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Spilling the beans: can employees be dismissed for discussing salary details with colleagues?

The Claimant in the case of Jagex Ltd v McCambridge was a Lead Concept Artist for a computer game developer. He had worked for the company for 6 years and had an unblemished record.

On the morning of 24 August 2017, the Claimant came across a visa application form on one of the company’s photocopiers, which included the salary of the company’s Senior Vice President and Head of Corporate Strategy, Mr Hamza Muddasir. The Claimant left the document in an area where unclaimed documents were placed, assuming that Mr Muddasir would collect it. Later that day, the Claimant was passing the same photocopier with his colleague, Mr Stuart Murray, and noticed that the document was still there. The Claimant pointed the document out to Mr Murray. The document had also been seen by another colleague, Mr Matt Heath.

Within the company, there was general dissatisfaction with the discrepancy in pay levels of Developers and Executives, and news about Mr Muddasir’s salary spread quickly. By lunchtime, having received the information from a separate colleague via text message, Mr Joe Redstall, a more senior employee than the Claimant, had initiated a game of “guess the Executive’s salary” while eating lunch offsite with colleagues. Neither the colleague who had sent the text message, nor Mr Redstall, had been told about Mr Muddasir’s salary directly by the Claimant.

When the Claimant noticed that the document had still not been claimed the next day, he placed it in a confidential waste bin. He mentioned the document to two more colleagues. Later the same day, the Claimant was asked to speak to a senior colleague, Mr David Osborne, as well as a representative from HR. He was informed that he was under investigation for a disciplinary matter as a result of divulging Mr Muddasir’s salary. The Claimant was open about who he had told about the document during this meeting.

At a disciplinary hearing on 7 September, the Claimant apologised for his actions, but stated that he did not believe the information to be confidential as he assumed salary information would have been published in the Company’s annual report (which it was not). Furthermore, the Claimant’s contract did not explicitly stipulate that salary details should be considered confidential information and that divulging such information would be grounds for dismissal. In spite of this, the Claimant was summarily dismissed for gross misconduct the following day.

Shortly after his dismissal, the Claimant made a claim against his former employer for unfair dismissal and wrongful dismissal. The Tribunal found in favour of the Claimant on both counts, finding that the Respondent’s interpretation of the confidentiality clauses of the Claimant’s contract was not reasonable, and that, rather, this was “an internal disclosure of information on a personal document left lying around which was not classified as confidential”. As such, the Claimant’s actions could not reasonably qualify as gross misconduct and he was wrongfully dismissed. The Tribunal considered the Respondent’s actions to be extraordinarily heavy-handed and an attempt to make an example of the Claimant.

The Respondent appealed the Tribunal’s decision to the Employment Appeal Tribunal on the grounds that:

  1. the Tribunal had ‘erred in its approach to the application of Polkey by not making a reduction to the compensatory award’;

  2. the Tribunal had ‘erred in deciding not to make a reduction for contributory fault in relation to both the basic and compensatory awards’; and

  3. the Tribunal had erred in its approach to the construction of the Claimant’s contract.

The EAT, siding with the Claimant, held that the dismissal had been substantially and procedurally unfair. There was some good news for the Respondent however, as when considering whether there should be a deduction in compensation, the EAT found that the Tribunal had erred in its application of the test for contributory conduct. The EAT reminded us that a Claimant’s conduct need only be “blameworthy or culpable” rather than being worthy of gross misconduct in order for a contributory reduction to be considered. This point alone was remitted back to the Tribunal for consideration at a final remedy hearing.

What does this mean for you or your business?

Employers should not automatically assume that salary details are confidential information. Disclosing such information is not necessarily grounds for disciplinary action unless there is explicit wording in the employee’s contract that prohibits such conduct. Even if the employee’s contract prevents them from disclosing salary information, the Equality Act 2010 includes provisions that offer protections to employees in certain circumstances. For example, discussions may be protected if an employee seeks or makes a pay disclosure for the purposes of determining a connection between pay and having a certain protected characteristic (e.g. race or gender).

Disclosure of employees pay will qualify as “personal data” and will likely trigger provisions under GDPR. Companies should take legal advice on such a request, however it is anticipated that a defence of legitimate interest or compliance with a legal obligation would be utilised by employers in such circumstances.

What do you need to be doing now?

In the interests of transparency, many companies have implemented pay scales that are shared with all employees. If an employer wishes to limit the disclosure of salary details, they must ensure that explicit terms are included in employees’ contracts. However, employers should also be mindful that they will not be able to prevent the disclosure of salary information in all circumstances. Employees are entitled to make or seek pay disclosures if this is in the interest of determining to what extent there is a connection between pay and a particular protected characteristic. Furthermore, as the case of Jagex Ltd v McCambridge demonstrates, it can be difficult to prevent the accidental disclosure of salary details, and employers should be cautious when taking disciplinary action against recipients of such information.

Recommended Reading

Click here to read the Employment Tribunal report.

Click here to read the Employment Appeal Tribunal report.

 

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.

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