Employment Law Across The Pond

Monday, May 3, 2010 - 01:00

Editor: Please tell us about your professional background and Proskauer's London labor and employment practice.

Ornstein: Employment law has been my special field for more then ten years, advising mainly employers on a full range of employment law issues, such as litigation, counseling and traditional labor law. Some of the areas where I have a particular specialty include advising and litigating in relation to what we call in the UK "team moves" which raise non-compete and trade secret issues. We act on behalf of those hiring as well as employers trying to prevent employees from leaving. I do a lot of traditional trade union law, such as industrial action, collective bargaining and trade union recognition issues. I also advise on large-scale redundancies, which in the UK will often trigger collective consultation obligations. I've been at Proskauer now for about six months and joined as part of our focus on international expansion. We're just at the start of a long-term project to build up a leading UK employment practice complementing our leading practices throughout the U.S. as well as in France. It is a tremendously exciting project.

Editor: How many lawyers are involved in your labor and employment practice in London?

Ornstein: At the moment there are three of us in the London office, a small proportion of the 150 or so labor and employment lawyers we have globally.

Editor: In the UK I understand that there are specialist employment courts. Would you tell us more about these and the impact this has on employment litigation in the UK?

Ornstein: The majority of employment-related litigation is conducted through the Employment Tribunal System, courts throughout the UK that are dedicated to employment-related disputes. Historically these courts were started with a view to providing an informal forum for settling workplace disputes, where there was the quaint idea that the individual would represent himself or herself and the company would be represented by someone in HR. It's fair to say over the last 30 years or so Employment Tribunals have become increasingly formal, particularly given the growing complexity of employment law as well as the emergence of more and more legislation. Cases before Employment Tribunals are decided by panels consisting of a chair, who is a qualified lawyer, along with two lay members, one of whom will usually come from a union background and the other from an industry background. The aim for the Tribunal, which I think has been achieved broadly successfully, is for the panel to be able to draw on real experience in the workplace to arrive at equitable decisions within the context of the law. There's recently been talk of reducing the involvement of the lay members, which has been met by resistance from practitioners - a testament to the general consensus that the Employment Tribunals work well.

Like most courts (but in contrast to arbitrations) Employment Tribunals are open to the public, meaning that high-profile cases are often reported in the media. Therefore, one important aspect of advising clients is to assist them in managing any publicity a case may generate and the associated reputational issues. Another important feature of Employment Tribunals is that they have very limited powers to make cost awards, meaning that unlike most litigation in the UK, the loser doesn't have to pay a proportion of the winner's legal costs. This is an important factor in litigation because very often, the costs of fighting a long trial can exceed the amounts of money at stake.

Another important difference between the UK and the U.S. is that in the UK damages are based on loss of earnings flowing from the act complained about. For instance, if an employee loses his job (even if the dismissal was unlawful) but then gets a new job the next day, he will have no material damages claim, no matter how unfair the dismissal. Even in the most heinous cases of discrimination, there are judicial guidelines that limit the amounts of compensation payable to about £30,000. This means that value of claims in the UK is generally lower than comparable claims in the US.

Editor: Is there no appeal from the judgments of the Employment Tribunals?

Ornstein: The appeal may be taken up to a specialist Employment Appeals Court, which has the status of the High Court, chaired by judges with specialist knowledge of employment law but who have the status of High Court judges. If you want to go one step further, you're back-fed into the normal judicial system, and have to appeal to the Court of Appeal (which also hears appeals from the High Court), then one more step up to the final court, the Supreme Court. In some cases, there may also be scope to refer issues to the European Court of Justice where these raise questions of European law (which is an underlying source of a significant amount of UK employment legislation).

Editor: The UK has a long tradition of trade unions. Would you tell us about some of your work regarding trade union and collective labor law? How is that changing in today's global marketplace?

Ornstein: I have been lucky enough to have gained significant amounts of experience advising employers in connection with trade union and labor law throughout my career. At the very beginning of my career, I acted for employers in the coal industry in collective disputes with unions representing mineworkers, which included strikes and pay disputes. More recently, my work in that area has included acting on behalf of employers in the financial services sector in collective negotiations with unions representing support staff and acting for employers where unions are seeking collective bargaining rights, including acting for Cable&Wireless in one of the leading UK decisions in this area. I also advise corporations about strategies and their legal rights in connection with industrial action, including in relation to a current "hot topic" in the UK, which relates to trade unions taking industrial action in response to employers utilizing workers from outside the UK. (Last summer there were a series of wildcat strikes in the UK in the energy industry in response to employers using overseas workers.)

Indeed, from an international perspective, the mobility of workers has become an increasingly important issue in industrial relations, especially because in many cases, trade unions have opposed having workers from one country finding positions in another. This raises very interesting issues from a European law perspective, where one of the fundamental principles is the freedom of movement of workers throughout the European Union.

