Every business has valuable knowledge and confidential information - for example, knowledge of clients and contracts or technology - that it considers invaluable to its success. If an employer wishes to protect the use of this information both during and after a period of employment, restrictive covenants may be included in an employee’s contract.
The standard types of covenants are where restrictions are placed on a former employee being able to work in similar employment for a competitor. This is to prevent poaching of clients or customers of the former employer, or to prevent a former employee from dealing with former clients or customers, regardless of which party approached the other. Where employee poaching is concerned, a non-poaching covenant can also be used, which prevents an employee poaching former colleagues.
Restrictive covenants can be introduced as part of specified employment contracts before commencement of work but should not be used for all staff as this would only be frowned upon if it was later taken to court.
It will be largely applicable to the more senior staff - those in contact with the sensitive information that it is necessary to protect. Having such clauses set out in the contract from the outset may help to deter employees from joining competitors and may warn off potential new employers.
However, it can also be put into operation at a later date if an employee accepts promotion, or if their duties have changed. In this case, negotiation may be required as some will not willingly agree to the restrictions being introduced and it could be crucial to be able to prove that the employee agreed to the clause.
In order for a restrictive covenant to be enforced it must be considered to be reasonable and necessary to protect the business interests. Therefore, it is important that a restrictive covenant is carefully drafted and regularly checked to ensure that it is updated if necessary.
When invoking restrictive clauses, employers should consider what they want to achieve and the commercial repercussions of taking a particular stance in relation to publicity, client relationships, management time and cost, etc. Legal action in this area can involve a substantial amount of time and money.
United Airlines recently announced that they have reached an amicable resolution with Dr David Dao, the passenger who was forcibly removed from a flight by Chicago aviation police.
On April 9th, Dao, who was seated on a United Express flight operated by Republic Airlines, was dragged off the aircraft after refusing to surrender his seat to must ride aircrew. A video of the incident went viral and caused an outcry around the country.
Dao’s lawyers announced that he will receive a settlement from the company, although the exact amount will remain undisclosed, as per one of the agreement provisions. Whilst United Airlines CEO Oscar Munoz has admitted he ‘messed up’ with his first response to the incident, the lawyers did however call the resolution 'amicable' and stated that 'In addition, United has taken full responsibility for what happened on Flight 3411, without attempting to blame others, including the city of Chicago. For this acceptance of corporate accountability, United is to be applauded.'
When asked whether the incident had impacted ticket sales, Munoz would only say that due to the company's high volume it was too hard to tell. However, it has been reported that his contract has been amended so that he will no longer become the carrier’s Chairman in 2018.
In the wake of the incident, United initially announced certain changes to policy, which included no longer asking law enforcement officers onto airplanes unless there are security or safety reasons. Following on from this, they have initiated at least ten other changes including reducing the number of overbooked flights and substantially increasing the incentives for passengers who give up their seats.
Other US carriers have also been quick to react in reviewing their policies surrounding the surrendering of seats. For example, all Airlines for America (A4A) member airlines are now committed to not removing a boarded passenger from an aircraft in a bumping situation and also to ensuring that crew being transported are booked in advance.
It has been acknowledged that these changes are, in part, due to the threat from Congress to impose new regulations and to use an upcoming FAA spending bill to force airlines to make improvements. “Seize this opportunity” airline reps were told “If you don’t, we are going to come....and you aren’t going to like it”.
On May 1, 2017, relief from holding a Federal Aviation Administration (FAA) medical certificate came into force for certain pilots.
This relief is called BasicMed and means that General Aviation (GA) pilots who take advantage of this new rule can now fly without holding an FAA medical certificate, as long as they meet certain requirements.
Up until now, the FAA has required private, recreational and student pilots to hold a current third class medical certificate. This meant completing an online application and having a physical examination with an FAA-designated Aviation Medical Examiner (AME). The medical certificate was then valid for five years for pilots under 40 and for two years for pilots aged 40 and over.
The BasicMed rule has not changed the FAA’s certificate program, as applications can still be made for a first, second or third class medical, as before. Instead, it offers GA pilots an alternative to the FAA’s medical qualification process for the third class medical certificate.
