Archive for March, 2013

Our Employment Law colleagues blog on another Employment Tribunal case related to an employee’s use of social media. In this case, the employer’s social media policy was relevant to the Tribunal’s dismissal of the employee’s claim.

Brodies Employment Blog

Recently, there have been a number of Employment Tribunal cases focusing on employees’ Facebook posts. In Weeks v Everything Everywhere Limited, the claimant was dismissed after making posts that compared his employer to Dante’s Inferno.

Everything Everywhere Limited (EEL) employed Mr Weeks as a customer service adviser. Its social media policy warned employees to avoid making posts that could damage EEL’s reputation or be viewed as bullying and harassment.

Mr Weeks frequently made Facebook posts that likened EEL to Dante’s classical portrayal of Hell, such as “Dante’s awaits me – what a downer 12 hours of love and mirth“. Ms Lynn, one of his colleagues, reported these comments to Mr Groom, his line manager. Mr Groom formally warned Mr Weeks to stop posting in this manner.

After receiving the warning, Mr Weeks made posts which Ms Lynn found threatening. For example, he posted “it saddens me that people…

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New rules on payment surcharges in consumer contracts

At the end of last year, the Government implemented Article 19 of the Consumer Rights Directive through the new Consumer Rights (Payment Surcharges) Regulations 2012. These regulations aim to address ‘above-cost’ payment surcharges made by traders.

Payment surcharges (where a trader imposes a fee on customers depending on the type of payment method they choose to use) have become a popular way for traders to reduce the headline cost of goods or services when trading in a competitive market. Payment surcharges are particularly notorious in the budget airline industry (where substantial charges are often imposed for using a credit card), but in recent years have become increasingly common in both on and offline consumer contracts.

The new laws are aimed at ensuring that any surcharges are note used by traders as a mechanism for generating additional revenue for the trader.

So what do these regulations actually change?
The new regulations prohibit traders from imposing payment surcharges on customers where the charge exceeds the cost to the trader of using the payment method – in other words, ‘above cost payments’. They are payment method agnostic – that means they apply not just to surcharges imposed when using a credit or debit card, but also other methods such as cheques, cash and direct debits.

In addition to payment charges, the regulations are also applicable to discounts offered for paying using particular methods (for example, direct debit).

The regulations apply to all consumer contracts (both on and offline) in sales or services, digital content and most utilities, and also extend to package holidays, which is beyond the scope of the Directive. The rationale for including package holidays is that a failure to extend the prohibition would produce inconsistencies between packages holidays and individual, separately purchased, components of a holiday (for example air travel).

The regulations detail some excluded contracts including certain financial service and social services contracts.

Charges that do not vary depending on the payment method (and therefore apply to all payment methods) are not affected by the regulations.

How do you calculate what charges are reasonable?
Neither the regulations nor the Directive define what the “cost to the trader” is for the purposes of determining what charge is appropriate. In its guidance (see link below) the Department for Business Innovation and Skills states that only direct costs are relevant, but that these will vary depending on the size of the trader.

In relation to card payments, the guidance lists the following types of costs as being relevant:

  • The Merchant Service Charge, which traders pay to their acquiring bank
  • IT and equipment costs used for particular means of payment such as card terminals, for example point of sale devices
  • Risk management – active fraud detection and prevention measures which vary depending on their business and whether transactions take place face to face or remotely
  • Processing fees such as charges for reversing or refunding a payment
  • Any operational costs that can be separately identified as internal administrative costs arising from activities dedicated exclusively to card payments. For example, where traders opt to buy in services from intermediaries who provide equipment, fraud detection and processing services (especially online payments) for card payments, they should be able to recover the costs they incur through a payment surcharge.

When does this change come into effect?
The regulations come into force on 6 April 2013 and apply to all contracts entered into on or after this date, although new businesses (which begin trading between 6 April 2013 and 12 June 2014) and micro-businesses (less than 10 employees) are given until 12 June 2014 before the regulations apply.

Do the regulations have any other powers?
In the event of non-compliance trading standards are provided with powers to investigate.

Trading standards can also seek undertakings from traders or apply for injunctions in the event of non-compliance. The regulations can also be enforced under the Enterprise Act 2002 (Part 8 Domestic Infringements) Order 2013. Specified enforcers can apply to the courts for enforcement orders if they become aware that a trader has or is likely to engage in conduct which constitutes an infringement.

