1. CM Murray LLP: Specialists in Employment and Partnership Law EMPLOYMENT LAW UPDATE SOCIAL MEDIA IN THE LAW FIRM WORKPLACE HR in LAW Susanne Foster, Esther Martin & Clare Murray CM Murray LLP 11 th July 2012

2. CM Murray LLP: Specialists in Employment and Partnership Law Social networking sites :901 million monthly active users at the end of March 2012 : :340 million Tweets per day with 140million + active users :161 million members at the end of March 2012

3. CM Murray LLP: Specialists in Employment and Partnership Law Summary Benefits / Concerns of Social Media Use Recent Case Law Recruitment / Vetting Data Protection Laws Best Practice

4. CM Murray LLP: Specialists in Employment and Partnership Law The Benefits Enables law firm employers to find different ways to approach the recruitment and selection of associates (NB: Generation Y employees) Allows employees to business network and build professional relationships Law Firm clients are increasingly using such media which may result in an increasing expectation that their law firms do the same (NB: Law Society Practice Note) Provides an instantaneous, responsive and different method of communication internally and externally Enables the sharing of knowledge, research and articles within online communities (particularly important in law i.e. a knowledge based business)

5. CM Murray LLP: Specialists in Employment and Partnership Law The (Potential) Key Concerns Damage to client relationships / Firm reputation Breach of Contract / Confidentiality Issues / SRA Code of Conduct Cyber-bullying e.g. bullying, harassment etc Discrimination Claims Unfair Dismissal: –Privacy concerns under the Human Rights Act 1998: Article 8 (right to private and family life, home and correspondence) Article 9 (right to freedom of thought, conscience and religion/to manifest his religion or belief) Article 10 (right to freedom of expression) –Qualified rights: Justified; in accordance with law; necessary etc Breaches of Data Protection Act

6. CM Murray LLP: Specialists in Employment and Partnership Law Key Risk: Damage to client relationships and Firm reputation Preece -v- JD Wetherspoons plc, ET (2010) –Pub manager made inappropriate comments on FB about customers (whilst she was on duty): Fellow Employee 2:“are they barred now – D” Friend / Customer: “can’t believe you barred all those dear old nice people...” Miss Preece:“ha ha just has a phone call from the daughter callin me a snide b**** lol” Fellow Employee 1:“ha ha ha, that’s well funny!! She is right though... Shame on you picking on the old ladies ha ha ha!!” Miss Preece:“can u f..c of each plz lol” Fellow Employee 1:“only messin’ bout time some 1 told the moanin old hag lol”! X” Miss Preece:“fu...in hag!!!!!! Hope her hip breaks” Fellow Employee 3:“why does fun stuff happen the one night I am not working!” What happened?” Miss Preece:“Sandra an Brian barred ha ha ha!”

7. CM Murray LLP: Specialists in Employment and Partnership Law Key Risk: Damage to client relationships and Firm reputation Preece -v- JD Wetherspoons plc, ET (2010) –ET claim for unfair dismissal (not upheld) –Employer had email, internet and intranet policy which referred to employee use of sites such as FB and Miss Preece was aware that her actions were in breach of that policy –Miss Preece’s activities were in the public domain –Miss Preece’s mitigation argument that using FB to vent anger and upset at incidents at work not upheld (ET considered entries were more of a joke between friends; discourse took place over period of time; ‘hotline’ available to Miss Preece) –ET considered a final written warning may have been more appropriate (cannot substitute view)

8. CM Murray LLP: Specialists in Employment and Partnership Law Key Risk: Damage to client relationships and Firm reputation Whitham v Club 24 Ltd t/a Ventura, ET (2010) –ET claim for unfair dismissal (upheld) –Mrs Whitham, posted the following comments (outside of working hours): Mrs Whitham: “I think I work in a nursery and I do not mean working with plants” Team Member: “Don’t worry, takes a lot for the b******* to grind me down. LOL” Former Team Member:“Ya, work with a lot of planks though!!! LOL” Mrs Whitham: “2 true xx” –Mrs Whitham was suspended and a disciplined –Dismissal for a relatively mild comment on FB fell outside the band of reasonable responses –Comments on FB did not refer to a client nor was there any evidence of any actual or likely harm to the relationship –Relevant policy documents only sought to prevent disclosure of confidential information on such sites –ET took into account of Mrs Whitham’s exemplary record and mitigating factors to do with health and personal circumstances