Under the new BasicMed rules, pilots have to:
- Comply with the general BasicMed requirements (possess a U.S. driver's license, have held a medical after July 14, 2006).
- Get a physical exam with a state-licensed physician, using the Comprehensive Medical Examination Checklist
- Complete a BasicMed medical education course;
Then they must comply with certain aircraft and operating requirements.
It should be noted, however, that new and/or student pilots who have never held a medical certificate before, or pilots that have not held a valid medical certificate after July 2006, will need to obtain a third class medical before being eligible to apply for BasicMed.
Details about BasicMed can be found on the FAA website at: https://www.faa.gov/licenses_certificates/airmen_certification/basic_med/
Spirit Airlines, a low cost carrier based in Fort Lauderdale, Florida were brought to the public’s attention recently due to a fight between angry passengers who threatened their employees. The fracas began as a result of flight cancellations because of a lack of pilots, which the airline believe is due to organized action by some of their pilots, to not pick up voluntary overtime assignments.
Since February 2015, Spirit and the Air Line Pilots Association (ALPA) who represent its pilots have been engaged in collective bargaining talks regarding the complaint that their pay is way below market levels. However, by this April there had been a breakdown in negotiations which led, according to Spirit, to the “illegal work slowdown”. This caused around 15% of its scheduled flights to be cancelled in the first week of May, at a cost of around $8.5 million.
As U.S. labor laws do not permit employees in critical service public functions to go on strike or take part in work slowdowns, the U.S. District Court issued a temporary restraining order (TRO) on May 9th to ensure ALPA and their members restored operations.
However, while the Court also ordered a motion for a hearing on a preliminary injunction, Spirit Airlines have now stated that this is no longer necessary as an agreement has been reached with ALPA to indefinitely extend the TRO.
Although they declined to comment, Spirit said ALPA had agreed that the temporary restraining order “will remain in effect until a collective bargaining agreement is signed and ratified or, if applicable, the parties are released from mediation by the [US] National Mediation Board.”
Recently released research has revealed that nearly a quarter (23%) of employees are concerned that at least part of their job could soon be automated, as employers flock towards the latest technology.
Analysis suggests that up to 30% of UK jobs could potentially be at risk of automation by the 2030’s - lower than the US or Germany, but higher than Japan. More than 10 million UK workers are at high risk of being replaced by robots within 15 years as the automation of routine tasks gathers pace in a new machine age. However, in many cases the nature of jobs will change rather than disappear.
Those with the highest risk are male workers and certain industries, such as transport, retail and manufacturing. Education, health and social care are not likely to be as affected, as it is difficult to automate tasks undertaken in those areas.
Jon Andrews, the head of technology and investments at PwC, said: “There’s no doubt that AI and robotics will rebalance what jobs look like in the future, and that some are more susceptible than others.”
He went on to say, “What’s important is making sure that the potential gains from automation are shared more widely across society and no one gets left behind. Responsible employers need to ensure they encourage flexibility and adaptability in their people so we are all ready for the change. In the future, knowledge will be a commodity so we need to shift our thinking on how we skill and up skill future generations. Creative and critical thinking will be highly valued, as will emotional intelligence.”
The report predicted that automation would boost productivity and create fresh job opportunities, but it also stated that action was needed to prevent the widening of inequality that would result from robots increasingly being used for low-skill tasks, such as in the construction industry.
Robots that can lay six times as many bricks a day as humans have already replaced humans on a handful of sites in America. The firm who developed the robots - called SAM (Semi-Automated Mason) plan to introduce them into the UK within the next two years.
Scott Peters, president of Construction Robotics, told The Times, “We are going to be going over to the UK in the coming months to meet with some companies and see if we can find a home for Sam there.”
According to Construction Robotics, SAM has the ability to pick up bricks, apply mortar and lay the bricks but humans will still need to set up the robot and supervise.
Australian company Fastbrick Robotics has also developed a proof of concept for a commercial bricklaying machine called Hadrian X which can, from the computer aided design of a house structure handle the automatic loading, cutting, routing and placement of all bricks to build a complete house in two days. Delivery of the first commercial prototype of Hadrian X is due later this year.