What do traders need to do now?
Any trader that currently imposes payment surcharges should review their charges to ensure that they are compliant with the new regulations.

Further information…
The Department for Business, Innovation and Skills has published helpful guidance including Q&A’s on the new Regulations whith can be accessed on the BIS website (PDF).

Martin Sloan

The SPL’s big bar bill (broadcasting rights)

Over the past couple of years I have written periodic updates regarding the rights of English (or English-based) pub landlords to use “foreign” decoders to screen football matches in their pubs.  Following the European Court of Justice (“ECJ”)’s decision as reported in Football Association Premier League v QC Leisure, in  my post from last February I offered this summary of the state of play:

The ECJ decided that national legislation banning the use of overseas (non-UK, but EU supplied) decoders amounted to an unlawful restriction on competition, and it was probable that only certain elements of Sky’s broadcast of match footage was protectable by copyright….Provided a landlord is using an EU decoder of some description, the consequences very much remain to be seen.  Perhaps the best way to summarise the current situation is to borrow some football terminology:

  1. Win – Use a decoder supplied by Sky
  2. Lose – Use a decoder without paying for it, or a decoder obtained from/that accesses the feed of a non-EU rights holder
  3. Draw – Use a decoder supplied by a EU (but non-UK) rights-holder

A new development in the pub landlords v football rights holders battle emerged on Monday, when it was reported that the Scottish Premier League (SPL) is facing a £1.7m damages claim over its legal bid to stop a pub group screening live matches via a Polish broadcaster.  The case in question is The Scottish Premier League Limited v Lisini Pub Management Company Limited

The background of the case

The story starts way back in 2006, when new Rangers boss and “fitness fanatic” Paul Le Guen was at war with Barry Ferguson, and present-day SPL player of the year Charlie Mulgrew was being “made into a man” (and what a hunky one!) at Wolves. 

The SPL took proceedings back in against Lisini Pub Management Co Ltd for unlawful broadcasts of Celtic games in autumn 2006 using a broadcast signal from Poland.  At the start of 2007 Lisini signed an undertaking saying that they would stop using foreign decoders.  They then used a Polish decoder to screen a match in April 2007.  The SPL then obtained interdict to prevent any more use of foreign decoders.  And the case was then sisted to see what the ECJ had to say about the use of decoders supplied by EU rights-holders. 

Of course, as described above, the ECJ decided that the use of foreign decoders was probably OK, and Lisini Pub Management Co Ltd is now counterclaiming against the SPL, seeking damages of £1,761,749. 

The decision

In the Outer House of the Court of Session Lord Woolman refused to dismiss Lisini’s counterclaim, concluding:

 In my view the English Premier league case has an important bearing on the present action. The material facts are virtually identical. The ECJ gave clear answers to the precise questions referred to it. Its decision means that subscribers in member states are entitled to access broadcast signals from other member states. An EC citizen living in (say) Germany should not be prevented from obtaining a signal from Sky, BBC, RAI, Nova or Polsat.

The SPL sought to argue that the ECJ arrived at its conclusions without any detailed investigation of whether banning the use of overseas (non-UK, but EU supplied) decoders would actually have an anti-competitive effect on the market for live football broadcasts.   Lord Woolman found this argument “unconvincing”. 

What’s not reported amongst the “SPL face £1.7m claim” headlines is that I think Lisini will have to work quite hard to actually prove such a huge loss.   It will be interesting to see how they reach that figure – it’s not exactly “small beer”.

John-McGonagle

European Parliament approves new consumer dispute resolution procedures

The European Parliament recently confirmed its adoption of the European Commission’s Alternative Dispute Resolution (ADR) and Online Dispute Resolution (ODR).

The ODR is intended to establish an EU-wide online platform to quickly and efficiently handle consumer disputes arising from online transactions, avoiding the need to go to court.

Tonio Borg, Commissioner for Health and Consumer Policy explained that

ADR and ODR are a win-win for consumers, who will be able to resolve their disputes out-of-court in a simple, fast and low-cost manner, and also for traders who will be able to keep good relations with customers and avoid litigation costs.

