What’s the answer: Can they do that?

Annie Hayes

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What’s the answer: Can they do that?

By Annie Hayes

Robert Newton gets legal guidance this week from Stephanie Wootton, employment law expert at Browne Jacobson and Nicholas Snowden, senior solicitor at Clarkslegal LLP on the rules governing TUPE transfers.

The question:
We are currently undergoing transition to HR shared services on a global level. On an employee level, we were told of the third party consultancy that was to take over the running of a certain part of the HR function for our company when outsourced. We were told that we could not apply directly to this company until we were made redundant or had resigned as they may want us to TUPE. Despite this, a number of individuals from our team did apply in confidence to this consultancy.

We then had a meeting a couple of weeks later with our senior manager who reiterated the fact that we could not apply directly to this company. They also mentioned they knew who had applied, what positions had been applied for and when they had applied, though they didn’t mention the actual names. This was mentioned in a formal team meeting. Can they do this a) prevent us leaving to join a third party b) disclose confidential information c) relay confidential information to others?

Robert Newton

The answers:
Stephanie Wootton, employment law expert, Browne Jacobson

Some contracts of employment contain ‘restrictive covenants’ or ‘restraint of trade’ clauses, which attempt, for example, to prevent an employee from working for competitors in the same industry, or even for specific companies, when he or she leaves a firm’s employment.

In the absence of an express clause of this nature, signed by the employee, individuals are entitled to apply for work with any employer they choose, at any time.

It may well be that TUPE regulations will apply in the circumstances you describe. If so, your contractual terms of employment will remain the same and your continuity of service will be maintained if you are transferred. However, even if it is envisaged that your employment will automatically transfer under TUPE, this is not a bar to an individual making a direct application to the consultancy company in question.

With regard to the issue of whether the consultancy has disclosed names and details of applications, there may be difficulties proving exactly how the employer has come into possession of this information. For example, if individuals forwarded applications using the company email system, then the employer may of course have been able to access this without contacting the consultancy.

In turn, there may be data protection issues relating to the monitoring of emails, if you were to have evidence that this was how your employer knew about the applications.

If confidential information has been disclosed by the consultancy, this may be more serious, as there are provisions preventing such information from being passed on.

The Data Protection Act 1998 governs ‘personal’ and ‘sensitive personal data’. A job application is likely to fit this description, as it will likely hold such data about an individual.

The processing of this data by the consultancy would therefore be covered by the Act, and as such, disclosing information about job applications without the individual’s consent could potentially be a breach of the Act, depending on the precise circumstances. The circumstances and exceptions covered by the Act are many and complex, and I would advise you seek further advice on specific DPA issues if you suspect a breach.

Stephanie can be contacted at: swootton@brownejacobson.com

Nicholas Snowden, senior solicitor at Clarkslegal LLP

The answer to your question (a) is that, subject to any contractual rights the company may have in relation to notice periods and restrictive covenants, it cannot prevent you leaving to join a third party. Neither can it prevent you from applying to a third party.

Clearly, if you obtained a job with a third party, you would probably have to work your notice period. You may have restrictive covenants in your contract of employment, which may further restrict you. However, in practice, only a valid non-competition clause could prevent you from joining a competitor for a period. As it does not appear from your question that the HR consultancy competes with your current employer, even if you have restrictive covenants they are unlikely to prevent you from joining it.

You mention the possible application of TUPE. As you probably know, whether the HR consultancy wants you under TUPE or not, does not affect whether TUPE applies. It would be advisable to obtain advice on whether you should be transferring under TUPE or not. If the advice is that you should transfer, you may end up working for the HR consultancy in question, regardless of the outcome of any application which you may have made. If the outsourcing takes place after 6 April 2006, note that the new TUPE regulations will apply.

The company’s statement that you should not apply for a job with the HR consultancy until you resign or are made redundant, as the consultancy may want you to transfer under TUPE, does not make sense. This is because if you transfer under TUPE, you are not redundant and should not normally receive a redundancy payment from your current employer.

As far as the applications to the HR consultancy are concerned, that consultancy appears to be at fault for disclosing the information to your employer without your consent. Neither should your employer retain that information. Both are examples of processing of personal data which is unlikely to comply with the Data Protection Act 1998 (DPA).

You could alert the parties to this and threaten to report them to the Information Commissioner’s Office, but I am not sure that this would help you if you are still interested in working for the HR consultancy. It is also always open to you to make a subject access request under the DPA. This has nuisance value, but if you want to preserve decent relations in the hope of continued employment, it is unlikely to help you either.

Finally, as the behaviour of your current employer has been pretty unreasonable in seeking to prevent you from applying to a third party and then seeking and obtaining data about your application for a job at that third party, there is also the possibility of a claim of constructive dismissal. However, constructive dismissal claims are always difficult to win and it is not a particularly attractive prospect when some other outcomes could be:

A TUPE transfer and continued employment by the HR Consultancy.

A TUPE transfer followed by redundancy and potentially a statutory or enhanced redundancy payment.

No TUPE transfer, but acceptance of your job application by the HR Consultancy.

Going down the constructive dismissal route would immediately cut off your income with no guarantee of ever getting any compensation and bringing the claim would be unlikely to help you get a job at the HR Consultancy.

Nicholas Snowden can be contacted at nsnowden@clarkslegal.com

HRZone highly recommends that any answers are taken as a starting point for guidance only.

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