A good reputation is more valuable than money – or is it?

Mark Shulman and Rachael Taylor of Cumberland Ellis look at how the rise in social networking and use of email can impact on employers

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Mark Shulman & Rachel Taylor, Cumberland Ellis LLP

It has been said since Roman times that a good reputation is more valuable than money. Reputational issues in the employment context have increasingly come under the spotlight, partly due to the proliferation of social media.

In a 2007 briefing, the Trades Union Congress referred to companies only working out their responses to social networking when faced with the first problem and the possibility of having to take drastic action that could have been avoided by early intervention; the report labelled the UK's Facebook users as "3.5 million HR accidents waiting to happen".

**Recruitment **One risk is that a claim for discrimination could arise if information found on blogs or social networking websites is used to reject a job candidate. An applicant's sexuality, religious beliefs or age would not usually be included in a CV or application form, but employers can now find much information about a candidate via the internet.

Most employers would provide a reason relating to job skills or competencies for rejection, but if an applicant became aware that the reason related to a protected characteristic (or, in the absence of a clear explanation for rejection, was able to draw such an inference), a successful claim could follow.

Employers should also beware of storing information which has been gleaned 'informally' about candidates on the internet, as this could give rise to data protection issues.

**During employment Discrimination** - Under the Equality Act 2010, acts of an employee in the course of their employment are treated as having also been done by the employer, whether or not done with the employer's knowledge or approval, i.e. an employer can be vicariously liable for discrimination or harassment.

So, for example, where comments are made online about another employee that amount to harassment, liability can arise for the employer, even if the employee is not using the employer's IT equipment. Further, Tribunals tend to apply a very broad test to as to what amounts to an employee acting "in the course of employment" and the fact that the offending act took place while an employee was not physically at work or acting under instruction from an employer is unlikely to be sufficient to defeat the claim (Jones v Tower Boot Co Ltd.

If an employer takes all reasonably practicable steps to prevent the harassment or discrimination, it will not be liable. Reasonable steps might include having appropriate policies and training which clearly state the expected standards of online behaviour, both inside and outside the workplace.

Confidential information - Employers are also exposed to the danger that employees may post confidential information online. The use of LinkedIn can create specific problems because it is effectively a list of an employee's business contacts which may include clients or customers. Does that contact information remain confidential once made public in this way? There is little case law but in WRN Limited v Ayris [2008] EWHC 1080 (QB) the High Court refused to grant an injunction to restrain the use of business contact information where details were posted on the company's website.

In the Ayris case an employee's contract required that upon termination he should return all documents which contained or referred to any "Confidential Business Information", defined as:

"…all and any Corporate Information, Marketing Information, Technical Information and other information …

When the employee left, the employer contended that, unless restrained by an injunction, the employee had acted in a way that would infringe contractual restrictions relating to the use of Confidential Business Information.

The first issue concerned business cards which the employee had acquired from contacts in the course of his employment and which the company claimed were company property. The Court accepted the company's contention that the cards were acquired during, and for the purpose of, the employee's employment and therefore the company was entitled to have them returned as being its property. The Court did not therefore need to decide whether the information on the cards constituted "Confidential Business Information".

The second issue related to whether contact details of clients which appeared on the company website amounted to "Confidential Business Information". The Court accepted that the employee had easily been able to independently compile contact details from the internet, based on a starting point of the company's website, and therefore his efforts had not required "a significant expenditure of labour skill or money" to obtain the information and so the circumstances fell outside the contractual prohibition on using "Confidential Business Information".

Employers should consider whether and how far the use of LinkedIn (potentially a powerful business tool) should be controlled through appropriate contractual provisions and possibly restrictive covenants.

Loss of reputation – There have been well-publicised cases such as the 13 cabin crew staff dismissed by Virgin Atlantic over their use of Facebook to criticise safety standards and call passengers "chavs", which the airline said "brought the company into disrepute".

In Preece v JD Wetherspoons plc (ET2104806/10), P, a shift manager at one of Wetherspoons' pubs, was dismissed as a result of rude and abusive comments she made on Facebook about two customers. P argued that her dismissal was unfair because the comments could only be viewed by 40 to 50 close friends, rather than all of the 646 of her Facebook friends. The tribunal rejected this argument, in part, no doubt, because someone outside that group had clearly read the messages and complained to her employer.

However, in Taylor v Somerfield (unreported), the claimant was dismissed for bringing Somerfield into disrepute after posting a video on YouTube showing two colleagues hitting each other with plastic bags. The tribunal did not accept that there were sufficient grounds for dismissal, and was influenced by the fact that there were only eight hits on the video clip and no loss to the employer.