Astoundingly, the Commission claims that the a well-functioning and transparent ADR could save consumers €22.5bn a year.

Online Dispute Resolution – the basics
ADR aims provide an alternate route to resolving disputes by using non judicial entities – for example, a conciliator, mediator, arbitrator, or ombudsman.

The ADR entity proposes a solution or brings the parties together to find a solution. Entities operating fully online are called online dispute resolution entities and will be utilised in the new ODR platform.

With more online and cross border European trade the ODR platform will allow the resolution of disputes when traders and consumers are in geographically different locations. The nature of the platform will (hopefully) speed up procedure to the benefit of both consumers and traders.

It is intended that the new procedure will be available to resolve all consumer contract disputes other than contracts for health and education, regardless of what they purchased, and whether the purchased it domestically or across borders. The ADR process will apply to contracts purchased both online and offline.

When will the regulations come into force?
Member States will have 24 months, after the entry into force of the Directive, to transpose the regulations into national legislation i.e. midway through 2015. The ODR platform will become operational six months after the end of the transposition period.

What should traders do now?
A trader who commits or is obliged to using ADR will need to inform consumers about ADR on their website and in their general terms and conditions. Although the changes are not intended to come into force for some time, traders should start to think about their process changes now.

Traders will be obliged to inform consumers about ADR when a dispute cannot be settled between the trader and consumer. Traders should also provide a link to the ODR platform on their websites.

How will it work in practice?
The platform will link all national alternative dispute resolution entities. A set of common rules will be published detailing the functions of the ODR platform, including the role of national ODR advisors.

Consumers will be able to submit a complaint online using the ODR platform. The platform will notify the trader a complaint has been made. The consumer and trader will then agree upon the appropriate ADR entity to determine the dispute. The new rules provide that ADR entities should settle disputes within 90 days.

We will post more information on the new procedures when they become available.

Martin Sloan

Leveson, Royal Charters and the future of press regulation in Scotland

On Monday the three main political parties in Westminster agreed on a plan to implement the Leveson Report’s press regulation recommendations in England and Wales.

The plan
The agreed approach involves a Royal Charter which will establish a new regulator for the press, and amendments to the Enterprise and Regulatory Reform Bill (to help entrench the Royal Charter so that it can only be dissolved by a two-thirds majority vote of both the House of Commons and also House of Lords) and the Crime and Court Bill (so that all “relevant publishers” who do not sign up to the new regulator will pay extra or exemplary (punitive) damages for libel and breaches of privacy). 

The Royal Charter is surprisingly difficult to find, but here is a link.  It remains to be seen whether the new plan will gain widespread acceptance.

Labour leader Ed Miliband has claimed that:

What we have agreed is essentially the royal charter that Nick Clegg and I published on Friday. It will be underpinned by statute. Why is that important? Because it stops ministers or the press meddling with it, watering it down in the future.

Tough talking, but what exactly does Ed Miliband mean when he says “essentially the royal charter”?  What might end up being different?

Well, according to the Royal Charter as drafted at present, a “relevant publisher” means:

a person (other than a broadcaster) who publishes in the United Kingdom:

i) a newspaper or magazine containing news-related material, or
ii) a website containing news-related material (whether or not related to a newspaper or magazine)

It’s an alarmingly wide definition, which could capture not just foreign news websites but also bloggers and perhaps Tweeters. It doesn’t entirely correspond with Culture Secretary Maria Miller’s assertion that:

a publisher would have to meet the three tests of whether the publication is publishing news-related material in the course of a business, whether their material is written by a range of authors – this would exclude a one-man band or a single blogger – and whether that material is subject to editorial control.

By way of example, here on Brodies Techblog we have a team of bloggers, we publish news-related material in our blogs (in that we comment on topical legal issues), and our posts are subject to editorial control before they are published. Did Cameron, Milliband and Clegg have blogs like this in their sights when agreeing the draft charter? Should a blog like this be treated differently from the blog of a individual, but high profile and influential blogger? It’s not clear.

What is clear is that there is still work to be done on the drafting of the charter.

Should the press be regulated like broadcasters?
An interesting – but often overlooked – aspect of the press regulation debate is that broadcasters are regulated by communications regulator Ofcom.