9. CM Murray LLP: Specialists in Employment and Partnership Law Key Risk: Damage to client relationships and Firm reputation Crisp – v- Apple Retail (UK) Ltd (2011) –Claimant, posted number of FB posts e.g. “Mobile Me f***** up my timezone for the third in a week and woke me up at 3am? JOY!!” and “Apple!! “shakes fist”” –Employee suspended and disciplined –Mr Crisp argued FB page was private and was unrepentant in disciplinary hearing –Dismissed for gross misconduct for bringing Apple into disrepute; posts attacked Apple’s core value of protecting its image

10. CM Murray LLP: Specialists in Employment and Partnership Law Key Risk: Damage to client relationships and Firm reputation ET claim for unfair dismissal (not upheld): –Training received on posting comments re Apple could amount to misconduct –Policy documents referred to speaking favourably and contained relevant guidelines –Importance of image to Apple entitled them to treat this as gross misconduct –Mr Crisp responded to questions by stating “no comment” – no help to Apple in understanding mitigating reasons –Article 8 - Mr Crisp had no control over how his comments might be copied and passed on to others. Even if article engaged use of FB information by Apple was justified and proportionate to protect its own reputation –Article 9 – Type of comments made not important to free expression and damaging to Apple’s reputation, therefore Apple could limit right

11. CM Murray LLP: Specialists in Employment and Partnership Law Key Risk: Harassment Teggart v TeleTech UK Limited NIIT 00704/11 Mr Teggart posted obscene comments on FB (at home, on his own PC, in own time) about the promiscuity of a female colleague mentioning the name of his employer A person claiming to be a member of the public reported the comments Mr Teggart was dismissed for gross misconduct on grounds that he made offensive comments which breached the Company code of conduct and the comments brought company into disrepute NI Industrial Tribunal dismissed claim of unfair dismissal

12. CM Murray LLP: Specialists in Employment and Partnership Law Key Risk: Harassment Teggart v TeleTech UK Limited NIIT 00704/11 –Decision to find Mr Teggart guilty of having brought the company into disrepute was “seriously flawed” (little evidence on this) –Comments satisfied the definition of harassment in the Company’s dignity at work policy; this was sufficient to justify dismissal of claimant –Articles 8, 9 and 10 of HRA not engaged Article 8 – posting of comments on FB, Mr Teggart abandoned any right to consider his comments private Article 9 – “belief” does not extend to a comment about the promiscuity of another person (refers to a philosophy, set of values etc) Article 10 - must be exercised in a way that is necessary for the protection of the reputation and rights of others

13. CM Murray LLP: Specialists in Employment and Partnership Law Key Risk: Breaches of confidentiality Hays Specialist Recruitment (Holdings) Ltd and anor v Ions and anor (High Court, 2008) –Court did suggest that the transfer of information concerning clients and applicants to Mr Ions LinkedIn Network whilst still employed by Hays may amount to breach of duties as an employee –Highlights risk for businesses of confidential information being uploaded to social networking sites Consider employee’s: –Express confidentiality covenants –Implied duty of confidentiality (protection both during and after employment) –Obligations under Code of Conduct 2011 (Chapter 4 – Confidentiality & Disclosure)

14. CM Murray LLP: Specialists in Employment and Partnership Law Other possible risks Other possible areas to consider (not exhaustive): Libel Time Wasting Personal injury claims Intellectual Property Issues False Advertising Insider trading and market abuse Agency law concerns Criminal law

15. CM Murray LLP: Specialists in Employment and Partnership Law Case Law Summary Nature of the comments made: are they minor comments? do they genuinely damage firm / reputation / client relationships? Do not take a disproportionate view Is there a social media policy (or other policy) in place and has this been breached? What is the specific wording of any such policy / Can it be used as ground for disciplining / dismissal? Has the employee received the policy and any training on it? Full and proper investigation – statements for affected employees / third parties (if relevant). Remember ACAS Code Consider: Individual’s disciplinary record Circumstances at the time Individual’s health and personal circumstances Any mitigating circumstances Articles 8,9 and 10 – employees may struggle with this line of argument

16. CM Murray LLP: Specialists in Employment and Partnership Law Recruitment and Vetting Checking on-line profiles: whilst not unlawful, not good practice Details re candidate’s ethnic background, age, sexual orientation etc. should be part of separate monitoring process Shoulder-surfing (NB: Certain US states legislating against such a practice) Possible discrimination claims HRA concerns Data protection concerns – ‘vetting’

17. CM Murray LLP: Specialists in Employment and Partnership Law Data Protection Laws DPA Code confirms: –Only personal information should be sought that is relevant to the recruitment decision to be made; and –It should be clearly stated to applicants the nature of and sources from which information might be obtained about the applicant Candidate should be allowed to make representations regarding information that will affect the decision to finally appoint DPA does not prevent monitoring Carry out an ‘impact assessment’ to decide if and how to carry out monitoring

