonably differ as to guilt or the appropriate sanction. Employers should, however, take from this judgment that disciplinary processes need to be full and fair, disciplinary policies need to be clear, and sanctions need to be properly reasoned.