The traditional freedom of the press (particularly in comparison to broadcasting) has complex roots and justifications, including the practical issue of scarcity of broadcast spectrum, which has led to far stricter regulation of television and radio broadcasters.

As a consequence of Ofcom’s regulatory control over broadcasters, broadcasters’ websites are specifically excluded from the Royal Charter definition of “publishers” set out above.  These websites will continue to be regulated by Ofcom.

The Scottish dimension
Press regulation is a devolved competency of the Scottish Parliament.  Alex Salmond has said the concept of a UK-wide regulator backed by Royal Charter may be “an idea worthy of consideration”.

It appears that the First Minister is keen to distance himself from the report produced of the Expert Group on the Leveson Report in Scotland, better known as the “McCluskey Report” (in reference to the Group’s chair, Lord McCluskey), which was published three days before the Westminster announcement.

The recommendations were widely derided last week as being draconian and having gone too far.

Allan Rennie, editor-in-chief of Media Scotland, said:

it’s not just about the press, it’s about anyone in Scotland who dares to express an opinion.

Analysis of a Report and recommendations which appear stillborn are perhaps academic, but it’s not entirely easy to reconcile some of the more vigorous attacks on the McCluskey Report with the actual content of the Report’s proposed Draft Press Standards (Scotland) Bill.

For example, one of the most widely repeated claims over the weekend was that the proposed draft Bill would apply to any publication which can be viewed from Scotland (in other words, anything on the internet, regardless of where the author of the content in question is located). While it’s correct that in the case of allegedly defamatory publications posted on the internet it is generally accepted that “publication” takes place where the article is downloaded, the proposed draft Bill didn’t explicitly refer to this understanding of “publication”.

It referred instead to a publication which “takes place in Scotland”. Further, paragraph 20 of the McCluskey Report specifically stated that the proposed draft Bill was written in “plain English”. (On the other hand, it does seem curious that the proposed draft Bill dispensed with the “publishes in the United Kingdom” wording in several of the draft bills that have been in circulation recently, including Hacked Off’s “Proposed Media Freedom and Regulatory Standards Bill”.)

Differences under the Scottish legal system
Less ambiguous was the McCluskey Report’s conclusion that

we have reached the view that there is no practical alternative to making [the new regulation system] compulsory for all news-related publishers.

As discussed above, the new plan agreed by the three main parties in Westminster does not provide for compulsory opt-in, but instead envisages exemplary damages for publishers who fail to sign up to the new regulator.

However, because damages under Scots civil law are purely compensatory, the concept of exemplary or punitive damages is unknown in Scotland. This is explained in further detail in the Scottish Government’s “Carrots and Sticks” Leveson Briefing Note.

There are also other aspects of Scots Law which would require consideration should the Royal Charter plan be followed, including arbitration and court expenses (in Scotland “costs”).

However, none of these problems would be insurmountable, and the McCluskey Report itself noted at Paragraph 10:

Scottish legislation could provide for a separate Scottish Recognition Body. We do not consider that there is anything in such a proposal that would prevent the formation of a single UK-wide Regulatory Body if that as considered appropriate”.

Alex Salmond has said that he shall continue cross-party talks on press regulation, and report to the Scottish Parliament after Easter. The Scottish Government has separately sought clarification from the UK Government on the impact of the proposed Royal Charter in Scotland.

For the timebeing, however, the future regulation of the press and the web in Scotland (or available in Scotland), and its scope, remains unclear, leaving publishers in the UK uncertain as to whether they will be subject to two different regimes or a single, harmonised, regime.

We will continue to follow this debate as it evolves.

John-McGonagle

Kitchen design company fined £90,000 for unsolicited marketing calls

As someone who received a number of cold calls from fitted kitchen company DM Design, I’m pleased to see that the Information Commissioner’s Office (ICO) has taken action against the company for a breach of the Privacy and Electronic Communications Regulations (PECR).

The fine is the first monetary penalty to be issued by the ICO in relation to live marketing calls. The ICO’s power to issue monetary penalty under the PECR came into effect in 2012, but to date the power has been little used. The first fine to be issued under the PECR, in November last year, was however fairly high – a £440,000 fine issued to Tetrus Communications after it sent millions of spam text messages to promote compensation claims for personal injury and payment protection misselling.

