Case Round up

Our resident experts at Pinsent Curtis Biddle bring you a comprehensive
update on all the latest decisions that could affect your organisation, and
advice on what to do about them

Barlow v Borough of Broxbourne, High Court: High Court rejects
damages claim for depression caused by alleged bullying and stress

Barlow claimed damages for psychological injury, which he claimed had been
caused by victimisation and bullying at work, which had led to him suffering a
depressive illness. He also claimed damages for stress. The High Court rejected
both claims.

The High Court ruled that the incidents relied on were not sufficient, when
considered individually or cumulatively, to amount to bullying or
victimisation. Furthermore, the council was not liable for the depressive
illness caused by Barlow. There was nothing in Barlow’s behaviour that had
indicated any risk of psychiatric illness. He had failed to establish that
there was a reasonably foreseeable risk that the conduct complained of would cause
him harm.

Key points

The High Court took a robust view to the allegations of bullying. There was
evidence of Barlow’s manager being angry with him, and using very abusive
language. While the High Court considered it undesirable that senior managers should
resort to abusive language in the workplace, the incidents had be regarded in
context, were not numerous and were due to the manager being exasperated at the
catalogue of errors in the department for which Barlow was responsible. Barlow
was a senior employee and did not appear to be particularly sensitive or upset
by the incidents.

The case also reinforces the fact that in claims for psychiatric illness,
whether due to alleged bullying or for stress, the key issue is whether or not
there is a foreseeable risk of ill health. This is the first ‘threshold’ issue
to be considered. If foreseeability of harm to health is not established, the
claim must fail.

What you should do

– Although this claim was unsuccessful, remember bullying and stress can
give rise to other types of liability, such as constructive dismissal and
discrimination claims. They can also cause low morale, increased staff turnover
and absenteeism

– Implement policies on bullying and harassment. Make it clear that bullying
is a serious disciplinary offence and advise employees on the procedure for
raising complaints

– If complaints are raised, take them seriously – failure to do so can also
amount to constructive dismissal and possibly discrimination

– Train managers in appropriate methods of dealing with poor performance and
other managerial issues, including the proper use of disciplinary, performance
review and other procedures

Albion Automotive v Walker and Others, Court of Appeal: An
important decision on when enhanced redundancy payments become part of the

In six previous redundancy exercises before Walker’s redundancy dismissal,
Albion had made enhanced redundancy payments. When Walker was dismissed, he
received only a statutory redundancy payment. An employment tribunal ruled that
the enhanced redundancy terms were part of Walker’s contract of employment by
virtue of custom and practice. That decision was upheld by the EAT and by the
Court of Appeal.

Key points

The decisive issues, in the Court of Appeal’s view, were that the enhanced
redundancy terms had been applied in previous redundancy situations; had been
put in writing by Albion and shown to the employees; were well known to all
employees; had been applied over a considerable time period to approximately
750 employees; and that all of the Albion employees had a reasonable
expectation that they would also receive the enhanced redundancy terms.

It was also particularly relevant that the company had applied the terms
automatically in later redundancy exercises without further negotiation or
reference to the trade unions, and that statements made by the company in a
newsletter in 1993 – that "the redundancy terms which will apply to these
redundancies are those which are currently in operation" – indicated that
the company intended to be contractually bound by the enhanced redundancy terms

Enhanced redundancy payments are common, particularly in large-scale
redundancy exercises. They often provide an incentive to employees to volunteer
for redundancy and, in the case of compulsory redundancy, can reduce the
incidence of unfair dismissal claims or the value of any claims that are
brought. This case, however, demonstrates that the regular use of the same
enhanced terms creates a substantial risk of the employer being bound to offer
these terms in subsequent redundancy exercises.

What you should do

To avoid enhanced redundancy payments acquiring contractual effect:

– Manage employees’ expectations by making clear that the terms apply to a
specific redundancy exercise or for a specific period, that there is no
commitment to use these terms in any future redundancy exercise and that the
employer has no intention of being contractually bound

– Don’t reduce the terms to writing or make them widely available to employees

– Make a specific decision in each redundancy exercise on the terms that
will apply. Make sure this is documented and shows there is no commitment to
making these terms available in the future

– Consider applying different terms to different redundancy exercises

Hunter Cane Limited v Watkins, Chancery Division: Diverting
business opportunities was breach of director’s fiduciary duties

In October 2002, Watkins resigned from his employment as a director of the
company. When the company examined the computer he returned, it suspected he
had taken clients and business with him, in breach of his fiduciary duties as a

The court ruled that Watkins’ resignation was prompted by his desire to
acquire for himself actual or potential business opportunities from the
company, and that during his employment he had secretly and systematically
abused his position as a director. There was clear evidence that he had sought
to divert the company’s business to himself. The company obtained an injunction
restraining him from dealing commercially with 21 named clients.

Key points

In this case, Watkins had no service agreement with the company. However, as
a director, he was under fiduciary duties and had breached these by seeking to
divert, for his own benefit, business that ought to have gone to the company.
Crucial to the granting of the order was compelling evidence that showed
Watkins had diverted these business opportunities to himself.

What you should do

– Use written service agreements and include appropriate protection against
post-termination competition by employees. The employer here was able to rely
on a breach of fiduciary duty – that argument is only available in the case of
directors and can be difficult to establish. A written contract is the best

– Take legal advice on the appropriate form of the post-termination
covenants. To be enforceable, these should be tailored to the business
interests that the company can legitimately protect and the risk posed by the
employee after termination

– Include covenants preventing dealings with customers or clients after
termination, as well as prohibitions on soliciting or canvassing for business

– Include a garden leave clause as this may provide additional (and more
easily enforceable) protection against the employee damaging the company’s
interests at termination.


– The application of TUPE to outsourcing (particularly contractor
changeovers) remains controversial due to the very different approaches adopted
by the ECJ and the Court of Appeal. The CA’s most recent decision – RCO
Support Services v Unison
– will be heard by the House of Lords later this
year. The decision will be of great significance, being the first time that the
House of Lords has considered this issue.

– In May, the EAT will consider the challenge to the upper age limit on the
right to claim unfair dismissal and redundancy payments. The Government is
challenging an earlier employment tribunal ruling in Rutherford v Harvest Town
Circle that the upper age limit amounted to indirect sex discrimination,
because it had a disparate impact upon men.

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