Commercial news update September 2019: Force majeure clauses, Facial recognition, Holiday Pay for term-time only workers

 

In association with Iain Larkins from Radius Law, we bring you updates across Corporate & Commercial, Data Security, Employment, Consumer and Competition law.

We focus on the commercial aspects and look at the practical steps for you to consider.

This month, we cover the following...

Corporate & Commercial

Force majeure clauses

Force majeure clauses are included in contracts to avoid a party being liable for any breach outside of its control (e.g. a flood). The Court of Appeal has recently ruled on two interesting points that arose from a force majeure claim:  a party seeking to exclude liability because of a force majeure event will, generally, be expected to prove that it would have performed the contract but for the force majeure event; and if that party would have breached the contract regardless of the force majeure event then it will not be able to reduce its liability by claiming that the innocent party has not lost anything that it would not have lost because of the force majeure event.

See News Analysis: Contractual exception clauses, force majeure, causation and damages (Classic Maritime v Limbungan Makmur)

Notice provisions

The Court of Appeal has emphasised the importance of complying with any detailed provisions concerning the notice of a claim.  In this case the buyer of a business failed to clearly reference its claim as a tax claim as required by the share purchase agreement. The Court rejected the buyer’s argument that separate letters that it had sent to the sellers could be construed as meeting the notice requirements. 

See News Analysis: Unilateral notice was not notice of tax claim (Stobart Group and another v Stobart & Tinkler)

Economic Duress

The law economic duress was developed to stop strong businesses exerting unfair pressure on weaker party. A recent Court of Appeal case, however, has ruled that it will only apply when the business exerting the pressure is doing so in bad faith. 

See News Analysis: Commercial contract not avoided on economic duress grounds where duress was lawful (Times Travel (UK) LTD v Pakistan International Airlines Corporation)

Correcting mistakes

The Court of Appeal has provided guidance for when courts will order rectification of a contract, as follows:

A party must prove that the document failed to give effect to either: a prior contract, in which case the terms of the prior contract must be objectively determined; or a common intention shared by (and communicated between) the parties.

See News Analysis: Rectification, common mistake and execution of deeds (FSHC Group Holdings Ltd v Glas Trust Corporation Ltd) 

Data security

Information Commission Office (ICO) prosecutions

Two notices to fine £100m+ for cyber security breaches have been issued against British Airways and Marriot. Marriot’s breach related to inherent security weaknesses in a company that it had purchased. The ICO told Marriot it had not done enough due diligence on acquisition and should have done more to secure customer data.

See News Analysis: ICO announce intent to fine British Airways and Marriott International £183m and £99m respectively

Meanwhile EE has been fined £100,000 for sending marketing messages without consent. The ICO rejected EE’s argument that they were technical updates because they included promotional content.

See LNB News: EE Limited fined £100,000 for sending texts to customers without their consent

New Cookies guidance

In July the ICO issued new guidance on the use of cookies (and similar technologies).  The guidance is a stark shift in the compliance requirements for cookies and states that non-essential cookies will need active consent - so, no pre-ticked boxes and the cookies must not be used on landing pages until consent has been obtained.

See LNB News: Information Commissioner's Office publishes revised cookies guidance

Real time bidding

The ICO published an ‘Update Report’ on real-time bidding (the process where web adverts are sold at the ‘blink of an eye’ based on the user profile). The report says that the ICO considers all current real time bidding practices to be non-compliant with GDPR but acknowledges that it is still investigating.  Watch this space for more news on this topic!

See Practice Note: Online behavioural advertising

Facial recognition

The GDPR requires all processing of personal data to be under a lawful basis. Consent is one option, but it’s only appropriate where it can be freely given.  In Greece an employer has been fined €150,000 for using consent to process employee data – considered inappropriate due to the imbalance of the employer employee relationship. 

See News Analysis: Employer in Greece fined €150,000 for relying on consent to process data under GDPR

In Sweden a local authority has been fined for using consent as the lawful basis for facial recognition to record classroom attendance.

Whilst on the note of facial recognition it’s worth mentioning that that the ICO has launched an investigation into the use facial recognition technology at the King’s Cross development in London.