In Gosden v Lifeline Project (ET/2802731/2009), G was employed by Lifeline, a charity which assigned employees to HM Prison Service (HMPS) to work in prisons. In 2006 he was assigned to work in Moorland prison but after receiving a formal warning for his behaviour, he was assigned to another prison in 2007.

In 2008, outside working hours and from his home computer, G forwarded an offensive e-mail to the home computer of a colleague from Moorland employed by HMPS. The e-mail contained material of a racist and sexist nature and was a chain e-mail, headed with the words "It is your duty to pass this on!". The colleague decided to forward this e-mail to another colleague who worked at Moorland and so the e-mail entered the HMPS computer systems.

The tribunal dismissed G's claim for unfair dismissal and accepted the reason for dismissal had been gross misconduct, namely damaging the employer's reputation.

The tribunal also considered what impact, if any, the Human Rights Act 1998 had on the right to a private life and whether it was reasonable to dismiss for conduct which takes place outside the workplace. While the e-mail in question was sent from the employee's home computer outside working hours to another employee's home computer, it was clearly not intended to be private. It had stated that "It is your duty to pass this on!" and so G was fully aware that it was likely to be passed on and he had no control over what the recipient did with it.

**Post-employment issues *Employers may have to grapple with reputational issues even after an employee has left their employment. In [McKie v Swindon College]()* [2011] EWHC 469 (QB), the High Court considered a damaging communication between an employee's former employer and his new employer.

In 1994 M began employment with Swindon College and progressed his career into management. In 2002 he took up a position at Bath City College and at that time was given an excellent reference from Swindon including reference to "strong leadership skills", the fact that staff had "a high degree of respect for him" and his "positive personality". The College highly recommended M and expressed regret at losing him.

In 2007 M left Bath College for Bristol City College. In May 2008 he started work at the University of Bath. Part of his new role was to oversee certain degree courses at FE Colleges, including Swindon College.

Shortly after M started his new role, the University received an e-mail from the HR Department at Swindon College. The e-mail stated that:

"Further to our telephone conversation I can confirm to you that we would be unable to accept Rob McKie on our premises or delivering to our students. The reason for this is that we had very real safeguarding concerns for our students and there were serious staff relationship problems during his employment ... No formal action was taken against Mr McKie because he had left our employment before this was instigated. I understand that similar issues arose at the City of Bath College."

The Judge described the circumstances in which the e-mail was sent from Swindon College as follows:

"I think when we actually look at the circumstances, we can see that the procedure adopted at Swindon College giving rise to the sending of the email, can be described as slapdash, sloppy, failing to comply with any sort of minimum standards of fairness … "

In terms of what the College should have done, the Judge was of the view that:

"At the very least one might have thought that, if an email such as this was going to be sent to a major educational institution such as Bath where… it was blindingly obvious that it would have an impact on his employment situation, at the very least one would have expected that there would be a formal meeting, a formal discussion, a formal examination of the personnel record, a formal recording of the processes that led to the taking of the decision, not winging off an email after a discussion…".

Following the e-mail, M was called to a meeting and summarily dismissed. The question therefore arose as to his available legal remedies. He had not yet accrued sufficient qualifying service to claim unfair dismissal. A claim of defamation would be difficult because, unless he could show malice, the doctrine of qualified privilege would apply to defeat his claim. It would also be necessary to prove malice to pursue the tort of malicious falsehood.

The Judge then referred to the House of Lords decision in Hedley Byrne v Heller [1964] AC 465 which gave rise to the so-called liability for negligent mis-statement. So, when A asks B to provide information about C and B provides that information knowing A will act upon it, B may be regarded as assuming a duty of care in and about the compiling and providing of that information, such that if reasonable care is not taken and A suffers loss as a consequence of his reliance upon that negligently provided information, he can recover his loss from B, even where that loss is purely economic. In the present case, although the University of Bath acted upon the information, it suffered no loss - it was M who had suffered the loss. The question was therefore whether Swindon College owed any duty to M in relation to the information contained in the damaging email.

The Court decided it was "fair just and reasonable" to impose a duty of care upon the College and that, as damage was foreseeable and the relationship between the parties was sufficiently proximate, there was negligence in the sending of the e-mail which had caused the loss claimed by M. Accordingly, there was a finding against Swindon College on the matter of liability.

It is well-established that there can be liability on employers providing a reference, but the Swindon case goes further in dealing with non-reference situations. This is a salutary warning to employers. Therefore, information passed about former employees to third parties (in whatever format or medium) should be properly authorised and follow an appropriate procedure which includes suitable steps to verify the information before it is sent out.

Published: 25/08/2011 17:30

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