18. CM Murray LLP: Specialists in Employment and Partnership Law Best Practice - Law Society Guidance Law Society guidance (issued December 2011): http://www.lawsociety.org.uk/productsandservices/practicenotes/socialmedia/5049.article No requirement to follow but sets out standard of good practice for solicitors / firms to follow which will make it easier to account to SRA for actions. Same ethical obligations apply to professional conduct in an online environment Principle 2 (Integrity), Principle 3 (Independence), Principle 6 (Public Trust) SRA Code of Conduct : Client Care, Confidentiality & Disclosure, Publicity and Relations with third parties Consider putting in place a social media policy (although does state that for smaller practices this may not be necessary but consider electing one individual for overseeing social media activity) Suggests points to include in your social media policy

19. CM Murray LLP: Specialists in Employment and Partnership Law Best Practice - Practical Considerations Consider Firm approach to social media: embrace -v- discourage? (ban altogether? reasonable use?) Properly drafted social media policy or email / internet policy (ACAS also recommend - http://www.acas.org.uk/index.aspx?articleid=3381) :- http://www.acas.org.uk/index.aspx?articleid=3381 ACAS recommends consulting with employees when putting together such a policy Clearly explain the possible legal risks associated with social networking in the work place Guidelines for employees for acceptable behaviour and examples of what may be deemed inappropriate Clear guidance on the protection of a company’s confidential information when using social networking sites and also confidentiality and privacy of third party information Link to related policies e.g. confidentiality, anti-harassment and bullying, data protection etc and update those policies if relevant (e.g. cyber-bullying) Consequences of breach i.e. grounds to discipline or dismiss for gross misconduct Compliance with SRA Handbook & Code of Conduct 2011 NB: Rapidly changing area – policy will need to be updated on regular basis to keep apace with changes

20. CM Murray LLP: Specialists in Employment and Partnership Law Best Practice - Practical Considerations Effectively communicate policy with staff indicating agreement ideally by signing acknowledgment Training – use the first few weeks of employment to establish acceptable standards of behaviour with regard to social media Recruitment: ACAS recommends you use at least 2 different recruitment methods in any event. Bear in mind exclusion: 10 million people in the UK have never used the internet. Be cautious if using social networking sites to vet potential candidates If using as part of recruitment process, allow prospective candidate to comment on findings Disclaimer Sample principles / policies available online: Coca-Cola, HP, Intel, Volvo etc

21. CM Murray LLP: Specialists in Employment and Partnership Law UPDATE: EMPLOYMENT LEGISLATION HR in LAW Esther Martin esther.martin@cm-murray.com @MsEstherMartin

22. CM Murray LLP: Specialists in Employment and Partnership Law Recent Developments April 2012 Unfair Dismissal: Two year qualifying period Tribunal Procedures:Judges to sit alone Maximum Costs Awards and Deposit orders increase Witness expenses Statutory awards:SSP, SMP, SPP etc. increased July 2012 Pensions: Auto-enrolment begins

23. CM Murray LLP: Specialists in Employment and Partnership Law Future Developments Enterprise and Reform Bill 2012-13: –Protected conversations –Settlement agreements –Mandatory pre-claim conciliation –Whistleblowing legislation amended –Financial penalties for employers –Legal Officers –Unfair dismissal compensatory awards

24. CM Murray LLP: Specialists in Employment and Partnership Law Future Developments Published Consultations: - Discrimination Questionnaires -Tribunal Recommendations -Third Party Harassment provisions (Equality Act 2010) -Collective Redundancy Rules -Modern Workplaces

25. CM Murray LLP: Specialists in Employment and Partnership Law Future Developments Parental leave (increase to 4 months) by March 2013 Flexible working for all employees by 2015 Fees introduced for employment tribunal claims by December 2013

26. CM Murray LLP: Specialists in Employment and Partnership Law New SRA Requirement for Law Firms Diversity Data Collection Principle 9, SRA Handbook: “You must…run your business or carry out your role in the business in a way that encourages equality of opportunity and respect for diversity” Law firms now required to report diversity statistics to the SRA annually From 2013 statistics must be published

27. CM Murray LLP: Specialists in Employment and Partnership Law PARTNER, EMPLOYEE, OTHER HR in LAW Clare Murray Clare.murray@cm-murray.com @ClareMary

28. CM Murray LLP: Specialists in Employment and Partnership Law Statutory Maternity Leave & Pay Unfair Dismissal Discrimination Protections TUPE Rights Spot The Odd One Out

