Monthly Highlights – UK Employment Law – February 2023

This month, our team highlight key takeaways from the Court of Appeal's decision in the Benyatov v Credit Suisse case and explore factors for employers to consider when sending their employees overseas for work. We also take a look at the Employment Appeal Tribunal's (the “EAT”) finding in Ter-Berg v Simply Smile Manor House Ltd and others in relation to written terms and employment status. We outline the new guidance issued by the Competition and Markets Authority on avoiding anti-competitive behaviour for employers and provide an update on the progress of the Employment Relations (Flexible Working) Bill 2022-23.

1. Benyatov v Credit Suisse (Securities) Europe Ltd [2023] EWCA Civ 140: the High Court reaffirmed the Caparo Test:

   The facts:

   • Mr Benyatov (the "Claimant") was a London-based banker working for Credit Suisse (the "Bank") and had been advising on the purchase of a state-owned electricity company in Romania.
   • On 7 January 2007, the Claimant was charged with economic or commercial espionage and the initiation and establishment of an organised criminal group in Romania.
   • The Claimant was found guilty and was initially charged with 10 years in prison; although the Claimant denies any wrongdoing and a thorough investigation by the bank found no wrongdoing. The Claimant has not served his sentence to date.

   • In proceedings brought by the Claimant against the Bank, the Claimant sought to recover loss of earnings due to the conviction; since the conviction, the Claimant has not been able to find the kind of work which could generate anything similar to the amount he earned as a banker. He advanced his claim on two bases:

     1. It was an implied term that the Bank would indemnify him against a loss of this kind suffered; and
     2. The Bank was in breach of a duty to take reasonable care to avoid the risk of him being convicted.

   The High Court's decision:

   The case was initially dismissed in January 2022 by the High Court and that decision was upheld on appeal in February 2023.

   The High Court rejected the Claimant's argument that the employees should be protected from politically motivated prosecutions overseas. The High Court applied the well-known Caparo Test^[1] and held that it was not reasonably foreseeable that the Claimant would be exposed to a conviction in the performance of his duties, therefore, the Bank did not owe a duty of care. There were several factors taken into account to reach the conclusion that the particular duty of care had not been established, namely: (i) that the country at the time was not regarded as high-risk; (ii) the transaction was not regarded as high-risk; (iii) the Bank had not been put on notice for some special need for vigilance; and (iv) there were no circumstances applying specifically to the Claimant which made it inappropriate for him to be appointed in his role. It is, however, important to note that the Judge suggested that 'if it had been a case with radically different facts, there would arise for consideration whether such a novel duty of care could be found.'

   Key takeaway:

   This judgment sheds a light on some of the key factors employers should consider when sending their employees overseas, including: (i) the risk level of the country that the employee is sent to; (ii) the risk profile of the transaction itself; (iii) any red or amber flags raised to put the company on notice to be especially vigilant in certain countries; and (iv) the particular profile of the employee, e.g. their name, origin and experience.

2. Ter-Berg v Simply Smile Manor House Ltd and others [2023] EAT 2: the EAT provided guidance on how to interpret the Supreme Court's judgment in Uber^[2]:

   The facts:

   • Dr Mark Ter-Berg (the “Claimant”) entered into a standard agreement with the Simply Smile Manor House (the “Company”) as an 'Associate' to provide dental services.
   • The agreement contained provisions asserting that nothing in the agreement constituted a partnership or contract of employment.
   • The Claimant was dismissed and consequently brought a claim for unfair dismissal for making a protected disclosure.

   Employment Tribunal findings:

   The Employment Tribunal dismissed the claim on the basis that the Claimant was not an employee. The Claimant appealed and the case was heard at an appeal. The appeal was ultimately allowed as it was found that the Employment Tribunal had erred in its analysis of a clause allowing substitution.

   The EAT's decision:

   The EAT provided interesting analysis on the application of the Supreme Court’s findings in the Uber case, namely, that whilst written contractual terms are not determinative, they are also not irrelevant. The EAT set out the position as follows:

   "In relation to clauses to the effect that a written agreement is not intended to create a relationship of employment or a worker relationship:

   1. As held by the Supreme Court in Uber, such a clause will be void and ineffective if, upon objective consideration of the facts, the tribunal finds that it has as its object the excluding or limiting of the operation of the legislation in question (pursuant to section 203(1) Employment Rights Act 1996 or the equivalent provisions of other legislation);
   2. In any event, if, apart from such a clause, the other facts found by the tribunal point to the conclusion, applying the law to those facts, that the relationship is one of employment or a worker relationship, such a clause cannot affect that legal conclusion; but
   3. If neither (a) nor (b) applies, then, in a marginal case, in which the tribunal finds the clause to be a reflection of the genuine intentions of the parties, it may be taken into account as part of the overall factual matrix when determining the correct legal characterisation of the relationship."

   Key takeaway:

   Employers should continue to draft agreements carefully and accurately. Whilst the courts will continue to look past contractual terms to identify the genuine employment, worker or consultant relationship, the starting point will still often be the contractual provisions in the agreement.

3. The Competition and Markets Authority (the "CMA") issued new guidance for UK employers on avoiding anti-competitive behaviour:

   The Senior Director of Cartels at the CMA indicated that the new guidance stems from concern that employees are struggling with the 'cost of living crisis' in the UK. They noted that anti-competitive behaviour, such as agreements or information sharing, can negatively impact the labour market.

   Employers should take care to read the guidance and seek legal advice to ensure compliance, given that collusion between employers is illegal and the CMA has warned that there would be significant financial and personal consequences for non-compliance.

   For more information, please read our detailed summary of the key terms here.

4. Employment Relations (Flexible Working) Bill 2022-23:

   The Employee Relations (Flexible Working) Bill completed its committee stage on 7 December 2022 and is listed for the remaining stages on 24 February 2023. The Bill would amend the Employment Rights Act 1996 to change Employee rights with respect to flexible working. Information on the proposed changes can be found here.

   Employers should try to stay up to date on flexible working provisions. In the event that the Bill succeeds, employers should seek legal advice to update their policies and agreements in accordance with the new legislation.

For further advice on any of the issues raised above, please contact a member of the London Employment team.