With technology evolving as quickly as it is, it has become more important to monitor how it is used in the workplace. This recent case between an employer and a previously dismissed employee provides a perfect example why.

I’m old enough to remember a time before the advent of smartphones and similar devices when the covert recording of internal company meetings and discussions was a relatively rare thing. I recall one particular case that I was involved in about 20 years ago where an employee (whose disciplinary hearing was being held in a hotel) had arranged for a friend to use a bulky but sophisticated and very expensive listening device to record what was said during the meeting through the wall from the adjoining room! Time however has moved on and technological advances now mean that employees do not need to go to such extreme and lengths in order to be able to successfully record meetings covertly.

Can the covert recording of meetings by employees ever be justified or is the Employment Tribunal duty bound to conclude that the act of covertly recording a meeting constitutes misconduct and/or undermines the implied term of trust and confidence?

The Employment Appeal Tribunal’s (EAT) recent decision in the case of Phoenix House v Stockman may help to provide some of the answers.

The facts

In what appears to have been a lengthy and time consuming case, the Employment Tribunal determined that Phoenix House Limited (the Respondent) had unfairly dismissed Ms Stockman (the Claimant) and further that it had subjected her to a whistleblowing detriment and single act of victimisation.

During the hearing of the case it became clear that the Claimant had secretly recorded an informal meeting which took place between herself and her employer’s Director of Resources (who was ultimately responsible for the HR).

Following the tribunal’s findings the Respondent argued (in relation to the issue of remedy) that had it known about the recording whilst the Claimant had remained in its employment then it would have dismissed her for gross misconduct. The Respondent contended on this basis that it would not be just and equitable for the tribunal to make any compensatory award in relation to the Claimant’s unfair dismissal.  The Respondent further argued that the Claimant’s basic award should be reduced to nil under section 122(2) of the Employment Rights Act 1996.

The Employment Tribunal was not persuaded by the Respondent’s submissions but it did decide in light of the Claimant’s decision make the covert recording that it would:

  • reduce the Claimant’s Basic Award by 30% for contributory fault;
  • reduce the Claimant’s Compensatory Award by 10%; and
  • reduce the Claimant’s Compensatory Award by a further 20% for contributory fault.

The Respondent was dissatisfied with this outcome and believed that the existence of the covert recording meant that the tribunal should have refused to award the Claimant any compensation and/or that any compensation awarded should have been reduced to zero; accordingly the Respondent appealed.

The appeal

Before delivering its decision in relation to the issue of the covert recordings and the correct approach to compensation, the EAT noted that the tribunal had, amongst other things, found that:

  • the Claimant had not made the recording for the purpose of entrapment or attempted entrapment of any of the Respondent’s officers or employees;
  • the making of covert recordings was not set out specifically in the Respondent’s own disciplinary rules as constituting an act of gross misconduct; and
  • the Respondent had failed by the time of the remedy hearing to amend its disciplinary rules to refer to the issue of covert recordings by employees.

The Respondent’s key points of appeal

The Respondent was critical of the tribunal’s approach and it invited the EAT to overturn its decision for the following reasons:

  • it argued that the tribunal had applied the wrong legal test when considering the question of whether or not it was just and equitable to make an award in light of existence of the covert recording;
  • that the tribunal was duty bound to hold that any covert recording of a confidential workplace conversation in the absence of any pressing justification was a clear and obvious breach of the implied term of trust and confidence;
  • that the tribunal should not have placed any reliance on the fact that the covert recording of meetings had not been identified as a disciplinary offence in the Respondent’s own disciplinary rules; and
  • that the tribunal’s finding that the Claimant had not intended to entrap the Respondent’s Director of Resources had been inadequately reasoned and also that it was perverse.

The EAT’s decision

The EAT noted as a starting point that in terms of unfair dismissal case both the basic award and the compensatory award are at risk of being reduced or even extinguished where it is discovered that an employee who has been unfairly dismissed is found to have committed misconduct that was unknown as at the date of their dismissal (the relevant sections of the Employment Rights Act 1996 being sections 122(2) and 123(1) respectively).

However, contrary to the Respondent’s assertion that there had been an error in law, the EAT stated that when it came to the question of determining whether there should be a reduction in compensation, the tribunal had adopted the correct approach by considering the following two questions:

  • What would this employer have done in respect of this employee had the existence of the covert recordings come to its attention prior to the termination of the Claimant’s employment?

and

  • What would the employer have done had it acted fairly?

 

Readers will note that the first question involves a subjective assessment whilst the latter requires the tribunal to make its own assessment of what would and would not have been fair. Accordingly, the EAT could find no fault with the tribunal’s own reasoning when it stated at para 45 of its remedy decision that:

“The   Tribunal   concludes   that   when   weighing   all   the   circumstances   and assessing  whether  or  not  the  Respondent  would  have  fairly  dismissed  the Claimant  had it  known  of  the  recordings, it  is  just  and  equitable to  reduce  the Compensatory  award  by  10%  to  fully  reflect  the  circumstances  relating  to  the covert recordings.  It is possible that once the reasonably available facts were known,  the  Respondent  may  objectively  and  reasonably  have  considered  this to  be  a  misconduct  matter  which then  fairly led  to  dismissal. The  Tribunal considers in the circumstances that this is a low percentage chance.”