Some of Britain's biggest construction firms have warned that the automation of the industry is likely to result in mass layoffs and Alison Carnwath, chairwoman of Land Securities, stated at the Institute of Directors' annual convention, “Five years ago I'd have smiled wryly if somebody had said to me that robots would be able to put up buildings in the City of London. I tell you we're not that far off, and that has huge implications."
From time to time, employees sustain injuries - either occupational or non-occupational - which involve them having a prolonged absence from work.
Often, a number of these employees have major difficulty in recovering enough to be able to return to their former jobs within a suitable time-scale. As a result, employers must consider how to terminate the relationship without infringing federal or state law.
Most employees want to get back to work as soon as possible after an injury. No one expects to be fired from work after returning from a painful recovery. State and federal laws protect workers from unjust and illegal firings based on breach of contract, various forms of discrimination, employer retaliation and disability.
In most states, any employee is liable to be terminated at the will of the employer, provided it is not for a reason prohibited by law, public policy or a contract right. An employer cannot terminate an employee because the employee has filed a workers’ compensation claim, or has a health condition that constitutes a disability; has taken a qualified leave of absence for a serious health condition, or has rights under a labor agreement or employee handbook. Montana is the only state which requires an employer to have just cause to fire an employee, once the employee has completed a probationary period.
The U.S. District Court for the District of Kansas recently ruled that a railroad employee with carpal tunnel syndrome who re-injured his hands at work could pursue his wrongful discharge claim even though he chose not to return to work when instructed.
Millennium Rail Inc. employed Danny Smith in February 2012 as a repairman/welder to fix rail cars. According to Millennium Rail, Smith was an inefficient worker and during the twelve months from January 2013 the company wrote him up three times for being inefficient - and suspended him for three days. The next month, he took approved leave under the Family and Medical Leave Act (FMLA) to have carpal tunnel surgery and returned from this leave with the same pay, title and responsibilities as before. Soon after returning to work, he fell and re-injured his hands. Smith's workers' compensation attorney sent Millennium Rail a letter seeking coverage for surgery related to the fall. Smith's doctor sent Millennium Rail a note stating that until Smith had surgery, he would be unable to use the tools essential to performing his duties. At this time, Smith and another employee - Lee Davis - applied for a switchman position with the company. Millennium Rail selected Davis for the position and Smith was left in a job that he was not able to do.
Smith submitted FMLA paperwork to take leave to have the surgery but did not confirm that the paperwork was approved. Millennium Rail had Smith assessed by another physician, who was of the opinion that she could not detect any sign of pain or weakness in his hands and that Smith could work without any restrictions. No third assessment was undertaken.
On April 1, 2014, Smith attempted to take FMLA leave. He moved to Oklahoma to stay with his brother as he could not afford housing while not working - and his FMLA paperwork was never processed, although it was apparently discussed internally at Millennium Rail. The company's compliance and claims specialist wrote that Millennium Rail's doctor believed Smith could return to work and that the company either needed to bring him back to work or terminate him.
On April 10, Smith was sent a letter instructing him to return to work on April 16 or he would have voluntarily resigned. Smith did not receive the letter until April 15 and as he realized that he could not return to work he did not respond to the request, so therefore was deemed to have resigned. He filed claims against Millennium Rail under the Americans with Disabilities Act (ADA) and the FMLA and under Kansas law for workers' compensation retaliation and violations of OSHA and also sued his supervisor under the FMLA. Millennium Rail sought summary judgment against Smith's claims and to bar Smith from receiving damages.
The court granted summary judgment against Smith's ADA claim for failure to accommodate him by promoting him to the switchman position, finding that Millennium Rail legitimately believed Davis to be more qualified. They also dismissed Smith's OSHA retaliation claim, finding that he had not submitted an OSHA claim before his termination.
However, the court denied summary judgment as to the remaining claims. They found that Smith could establish that he was constructively discharged by Millennium Rail as Millennium Rail's requirement that he return or quit was not clearly supported by medical evidence and supported a potential claim of constructive discharge.
Swiss International Air Lines (SWISS) and its fellow Lufthansa Group airlines announced that effective from 1st May 2017, they will abolish their rule requiring two people to be in a cockpit at all times.
