On May 31, 2016, the Advocate General (“AG”) of the European Court of Justice issued its opinion in a case relating to a Muslim employee wearing a headscarf at work. In the case, Samira Achbita v. G4S Secure Solutions NV, Case C-157/15, the AG stated that a neutral policy prohibiting employees from wearing visible religious symbols was not direct discrimination under Article 2(2)(a) of Directive 2000/78 EC, the EU Directive that addresses discrimination in the workplace. Furthermore, the AG indicated that such a policy may not constitute indirect discrimination either, and therefore not be illegal, provided it is based on a legitimate and proportional policy requiring religious or ideological neutrality in the workplace. This decision, while not binding, stands in stark contrast to the law on the subject in the United States, where just in 2015 the Supreme Court held that failing to hire an applicant because she wore a headscarf constituted discrimination.
On 23 June 2016 the people of Britain voted in favour of leaving the European Union – the so-called “Brexit.” The result has created uncertainty and speculation as to the implications of Brexit and what happens next.
Employee’s Privacy Rights
European courts continue to grapple with the limits on employee protections under Article 8 of the European Convention of Human Rights. Article 8 protects a person’s right to respect for their private and family life, and our blog has actively tracked developments on the subject (to review prior rulings, see here, here, and here). The UK’s Employment Appeal Tribunal (EAT) recently further defined the limits of an employee’s expectations of privacy in the workplace when it held that an employee had no reasonable expectation of privacy in emails and photographs from his personal phone that had been passed to the police.
Until recently, there have been few formal regulations regarding the operation of foreign non-governmental organizations (NGOs) in China. While the Chinese government has expressed skepticism and, at times, hostility toward foreign NGOs, many NGOs – including many prominent U.S. based organizations – currently operate in China. Based on new legislation in China, however, the status of the more than 7,000 foreign NGOs operating in China – in addition to many other organizations wanting to expand into the country – now remains in question.
European courts continue to clarify the right of employers to review their employees’ emails. As we discussed previously, the European Court of Human Rights and the National Labor Relations Board of the U.S. have recognized that employers have the right to monitor their employees’ internet communications in order to ensure productivity during work. (To review the holdings by the ECHR and NLRB, please click here and here, respectively.)
The protection afforded to trade secrets is disparate across the EU. In order to protect trade secrets as potential drivers for economic growth and jobs and to create a level-playing field within Europe, the European Parliament has now approved the Trade Secrets Directive.
This Directive aims to provide a minimum, uniform level of protection in respect of undisclosed know-how and business information (trade secrets) against unlawful acquisition, use and disclosure. The intent is for this protection work in parallel with the existing uniform EU law protecting intellectual property.
The Directive provides a minimum standard framework, with common definitions, procedures and sanctions. Higher levels of protection are permitted. Accordingly, countries which already enjoy higher levels of protection (e.g. UK and Germany) will not necessarily need to take any steps to implement the requirements. Nonetheless, decisions of the ECJ interpreting the Directive may well have a bearing on the existing national law of Member States in relation to trade secrets.
The following is a list of the notable aspects of the Directive:
Recitals 27(a) – Post termination restrictions
There are no requirements to harmonise the laws in relation to post-termination restrictions, including non-compete clauses.
Article 1.2a – Subject matter and scope
The Directive does not seek to limit an employee’s use of their experience and skills honestly acquired through the normal course of their employment. This means that what amounts to a trade secret must be above and beyond something that is mere skill and experience. Additional restrictions cannot be put on employees to reduce their mobility because of the Directive.
Article 2 – Definition of “trade secret”
Under the Directive, a “trade secret” is information that (i) “is secret in the sense that it is not….generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (ii) has “commercial value because it is secret”; and (iii) “has been subject to reasonable steps under the circumstances, by the person in control of the information, to keep it secret” (emphasis added).
This broad definition reflects the wording of article 39(2) of international TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights), an agreement administered by the World Trade Organisation. It is also similar to the definition of trade secrets under the U.S. Uniform Trade Secrets Act.
This will be a definition that is ripe for judicial interpretation by the ECJ, especially those parts emphasised in italics.
Article 4(b) – Exception for whistleblowers
One exception to the general prohibition against disclosing trade secrets is for whistleblowers. Article 4(b) explicitly permits the disclosure of trade secrets by whistleblowers, where such disclosure involves raising “misconduct, wrongdoing or illegal activity, provided that the [whistleblower] acted for the purpose of protecting the general public interest”. We anticipate that the scope of this exception will be an area of controversy.