Another trend I've witnessed is increasing cooperation between unions in different countries. In one case I was recently involved when organizers from a U.S. union were brought to the UK to help a UK union organize its campaign. However, in some cases I've been involved in, the interests of unions from different countries have not been aligned; for example, when a multinational corporation has to make choices about where it is going to make layoffs, unions from different countries have taken opposing views.

Editor: Please tell us about the recent British Airways case and how it demonstrates one difference between U.S. and UK employment law.

Ornstein: Generally, there have been increasing threats about possible strike action within the UK in recent months. One example is the British Airways case. Toward the end of last year, the High Court granted British Airways an injunction to stop a strike called by the UK's largest union, "Unite." More recently, an injunction to stop a strike was granted in favor of Network Rail, operator of the UK train services, against a strike organized by the RMT, a union representing transport workers. In each of the two cases, the basis for the injunction was that the union had not complied with statutory requirements to render a strike lawful. For example, in the British Airways strike Unite balloted members who would no longer be employed by British Airways at the time of the strike because they had accepted voluntary redundancy. Similarly, in the Network Rail case, the RMT balloted people ineligible to participate in the strike. Both cases were illustrations of the fact that in the UK the courts have the power to enjoin strike action where there has been deliberate or reckless failure to comply with certain procedural requirements. This shows one major difference between the UK and the U.S. Under UK law the power to enjoin strikes is limited to a situation where a union has failed to comply with procedural requirements. The courts in the UK (save in cases where freedom of movement within the EU is inhibited) have no power to enjoin a strike based on the merits or justice of the action, even where the strike is contrary to a "no strike clause" in a collective bargaining agreement.

In contrast, in the U.S. the general rule is broadly that a court cannot enjoin a strike except in limited circumstances, which relate to enforcing a "no strike clause" in an existing collective bargaining agreement which calls for an arbitration procedure and the strike is about a grievance that should have gone to arbitration.

Editor: I understand you were involved with UBS v. Vestra and Farr v. Thomas before the High Court. Would you tell us about these cases?

Ornstein: In the UBS case a special kind of injunction, known as a springboard injunction, was granted in response to the mass resignation of more then 50 UBS employees. A springboard injunction is one that prevents a wrongdoer from benefiting from his own wrongdoing through court-imposed restrictions (such as preventing the wrongdoer from dealing with the clients of the wronged party for a period of time). Before the UBS case, there was uncertainty as to whether that type of injunction could apply other than when the wrongdoing involved the misuse of confidential information. The UBS decision supported the view that springboard relief is available in respect of any wrongdoing rather then just confined to misuse of confidential information. This case has added to the employers' arsenal to prevent employees joining a rival.

In the Farr case, my client wanted to enforce a non-compete clause lasting for a whole year, which was held to be enforceable by the High Court. The other side appealed, and we won again in the Court of Appeal. I think it's fair to say that until that decision there had been a view among some practitioners that in most cases, non-compete clauses lasting a year would not be upheld by a court. Notwithstanding the decision, in every case it's critical to look at the particular circumstances. For an employer to enforce a non-compete, however long it is, he needs to be able to demonstrate that the protection being sought goes no further than is reasonable to protect the employer's interests.

Editor: Most companies want uniform practices and procedures across jurisdictions, but this is next to impossible. How do you approach achieving, if not uniformity, at least consistency or a level of predictability?

Ornstein: One strategy that's becoming more and more commonplace, and one I really like, is for companies to have a single policy which then has country-specific supplements. This solution accounts for legal and cultural differences between jurisdictions. It balances the desire to have a one-company focus attuned to local differences with the need to avoid a one-size-fits-all and often unworkable compromise.

Editor: As an employment lawyer in the current environment, doubtless your practice has included large-scale redundancies. Have companies needed to alter their practices in the context of the global financial crisis due to the pressures of publicity and/or increased likelihood of litigation?

Ornstein: There have been some changes in practices. Many employers are treating redundancies as a last resort. Instead, there's an increasing trend for employers to look at more creative ways of reducing costs, including reducing hours, increasing use of job-sharing and even offering sabbaticals with paid time off. These types of initiatives, particularly when they're carried out in consultation with employees, can often be win-win in difficult circumstances - employees feel they're being treated fairly, and employers often increase their chances of retaining good talent, which puts them in the stronger position in the not-too-distant future when things start to improve. One lesson learned from past downturns in some industries was that employers found themselves with an experience vacuum when things got busy again.

Editor: What advice as to its labor practices would you give an American company looking to open an office in the UK?

Ornstein: I would always advise a company to put its commercial needs first.

Don't set out to do things differently solely based on fear of employment law. My experience is that the UK is a flexible and open marketplace that enables commercial objectives to be achieved while complying with employment law requirements.

Please email the interviewee at dornstein@proskauer.com with questions about this interview.

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