Both fines serve as a timely reminder to organisations involved in telemarketing – whether by telephone, email, or SMS – to ensure that their processes comply with the law.

The law on unsolicited telemarketing
Under the PECR, organisations must not make unsolicited calls for direct marketing purposes where:

  • the subscriber (recipient of the call) has previously notified the caller that it does not wish to receive such calls: or
  • the telephone number in question is registered with the Telephone Preference Service (TPS).

To enable organisations to check whether a number is registered with the TPS, organisations can pay a fee to the TPS to receive a regular report of numbers that have opted out of receiving direct marketing. In practice, this means that any organisation wishing to make unsolicited marketing calls is required to subscribe to the TPS’s service and regularly check their calling lists against the list of numbers registered with the TPS.

The PECR also sets out rules applying to marketing by text (SMS) and email. In summary, an organisation cannot send unsolicited direct marketing emails or text messages (or faxes) to consumers unless:

  • that individual has either provided their details to the organisation as part of a previous transaction (and the marketing is for similar products and services from that organisation); and
  • the individual was given the opportunity to opt out of receiving marketing when the information was collected, and any permitted marketing gives the individual an easy way to opt out of future marketing.

So called “silent calls” (where an automated system dials numbers but when the recipient answers there is no one on the other end) are dealt with by the telecoms regulator, Ofcom. Ofcom now has powers to fine organisations making silent calls up to £2m.

What did DM Design do wrong?
In this case, it appears that DM Design consistently failed to check whether the people it was phoning had opted out of receiving marketing calls, and (in at least one case) refused to remove the individual’s details from their system when asked to do so.

Over an 18 month period, the TPS received nearly 2000 complaints in relation to unsolicited marketing calls from DM Design. According to the TPS’s records, 12 months into the complaint period, DM Design did pay for one month’s subscription to the TPS mailing list and downloaded it once, but did not download the list at any other time during the period of the complaints.

Reporting silent calls and spam telemarketing
If you receive silent calls or unwanted telemarketing, and are registered with the TPS), then you should report the call, email or SMS to the ICO or Ofcom (see links below). Having done this with unsolicited communications from a number of organisations (including DM Design), I'm pleased to see that the ICO is finally taking enforcement action.

Of course, in order for the ICO to investigate, they will need details about the party that sent the message. I usually find that if you connect through to the call centre, then the operative will usually me more than happy to tell you who they work for and where they are calling from before realising why you are asking!

You can access the ICO's unwanted text and calls reporting tool by following this link.

You can report silent calls to Ofcom.

Martin Sloan

Spring seminars

As part of Brodies’ spring seminar programme, we will be hosting two seminars involving Techbloggers:

  • Brand protection in the new internet landrush – this seminar will look at what you can do to protect your brand online – whether social media, web 2.0 or good old fashioned cybersquatting. The seminar will be hosted by IP experts Gill Grassie and Robert Buchan, with a guest speaker from domain management specialists, Demys
  • How insolvency can impact upon your brand and intellectual property rights – this seminar brings together our intellectual property and insolvency experts to talk about the importance of intellectual property rights and what can be done to protect and exploit these in the event of insolvency, and the impact of insolvency on licence agreements and commercial or supply contracts. The seminar will feature Gill Grassie and Robert Buchan and our insolvency lawyers Rachel Grant and Jonanna Clark.

The events are free and will be held at our offices in Edinburgh, Glasgow and Aberdeen.

For more details and information on how to register, please go to our Events Page.

We look forward to seeing you there.

Grant-Campbell

Niall Mclean blogs on Brodies PublicLawBlog about a recent ICO monetary penalty notice issued following the loss of sensitive personal data by the Nursing and Midwifery Council.

Brodies PublicLawBlog

Last month, the Information Commissioner’s Office (ICO) fined the Nursing and Midwifery Council (NMC) £150,000 after the loss of three unencrypted DVDs which contained sensitive personal data.   The DVDs related to a nurse’s misconduct hearing and contained evidence from two vulnerable children.   You can read the ICO’s Monetary Penalty Notice here.    A recent post on our TechBlog discussed the methodology the ICO uses for calculating penalties and the NMC’s breach falls into the “very serious” category.