Article 9 – Provisional and precautionary measures
This gives judicial authorities the power to take certain interim actions and precautionary measures against an alleged infringer before a decision has been made. These would include: the cessation or prohibition of the use or disclosure of the trade secret on a provisional basis; a prohibition on producing, offering or placing on the market or using infringing goods or importing or exporting infringing goods; and seizing or delivering up suspected infringing goods. The Article is silent on other interim measures that judicial authorities may have the power to do e.g. search orders, freezing orders and pre-action disclosure.
Article 11 – Injunction and corrective measures
Once the case has been decided, the Directive gives judicial authorities to grant final remedies in addition to or as an alternative to an award of damages, such as orders prohibiting the use or disclosure of the trade secret; prohibiting the production, offering or placing on the market or use of the infringing goods, or importing or exporting or storing infringing goods; adopting appropriate corrective measures with regard to the infringing goods; and destroying or delivering up of relevant documents, objects, materials, electronic files. These remedies will be familiar to UK lawyers.
Article 13 – Damages
This gives judicial authorities the power to award damages for misuse of trade secrets. Interestingly, the legislation expressly provides Member States with the option of limiting the liability for damages of employees where the misuse was unintentional.
The European Parliament has formally approved the Directive. It will now need to be endorsed by the Council of the European Union, which we expect to occur in May. Member States will then have two years to ensure that the national law is in accordance with the Directive, or implement it.
Last month, we blogged about the much discussed ECHR Barbulescu opinion. (To review the implications of the case, please click here.) As a follow up, we wanted to provide further insights to multi-national employers about how this European decision compares to the position in the United States.
Purple Communications, Inc.: the United States’ approach to Email Monitoring
In the U.S., an employee’s freedom of expression, even when using an employer-provided email, has been closely guarded in recent years by the National Labor Relations Board (“NLRB”) under Section 7 of the National Labor Relations Act. Section 7 protects any employee when they engage in “concerted activities for…mutual aid or protection.” The NLRB has made clear that certain company policies that seek to limit social media and electronic communications could infringe on these rights, or “chill” concerted activities, and are therefore prohibited (for a full review of prohibited social media policies, see here, here, or here).
In December 2014, the NLRB encountered a similar policy to the one in Barbulescu. The case, Purple Communications, Inc., asked the Board to decide whether a newly introduced policy that required company electronic systems and equipment to “be used for business purposes only” violated Section 7. The Board held that introducing a blanket prohibition against employees using company electronic systems and equipment for private purposes violated Section 7. The Board held that introducing such a blanket prohibition would chill the rights of employees to engage in concerted activities. Importantly, this decision was limited to employees who already had access to an employer’s email for business purposes, and noted that employee use can still be subject to “reasonable” restrictions (e.g., prohibiting work-time use of equipment for personal purposes, or sending oversized attachments). The decision did not address the issue of whether a new policy which imposed a blanket ban on using company electronic systems and equipment would violate Section 7. The Board also noted (similarly to Barbulescu) that employers are permitted to monitor employee use of company electronic systems to ensure productivity during work-time, so long as the monitoring is not used to impede protected activity. (You can read more analysis about the NLRB’s Purple Communications, Inc. decision here.)
Accordingly, based on Purple Communications and Barbulescu, employers in both the United States and Europe have the right to monitor an employee’s communications on company electronic systems and equipment to ensure that the employee is using work-time productively. However, in order to do so, employers should make it explicit to employees that they may monitor these systems for that purpose as part of their electronic communications and social media policies. A failure to have an express written policy creates a significant risk that any such monitoring would be unlawful: in Barbulescu, the absence of such a policy may well have led to a different decision that would have prohibited the review of personal material; the implication from Purple Communications and other decisions under the NLRB is that absent a clear policy which sets out the scope and purpose of any monitoring, it will be far more difficult for a company to satisfy the NLRB that the monitoring does not violate Section 7.
Ontario’s Sexual Violence and Harassment Action Plan Act was passed and received Royal Assent on March 8, 2016. The Act will go into effect in six months on September 8, 2016. The Act creates new duties for employers to prevent and investigate sexual harassment in the workplace. To fully review the changes coming in the next six months, see our blog post from last month (here). Employers should be aware of these new requirements and should reach out to counsel to ensure that they are in compliance.
