Tuesday, Nov 2, 2021

Recruitment/Restrictive Covenants/Data Protection

Employers struggling to recruit ‘post pandemic’

Just over one in 10 (11 per cent) workers who are on furlough or not working are looking for a job, according to new research, potentially spelling trouble for those employers struggling to recruit in the wake of the pandemic.

A survey by Indeed has found that more than half (56 per cent) of people out of work are not actively seeking a new job, including two-fifths (41 per cent) of those on furlough.

Among all workers, 71 per cent said they weren’t looking because they expected to return to their pre-pandemic job, and a third plan to hold off.

Just under a third (30 per cent) of unemployed people who weren’t urgently looking for work said they have a financial cushion, while almost a fifth (17 per cent) said they could manage because their spouse or partner is still employed. A sixth said their reason for not looking for work was due to Covid-19 fears. 

Among those on furlough, 12 per cent said they were not comfortable with returning to work in person.

According to Indeed, the findings suggested that the lack of urgency among jobseekers to find a new role may be contributing to employers struggling to fill vacancies. This is despite the unemployment rate falling to 4.7 per cent and the number of job postings exceeding pre-pandemic levels. Jack Kennedy, UK economist at Indeed, said with many employers “desperate for staff”, a significant proportion of the workforce appeared to be “surprisingly relaxed” about finding work despite the end of the furlough scheme looming. “Most are feeling optimistic about returning to their workplace and so are in no rush to find a new job,” he added, but warned that with almost two million people still on the coronavirus job retention scheme, “some may soon learn they will not be going back and will therefore need to start actively searching”.

“The financial cushions enjoyed by some unemployed workers will also eventually erode, and will create a greater sense of urgency among those currently out of work but still happy to sit on the side lines,” Kennedy said. The main aim of the job retention scheme was to do just that – retain jobs for those firms that are still being impacted by the pandemic, so the hope would be that these organisations welcome their staff back, and this is likely to be the main driving force behind so few furloughed individuals actively job hunting.

When is a post-termination restriction clause unreasonable?

In light of a recent High Court ruling, Chris Thompson (Employment Partner at Gateley Legal) discusses the enforceability of restrictive covenant clauses versus the length of employment.

Post-termination restrictions can be controversial as there are often doubts as to their enforceability. We currently also await the government’s response from a public consultation on proposals to reform post-termination non-competition clauses, which might prevent them being enforced to any degree in the future. 

As it stands though, these types of employment covenants are enforceable only to the extent that they are shown to be necessary to protect the employer’s legitimate business interests. Those business interests will often be linked to the relationships that employees have formed with key clients. 

The burden of showing that the restrictions placed on the employee are limited to what would be reasonably necessary to preserve the client relationship will be upon the employer. That can be particularly difficult where there has been only a relatively brief period of employment and only a short amount of notice is required to end the contract. 

This was highlighted recently when the High Court considered the reasonableness of the covenants in Quilter Private Client Advisers Ltd v Falconer [2020] EWHC 3294 (QB), which concerned an employee who had left when still within her probationary period.

Ms Falconer, a financial services adviser, had appeared to quickly decide that her new role with Quilter was not right for her. She started looking for alternative employment even before her probationary period had ended. 

However, her contract of employment contained a number of post-termination restrictions which sought to prevent her joining a competitor for nine months or dealing with their clients for a year. Since her start date 120 clients had been passed to her but she had only made contact with 40 of these before giving notice of her resignation, which notably during her probation period only consisted of two weeks. Quilter placed her on gardening leave during those two weeks but later brought proceedings applying for an injunction to enforce the covenants. 

It was held that the covenants were unenforceable. What was the business interest being protected? It was taken into account that it takes time to build a relationship with a client and the fact that she had been passed clients did not mean that a relationship had been created. 

It was regarded as important that she was subject to only a two-week notice period, which also did not indicate that her departure would lead to a high-risk situation for the business. A shorter notice period usually reflected that an employee’s services were not that important or that it was a junior position. It was also relevant that more senior employees had the same or shorter covenants, which suggested that Falconer had just been given a standard contract without consideration as to its suitability.

Data Protection: Commission adopts adequacy decisions for the UK

The European Commission has adopted two adequacy decisions for the United Kingdom - one under the General Data Protection Regulation (GDPR) and the other for the Law Enforcement Directive. Personal data can now flow freely from the European Union to the United Kingdom where it benefits from an essentially equivalent level of protection to that guaranteed under EU law. The adequacy decisions also facilitate the correct implementation of the EU-UK Trade and Cooperation Agreement, which foresees the exchange of personal information, for example for cooperation on judicial matters. Both adequacy decisions include strong safeguards in case of future divergence such as a ‘sunset clause', which limits the duration of adequacy to four years. 

Key elements of the adequacy decisions

The UK's data protection system continues to be based on the same rules that were applicable when the UK was a Member State of the EU. The UK has fully incorporated the principles, rights and obligations of the GDPR and the Law Enforcement Directive into its post-Brexit legal system.

With respect to access to personal data by public authorities in the UK, notably for national security reasons, the UK system provides for strong safeguards. In particular, the collection of data by intelligence authorities is, in principle, subject to prior authorisation by an independent judicial body. Any measure needs to be necessary and proportionate to what it intends to achieve. Any person who believes they have been the subject of unlawful surveillance may bring an action before the Investigatory Powers Tribunal. The UK is also subject to the jurisdiction of the European Court of Human Rights and it must adhere to the European Convention of Human Rights as well as to the Council of Europe Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data, which is the only binding international treaty in the area of data protection. These international commitments are an essential elements of the legal framework assessed in the two adequacy decisions.

For the first time, the adequacy decisions include a so-called ‘sunset clause', which strictly limits their duration. This means that the decisions will automatically expire four years after their entry into force. After that period, the adequacy findings might be renewed, however, only if the UK continues to ensure an adequate level of data protection. During these four years, the Commission will continue to monitor the legal situation in the UK and could intervene at any point, if the UK deviates from the level of protection currently in place. Should the Commission decide to renew the adequacy finding, the adoption process would start again.

Transfers for the purposes of UK immigration control are excluded from the scope of the adequacy decision adopted under the GDPR in order to reflect a recent judgment of the England and Wales Court of Appeal on the validity and interpretation of certain restrictions of data protection rights in this area. The Commission will reassess the need for this exclusion once the situation has been remedied under UK law.

Alison Melville Greig Melville HR
Alison Melville Greig Melville HR
Human Resources

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