In relation to the issue of trust and confidence the EAT noted that times have changed and that technological advances now means that both employers and employees can record meetings (covertly or not) with relative ease. The EAT acknowledged that the covert recording of meetings by employees is now commonplace and that it cannot automatically be said that employees always do this in order to entrap or gain a dishonest advantage. The EAT recognised that some employees may record meetings in order to create an accurate record of what has been said, to protect themselves against being misrepresented when faced with an accusation of an investigation or to enable them to take Trade Union and/or professional advice.

The EAT stated that tribunals are not compelled to find that trust and confidence has been irreparably undermined in circumstances where a meeting has been covertly recorded. Instead, each case will necessarily turn on its own facts.

An employee’s motivation in making a covert recording will always need to be explored prior to determining whether or not the act of making the recoding will constitute misconduct and if so whether or not that misconduct undermines trust and confidence and/or is capable of amounting to gross misconduct. The EAT accepted that in some cases (albeit rare ones) the making of a covert recording by the employee may be justified. Other factors will also be relevant. For example:

  • Has the employer confirmed to the employee that covert recordings must not be made?
  • Has the employee lied about making a covert recording (e.g. recorded a meeting when they have stated openly that no such recording is taking place)?
  • What type of meeting has been recorded (e.g. is it the type of meeting where a record would normally be kept and shared in any event or a meeting that is intended to be confidential and perhaps where personal information relating to the employer or another employee is being discussed).
  • Is the making of covert recordings by employees expressed to constitute an act of gross misconduct in the employer’s own disciplinary rules and/or policy?

Whilst finding that the making of covert recordings by employees could not always be said to constitute grounds for dismissal, the EAT did make plain its view that in the vast majority of cases the making of a covert recording by an employee would constitute an act of misconduct.

On the facts of the present case the EAT affirmed the employment tribunal’s decision. It accepted the tribunal’s view that the Claimant had not recorded the meeting with the intention of entrapment.  The EAT noted that the Claimant had recorded a single meeting concerned with her own position rather than the confidential information of the business or other individuals and that consequently whilst a reduction in compensation was appropriate, the tribunal has been entitled to limit that reduction to 30%.

Commentary & guidance

This is an interesting but not wholly unsurprising decision. The EAT has confirmed, correctly in my view, that whilst the making of covert recordings by employees will often constitute blameworthy conduct and/or misconduct, it is not necessarily the case that when the employees actions and/or motivations are viewed in context, that these actions will be sufficiently serious to justify the conclusion that the implied term of trust and confidence has been undermined and/or that the employee is guilty of gross misconduct.

The EAT was at pains to point out that technological advances mean that employees and employers can record meetings with relative ease and that it will not always be the case that employees are seeking to gain an unfair advantage and/or attempting to entrap the employer.

The context of the meeting will also be a relevant factor. If the meeting was of a type where a detailed (although not necessarily a comprehensive) record of the meeting would ordinarily be made and subsequently circulated then the act of covertly recording that meeting will not generally be regarded as being as serious as a recording that is made of a meeting that is intended to be confidential and/or a meeting where sensitive information relating to the employer’s business and/or other individuals and employees is discussed. Indeed, covert recordings of these types of meeting may well give rise to potentially serious ramifications in terms of both the employer’s and employee’s obligations under the General Data Protection Regulation (GDPR) and the Data Protection Act 2018.

Finally, employers will note that the failure by the Respondent in this case to cite the covert recording of internal workplace meetings in its own disciplinary rules was seen as a relevant factor when it came to the tribunal’s decision to reduce the Claimant’s unfair dismissal Basic Award and Compensatory Award by only 30%.

Employers may want to consider (in light of the comments made by both the Employment Tribunal and EAT) whether their own disciplinary rules should be amended and updated in order to make it clear that the act of covertly recording a meeting will be deemed to constitute an act of gross misconduct. Amending your disciplinary rules to include this reference might deter employees from deciding to make the recording in the first place and/or strengthen the prospects of the Employment Tribunal agreeing to make a substantial reduction in the amount of compensation awarded to an employee in the event of a successful unfair dismissal claim.

Alternatively and/or in addition it would be good practice, in my view, for employers to state expressly at the outset of internal meetings (including for the avoidance of doubt disciplinary and/or grievance hearings) that the meeting is taking place on the understanding that it is not being recorded and to ask the employee to confirm their agreement to and/or understanding of this fact. A note of this part of the discussion should be included in the employer’s own notes. Additionally, if the employer’s own disciplinary rules expressly prohibit the making of covert recordings then this fact should be highlighted to the employee in the letter that they receive inviting them to attend the relevant meeting or hearing.

Please contact Nathan Combes by telephone on  01904 611 411 if you would like to discuss any of the issues raised in this blog or if you require help and/or assistance in relation to the drafting and/or content of your own organisation’s internal disciplinary rules, policies and procedures.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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