29. CM Murray LLP: Specialists in Employment and Partnership Law Mezzanine Partner Salaried Partner Fixed Share Partner Junior Equity Partner Spot The Odd One Out

30. CM Murray LLP: Specialists in Employment and Partnership Law Nicole Kidman Mimi Rogers Penelope Cruz Spot The Odd One Out Katie Holmes

31. CM Murray LLP: Specialists in Employment and Partnership Law Why status is important A Fixed Share Partner (FS Partner) may have employment rights A formal consultation process may need to be followed to exit an FS Partner for conduct, performance or redundancy reasons An FSP’s complaint may need to be dealt with as a grievance Restrictive covenants more likely to be enforceable against genuine partners than employees Ensure FS Partners are correctly assessed for tax and NI Exiting Partners may raise it to improve their negotiating position

32. CM Murray LLP: Specialists in Employment and Partnership Law Statutory rights available only to Employees (not Partners): Unfair dismissal Statutory Redundancy Payment Collective Redundancy Consultation Rights TUPE protections Statutory Maternity & Paternity Leave & Pay Statutory Minimum Notice of Termination Written reasons for dismissal Continuity of Service (And others)

33. CM Murray LLP: Specialists in Employment and Partnership Law Who is an Employee? s.230 Employment Rights Act 1996: “..an individual who has entered into or works under.. a contract of employment” “..contract of employment means a contract of service..whether express or implied..oral or in writing”

34. CM Murray LLP: Specialists in Employment and Partnership Law Who is an Employee? A contract of service will exist if 3 basic conditions are fulfilled: The individual agrees to provide own work and skill in performing a service, in return for pay; Agrees to be subject to employer’s control to a degree sufficient to make employer the master: (control inc. what is to be done, how, where & when); and The other provisions of the contract are consistent with a contract of service

35. CM Murray LLP: Specialists in Employment and Partnership Law Who is an Employee? Autoclenz v Belcher and others [2011] Car valets working under label of being self-employed; Key points included: –Written terms stating that they were self-employed not sufficient – they did not reflect reality –Look at the whole relationship and not solely documentation –What are the parties’ actual legal obligations? Tribunal found sufficient control to be employees Tribunal could disregard terms suggesting self-employed if they did not reflect actual obligations in reality

36. CM Murray LLP: Specialists in Employment and Partnership Law Partner, Employee, Other? Starting point to identify a genuine partner: s.1 Partnership Act 1890: “Partnership is the relation which subsists between persons carrying on a business in common with a view of profit” s.1(3) PA 1890: “The receipt...of a share of the profits of the business is prima facie evidence that he is a partner in the business but..does not of itself make him a partner in the business..

37. CM Murray LLP: Specialists in Employment and Partnership Law Range of Factors “..impossible to say …. a salaried partner is or is not necessarily a partner in the true sense. He may or may not be a partner depending on the facts….” “What must be done is to look at the substance of the relationship between the parties … and not..any mere label attached to that relationship.” “One must in every case look at the terms of the relationship to ascertain whether or not it creates a true partnership” Stekel v Ellice [1973] Megarry J

38. CM Murray LLP: Specialists in Employment and Partnership Law Range of Factors Sharing in profits and losses Sharing in liabilities Capital Investment Participation in management Ability to hire, fire & sign cheques Participation in surplus assets on winding up of the Firm Held out as a partner, inc name on firm notepaper Guaranteed pay Indemnity against liabilities from Partners No capital requirement Subject to control No such rights No participation Not held out V.

39. CM Murray LLP: Specialists in Employment and Partnership Law Range of Factors Critical question – did they intend to create a partnership rather than another relationship? All features of the agreement have to be considered to establish that intention The absence of profit sharing, capital or dominant management rights does not undermine or negate other evidence of partnership

40. CM Murray LLP: Specialists in Employment and Partnership Law Status of LLP Members? A Member of an LLP can be an employee of it S 4(4) Limited Liability Partnership Act 2000 “A member of a limited liability partnership shall not be regarded for any purpose as employed by the limited liability partnership unless, if he and the other members were partners in a partnership, he would be regarded for that purpose as employed by the partnership” On the facts, would he have been regarded as a partner? If not, on the facts would he have been an employee? (NB just because he’s not a partner, doesn’t mean he’s automatically an employee)