The Lufthansa group introduced the rule as a precautionary measure following thedeliberate crashing of a Germanwings Airbus A320, in March 2015. Investigations into the crash revealed that the co-pilot, who was alone on the flight deck, intentionally switched the plane’s altitude and increased speed, which flew the aircraft into an Alpine mountain and killed all 150 people on board.
Subsequent to this, the European Aviation Safety Agency (EASA) issued a temporary recommendation, (but not a requirement) that two crew members including at least one qualified pilot, should always occupy the cockpit during flight. Therefore if one of the two pilots left the cockpit, their place had to be taken during this time by another crew member.
In 2016, EASA revised its recommendation and offered instead the option of abolishing the two-persons-in-the-cockpit rule, provided airlines met relevant further criteria.
According to SWISS, they have conducted an extensive safety and security review in coordination with similar risk assessments by its fellow Lufthansa Group airlines. This concluded that the rule does not enhance flight safety and indeed can actually introduce additional risks to daily operations, such as more and longer openings of the cockpit door.
The carriers, comprising SWISS, Austrian and Lufthansa will therefore revert to previous cockpit access provisions, plus a number of additional safety and security measures in order to meet all of the requirements demanded by the European Aviation Safety Agency (EASA), of any airline seeking to abolish the rule:
- ensuring suitable selection criteria and procedures to assess the psychological and safety-relevant demands made on pilots;
- ensuring stable employment terms and conditions for cockpit personnel;
- giving pilots (easy) access to any psychological or other support programmes they may need;
demonstrating an ability as a company to minimize the psychological and social risks to which pilots are exposed, such as loss of licence.
SWISS have also stated that its decision to abolish the two-persons-in-the-cockpit rule is supported by the Swiss Federal Office of Civil Aviation.
The French helicopter operator lobbying association, Union Française de l’Hélicoptère (UFH) have called upon the European Aviation Safety Agency (EASA) to hold a two-year “regulatory pause” on issuing new rules.
UFH believe the publication of so many new rules is endangering the future of small operators, who struggle with the workload of reviewing and complying with so many new regulations in a short period of time.
The issuance of new regulations has been felt especially hard in France. Many operators have had to switch to twin engine flights after a rule banning single-engine commercial passenger flights was implemented, having a huge impact on both pricing and performance.
UFH stated that since 2011, around 10 - 15% of operators have gone due to “the economic context, the lack of a stable regulatory prospect and insufficient political support”.
The President of the European Helicopter Association (EHA) Jaime Arque agreed but added that the new rules issued recently was the result of a backlog of rulemaking.
In response, EASA say they have agreed to a cool down period and have already begun to lessen the rulemaking activity on new regulations. Eric Bennett, EASA’s Air Operations Regulations Officer stated “EASA now has to ensure the maintenance of existing rules.”
As some of the larger businesses begin to publish pay ratios, many executives will fail to receive a pay increase this year. A new analysis by PwC shows that the pay of senior executives is actually falling for the first time in recent history.
In one fifth of the cases reported, CEO’s decided to voluntarily waive their salary increase. However, it would appear that most companies have introduced best practice remuneration as a result of shareholder activism, rather than the decision being made by the CEO of the company.
Tom Gosling, head of PwC Reward Practice says, “There’s no doubt the new voting rules introduced last year have given shareholders more power and helped to bring stability to executive pay.”
The report goes on to state that 98% of companies have introduced ‘clawback’ which is a measure to reduce or recover bonuses and long term incentive plans in certain circumstances.
The Investment Association Executive Remuneration Working Group and the BIS Committee have both recommended significant changes to pay design, but FTSE 100 companies are showing no signs of making a fundamental change. Whilst 63% of the forty FTSE 100 companies evaluated are proposing new remuneration policies, there is very limited structural change in pay arrangements with conventional long-term incentive plans remaining the usual.
Tom Gosling states, “Pay is getting harder to earn, with almost all companies introducing the ability to claw back bonuses and many lengthening the time executives have to hold on the shares they get from long term incentives. Remuneration committees are really raising the bar for executive pay.”