The UK Employment Appeal Tribunal (EAT) recently considered two unfair dismissal cases in which an employer terminated an employee for inappropriately posting on personal Twitter or Facebook accounts. In both cases the EAT overturned the tribunal judge’s ruling for the employee; remanding one case for failure to apply the reasonable responses test and declaring the termination in the other case to be a fair and lawful response to the employee’s action.
It is well established in the UK that a dismissal will be deemed unfair unless the employer’s action falls within the “band of reasonable responses.” Simply, for a termination not to be unfair, the tribunal must decide if the action was within the range of reasonable responses that a reasonable employer may have taken in the same situation.
In the first case, Game Retail Limited v. Laws (UKEAT0188/14/DA, 3 November 2014), the employer terminated the employee for making numerous offensive tweets on his personal Twitter account. The employee, Mr. Laws, was a loss and prevention officer in charge of monitoring fraud at numerous Game stores across the country. In furtherance of his position, Mr. Laws began to follow a number of these stores on Twitter through his personal Twitter account. Despite the fact that Mr. Laws did not identify himself as a Game employee, he was aware that many of the Game store managers knew of his role within the company and became followers of his Twitter account. His account was also publicly available for anyone who chose to follow him on Twitter.
One of the Game store managers reported that Mr. Laws was posting offensive and derogatory tweets about numerous groups including dentists, Newcastle fans, and the disabled. Accordingly, Game dismissed Mr. Laws for gross misconduct. Mr. Laws alleged unfair dismissal, and the Employment Tribunal concurred. However the EAT disagreed, ruling the tribunal judge substituted his own views of reasonableness into the reasonable response test. The EAT also noted the tribunal judge failed to take the public nature of the Twitter account into consideration. In remanding the case to a new tribunal, the EAT made clear that employees’ right to freedom of expression must be balanced with the employer’s desire to remove or reduce reputational risk from its employees’ social media communications.
In the second case, British Waterways Board v. Smith (UKEATS0014/15/SM, 3 August 2015), Mr. Smith was dismissed for gross misconduct relating to offensive and derogatory Facebook posts about his employer. British Waterways had a policy prohibiting employees in Mr. Smith’s position from drinking while they were on standby. It also had a social media policy prohibiting postings which may embarrass the company. Violating both of those provisions, Mr. Smith posted numerous offensive comments on Facebook ranging from the fact that he was drinking while on standby to his severe distaste for his employer and fellow employees. British Waterways terminated Mr. Smith two years later upon discovering these Facebook posts.
Similar to Game Retail Limited, the Employment Tribunal found that Mr. Smith had been unfairly dismissed. However, the EAT overturned the decision finding that the tribunal substituted its own views for the reasonable views of the employer. The EAT held that British Waterways was clearly within the band of reasonable responses when it decided to terminate Mr. Smith.
These decisions should provide UK employers with some reassurance that terminating an employee for offensive social media postings is not unfair (and therefore lawful), depending on the facts of the case. Indeed, the British Waterways Board decision indicates that termination may still be reasonable despite the offensive postings occurring many years in the past. The Game Retail Limited decision also demonstrates that an employee does not have to identify herself as a company employee in order for the postings to be considered damaging to the company’s reputation.
UK employers should continue to enact detailed social media policies and effectively communicate these policies to employees. The violation of a sensible social media policy will only enhance the likelihood that a termination decision based on that violation will be found within the band of reasonable responses.
On December 18, 2015, the German legislature approved a law that adopted the pension provisions of the EU Mobility Directive. The Directive was passed to enhance worker mobility between EU countries by requiring stronger pension protections, yet some EU member countries have yet to adopt the pension provisions of the Directive. The new German law adopts two major provisions for employers:
- Pensions will now fully vest in three years instead of five years, and employees can participate in the plan starting at age 21 instead of age 25.
- The value of a vested pension for former employees (inactive plan members) must now be adjusted to remain commensurate with the vested rights of active members.
These new requirements make it easier for employees to transfer jobs and move between EU countries by protecting pensions after moving to a job in Germany. However, the law now provides fully vested pensions to employees as young as age 24, and the required adjustments to final-pay pension plans may significantly increase an employer’s pension expenses. The law will go into effect on January 1, 2018.
The German cabinet also is considering a law that would provide further protections to temporary employees. The law would make 18 months the maximum length for temporary employment. If the position continues past 18 months, an employment relationship with the hiring business is presumed. While the law would create a bright line at 18 months, the time period is subject to deviations through a collective agreement. The law also would require equal pay for temporary employees after the ninth month, and would prohibit the employment of temporary employees as strike breakers. If approved this year, the law would go into effect on January 1, 2017.