41. CM Murray LLP: Specialists in Employment and Partnership Law Tiffin v Lester Aldridge LLP (2012) Solicitor employed by LA as an associate Promoted to salaried partner Appointed to fixed share partner as a stepping stone to equity Fixed profit share, plus 5 profit share points Capital contribution of £5,000 Signatory to bank accounts Issued with P45 Tax and NI as self-employed Signed Members Agreement on LLP conversion Entitled to participate in the surplus assets on winding up of the firm in proportion to his capital Certain voting rights, though not on all matters

42. CM Murray LLP: Specialists in Employment and Partnership Law Tiffin v Lester Aldridge LLP (2012) Was served notice by the partnership Claim to ET for unfair dismissal, breach of contract and Redundancy: rejected – he was a partner, not an employee Appealed to EAT arguing he was in reality an employee He was not involved in management of the firm as FS Partners’ voting rights were “minimal” His share of profits and capital were too small The ET decision placed too much weight on labels rather than reality

43. CM Murray LLP: Specialists in Employment and Partnership Law Tiffin v Lester Aldridge LLP (2012) EAT: There is no certain minimum number or types of rights to vote or to participate in management decisions to qualify as a partner “..in many large professional partnerships, all but a few of the partners have any right to participate in the overwhelming range of decisions made by the firm and yet they are clearly partners”

44. CM Murray LLP: Specialists in Employment and Partnership Law Tiffin v Lester Aldridge LLP (2012) Court of Appeal: Members’ Agreement reflected the parties’ intention to set up a partnership No suggestion by Tiffin that Members’ Agreement was a sham No minimum threshold requirement for managerial involvement or profit share He did have a real voice in the firm’s management by his (more limited) voting rights Tiffin contributed to the capital, took a profit share and had a voice in management He participated in surplus assets on a winding up Held: Appeal rejected - he was a Partner

45. CM Murray LLP: Specialists in Employment and Partnership Law Partner, Employee, Other? No 1 CIO in investment management firm Fixed profit share, paid gross in 12 mthly instalments No Capital 6 months notice to retire Paid sick and holiday time Share options with 3 year vesting Could sign bank mandate & hire staff New members agreement gave him – 1/11 th share in profits and 1/11 th in sale proceeds on disposal of the firm

46. CM Murray LLP: Specialists in Employment and Partnership Law Partner, Employee, Other? Held: Partner The parties intended it to be a partnership & acted consistently with the Partnership Agreement He never suggested he was an employee or that partnership agreement was a sham until termination by the firm He had considerable autonomy No capital but had financial risk & received sweat equity Kovats v TFO Management (2009)

47. CM Murray LLP: Specialists in Employment and Partnership Law Partner, Employee, Other? No 2 Employee of law firm became salaried partner, then agreed new partnership arrangements for him Guaranteed profit share with a 1/18 th share in net profits No capital Paid tax and NI on self-employed basis Contractual obligations of full time & attending, perform assigned duties and comply with reasonable requests Held out as a partner in the firm Offered a compromise agreement on exit

48. CM Murray LLP: Specialists in Employment and Partnership Law Partner, Employee, Other? Held: Employee Tribunal decided as a matter of fact that the new arrangements had not changed the fundamental nature of the previous relationship; only his remuneration had changed He was not regarded as being part of the Partner hierarchy No risk of losses of the firm Parties conducted themselves as if he were an employee Williamson & Soden v Briars (EAT) (2011)

49. CM Murray LLP: Specialists in Employment and Partnership Law Key Practical Points to Remember Consider – do we intend appointment to be as a partner? Clearly document the relationship you intend to be in effect Written terms not necessarily determinative - court will look at the whole picture and the reality of the relationship Check written documentation is an accurate reflection of the relationship, otherwise it runs the risk of being held to be a sham When determining partner/employee status, certain key indicators will need to be present – try to satisfy as fully as possible Take tax advice (or risk being held to ransom) If there is doubt about whether an individual is an employee, be cautious and follow objective and fully documented selection and consultation processes before expulsion

50. CM Murray LLP: Specialists in Employment and Partnership Law Key Practical Points to Remember Remember: Partners are covered by discrimination protections LLP Members are covered by Whistleblowing protections (Bates Van Winkelhof v Clyde & Co)

51. CM Murray LLP: Specialists in Employment and Partnership Law Clare Murray, Susanne Foster and Esther Martin CM Murray LLP 37 th Floor Canary Wharf, London, E14 5AA England DD:0207 718 0090 FAX:0207 718 0091 E: clare.murray@cm-murray.comclare.murray@cm-murray.com E: susanne.foster@cm-murray.comsusanne.foster@cm-murray.com E: esther.martin@cm-murray.com @cmmurrayllp @Susanne_Foster @MsEstherMartin @ClareMary