The NMC has expressed disappointment at the decision which it says was down to “an isolated human error”.  The fine is a pointed reminder to regulatory bodies of the importance in keeping hearing information confidential and secure – particularly where it is held electronically and should be encrypted.

Niall Mclean

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Information Commissioner publishes guidance on Bring Your Own Device

The UK’s Information Commssioner’s Office (ICO) has today published new guidance for employers on the use personal (employee owned) devices for work purposes.

Bring Your Own Device (or BYOD) is a hot topic for many organisations. Many employees are seeking to use their own smartphone or tablet for work purposes. If properly implemented, a BYOD scheme can actually reduce the information security risks by making it easier for employees to access corporate data on their own device, thereby discouraging them from trying to find workarounds (such as emailing confidential information to a personal email address, or using a personal email address to carry out work business).

However, there are risks.

In November, Computer weekly reported that the number of BYOD devices in use was set to double by 2014. However, Gartner predicts that through 2014 employee owned devices will be compromised by malware at more than double the rate of corporate owned devices.

A survey by the ICO, published alongside the new guidance, reveals that some 47% of those polled have used a personal device (whether a smartphone, tablet or laptop) for work purposes. However, only 27% of respondents said that their organisation had provided guidance on the use of personal devices for work purposes.

BYOD policy
This is worrying, as it opens up the employer and employee to a number of risks.

For example, if the employer turns a blind eye to BYOD (which would otherwise breach its information security policy), it will find itself in a very difficult position in the event of a data loss incident. Not just with the ICO and any potential fine for a breach of the Data Protection Act, but also in terms of the ability of the employer to take disciplinary action against the employee.

A lack of a BYOD policy means that the employer has no cogent BYOD strategy, setting out what is and isn’t acceptable. For example, the sorts of devices that are considered to have appropriate levels of security, password security, the employee’s responsibilities, and what happens if the device is lost or stolen.

The policy should also cover other issues such as who is responsible for voice and data costs, insurance, and what happens if the employee is unable to carry out his duties because the device has been lost or stolen.

The ICO’s guidance
The ICO’s guidance emphasises the importance of developing a BYOD policy contains the following key recommendations:

  • Be clear with staff about which types of personal data may be processed on personal devices and which may not.
  • Use a strong password to secure your devices.
  • Enable encryption to store data on the device securely.
  • Ensure that access to the device is locked or data automaticaly deleted if an incorrect password is input too many times.
  • Use public cloud-based sharing and public backup services, which you have not fully assessed, with extreme caution, if at all.
  • Register devices with a remote locate and wipe facility (mobile device management) to maintain confidentiality of the data in the event of a loss or theft.

The guidance also reminds organisations in the public sector that information held by employees on a personal device may be subject to disclosure under freedom of information legislation.

More information
To read our top tips for BYOD, follow this link.

To read the ICO’s new guidance, follow this link.

Brodies can help you develop a BYOD policy which suits your organisation. To discuss how we can assist please contact me or your usual Brodies contact.

Martin Sloan

Is it reasonable to dismiss an employee at the request of the customer under an outsourcing agreement?

Our Employment Law colleagues have blogged on a recent Employment Appeals Tribunal decision over the dismissal of an employee by an outsourcing services provider following a request by the customer to remove the inidivual.

You can read more about the EAT’s decision by following this link.

Provisions that allow the customer to demand the removal of a member of staff are often an area of disagreement when negotiating an outsourcing contract. Often, the customer will require such a right for regulatory reasons (for example to comply with the FSA’s rules on outsourcing). However, the customer will also often insist on such a right to maintain the smooth running of the services and to ensure that disruptive employees (or those suspected of wrongdoing) are removed.

Outsourcing suppliers frequently push back on this as they fear that complying with such a request could lead to an unfair or constructive dismissal claim from the employee concerned.

This decision confirms that a decision to dismiss an employee at the request of a third party can be reasonable (and therefore lawful). However, the employer must consider the degree of any injustice on the employee and what alternative steps could be taken prior, or as an alternative to, dismissal. In this case, it appears that the employer did not investigate the underlying problem before dismissing the employee.

The decision will provide customers with some reassurance that such provisions are reasonable and should not automatically cause the outsourcing services supplier to be in breach of its obligations under employment laws, whilst also providing outsourcing services suppliers with some guidance on how such requests should be handled.

Martin Sloan


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