See LNB News: Information Commissioner’s Office investigates facial recognition technology over risk to privacy

Time limits for responding to subject access requests

The ICO guidance concerning the time-line for responding to a subject access request has been changed.  The main point is that the 1-month response period now starts on the day the request is received and ends on the same day of the next month – a day shorter than before.   

Employment

Restrictive covenants – removing unlawful restrictions

The Supreme Court has ruled that if a non-compete clause contains an unenforceable restriction then it can be removed leaving the remaining clause intact, provided: the words can be removed without needing to add to or modify the remaining text; the remaining terms continue to be supported by adequate consideration; and the removal of the words do not generate any major change in the overall effect of all the post-employment restraints in the contract.

See News Analysis: Supreme Court—restraint of trade part of non-compete covenant severable (Tillman v Egon Zehnder Ltd)

Holiday Pay for term-time only workers not subject to pro rata reduction

The Working Time Regulations entitle every worker to 5.6 weeks' annual leave. This is pro-rated for part-time workers – so a worker that works 3 day per week is entitled to 5.6 weeks x 3 days.  So far so good, but what about a worker who only works for 35 weeks of the year - like term-time only workers?  It would seem strange if they were entitled to the same holiday entitlement as someone that works all year, but that’s the decision that has been ruled by the Court of Appeal. The case concerned a teacher engaged to provide music lessons during term time. The Trust had been paying holiday based on 12.07% of average earnings in the 12 weeks before the end of each term (a formula suggested by ACAS Guidance for casual workers) but must now pay holiday pay for 5.6 weeks of average weekly earnings.

See Case Digest: Harpur Trust v Brazel (Unison intervening)

Court of Appeal confirms that discrimination because of perceived disability is unlawful

The Court of Appeal has confirmed that it is discriminatory to refuse employment because of a perception that a health condition will affect a person’s ability to work in the future.  This case concerned a front-line police officer who, without any thorough investigation, was refused a transfer to a constabulary because she had a small hearing impairment which the constabulary thought would have a substantial impact on her ability to perform her day to day activities.

See News Analysis: Direct discrimination wide enough to include treatment due to perceived disability (Chief Constable of Norfolk v Coffey)

Disciplinary proceedings: covert recording by employee may not be gross misconduct

The Employment Appeal Tribunal has ruledthat covert recording by an employee will not always be a breach of the employee’s duties to the employer. It will depend on the reasons.  The EAT recommends that it is good practice to discuss at the start of a meeting whether it will be recorded.

See News Analysis: Making a covert recording is not necessarily a breach of trust and confidence (Phoenix House v Stockman)

No requirement to provide agency workers with the same working hours as direct recruits

The Court of Appeal has clarified that the Agency Worker Regulations 2010 (‘Regulations’) do not oblige employers to provide agency workers with equivalent weekly hours and the reference to providing the same ‘duration of working time’ in the Regulations is only intended to refer to the maximum length of working time.

See Case Digest: Kocur v Angard Staffing Solutions Ltd and another

Consumer

EU and UK guidance on online terms and conditions and privacy policies

The UK government and the European Commission have published guidance for businesses on how to present online standard terms and conditions clearly. The EU guidance covers the mandatory legal information to be provided.

See LNB News: Government presents effective methods on improving customer understanding of privacy notices & European Commission issues guidance on unfair contract terms

Dealing with returns of defective goods

The European Court of Justice has ruled that a consumer who has received defective goods is obliged to return them unless the obligation becomes burdensome and will cause a significant inconvenience to the consumer.  In this case it concerned a tent which the Court agreed would cause such inconvenience – accordingly the seller should have collected the goods or paid for the return.

See News Analysis: Court of Justice considers consumer’s right to rescind contract (Fülla v Toolport GmbH)

Competition

Casio fined €3.7m for retail price maintenance

Casio has been fined €3.7m for unlawful price fixing agreements by the European Commission. Casio’s actions included telling retailers to sell digital pianos and keyboards online at or above a certain price. Casio had used software to make it easier to monitor online prices in real time.

See LNB News: CMA investigation: Casio fined €3.7m for RPM

Filed Under: News

Relevant Articles
Area of Interest