There is also increased attention to fairness in pay policies, as shown by four of the forty companies covered by PwC’s report, disclosing a ‘CEO to average employee’ ratio.
This month, the Business, Energy and Industrial Strategy Committee said businesses needed to improve corporate governance and tackle excessive executive pay to restore public trust. It highlighted the damage done at Sports Direct and BHS and the extreme executive salaries paid in recent years despite no wage increase for many workers. It continued by suggesting that employees should sit on remuneration committees.
Tom Gosling - of PwC - added, “Although we don’t think pay ratios are the answer, it’s good to see companies taking steps to address the fairness question. This is an area where business will need to do more to rebuild trust with the public and we’re likely to see proposals from the government to encourage this in due course.”
The National Transportation Safety Board (NTSB) is an independent federal agency dedicated to promoting aviation, railroad, highway, marine and pipeline safety.
They recently released a special report based on their investigations into the effectiveness of pilot weather reports (PIREPs). PIREPs are brief reports from pilots describing observed in-flight weather conditions. Because they provide in situ observations they are an important source of information for weather forecasters when assessing the quality of their forecasts and improving graphical weather products used by pilots.
Historically, it has been found that general aviation aircraft involved in poor visibility, weather-related accidents have a higher fatality rate than all other types of accidents. Additionally, accidents on US air carrier flights that involve in-flight turbulence account for the most injuries to passengers and flight attendants. Therefore the NTSB feel that complete, accurate and timely weather information is essential to support flight safety for all aircraft operations.
To compile the report, the NTSB investigated 16 specific accidents and incidents that exposed PIREP-related areas of concern, between March 2012 and December 2015. They also held discussions with members of various PIREP user groups, including hosting a two day forum to illicit information.
The culmination of this research revealed deficiencies in the handling of PIREP information that resulted in delays, errors and data losses. It found that the effectiveness of PIREPs was being reduced, generally, for one of two reasons:
Submission issues i.e. pilots are not providing enough (or incomplete) PIREPs and air traffic controllers not consistently soliciting them when weather conditions mandated such services.
Dissemination issues i.e. ATC, flight service station, or company personnel who handle PIREPs causing delays and errors or even failing to distribute the information.
As a result of this special investigation, the NTSB made safety recommendations
to the FAA, the NWS, the National Air Traffic Controllers Association, the Aircraft Owners and Pilots Association Air Safety Institute, the Aviation Accreditation Board International, the National Association of Flight Instructors, the Society of Aviation and Flight Educators, and the Cargo Airline Association.
The NTSB report concludes that stressing the importance of PIREPs during pilot training, creating standard criteria for reporting weather conditions and better handling of the reports when they are received by ATC, are some of the positive actions that could improve the system.
Ultimately, the NTSB believes that the actions recommended in their report “....will not only enhance safety in the near term within the constraints of the current PIREP system but also will serve as the foundation for supporting the long-term solutions associated with NextGen and other emerging technologies.”
The full NTSB report can be found here.
This month a new requirement comes into force that necessitates the gender pay gap being published within the next year – and every subsequent year. It applies to both private and voluntary employers with 250 or more employees and any employer failing to comply by April 2018 will be contacted by the Equalities and Human Rights Commission.
Gender pay is the difference in average pay between the men and women in a company and is different from equal pay - which means men and women must be paid the same for equal or similar work.
Sam Smethers of the Fawcett Society, which lobbies for gender equality, says that this new rule is “...the most significant legal change since the Equal Pay Act”.
The rules will be enforced by the Equality and Human Rights Commission and the companies affected must publish details on their own websites and through the government gender pay gap reporting website. They are obliged to provide data about their pay gap; the proportion of male and female employees in different bands; the gender bonus gap and a breakdown of how many men and women get a bonus.
A new study by TotalJobs points towards the fact that a significant number of employers are unprepared for the new requirements. The survey of 145 employers found that 82% were not reviewing their gender equality and equal pay policies as a result of the new legislation, whilst 58% did not have complete salary information across roles and gender. A third of employers were not reassessing remuneration as a protection against gender discrimination.
MP Justine Greening stated, “I am proud that the UK is championing gender equality and now those employers that are leading the way will clearly stand out with these requirements.” She added that the government would prefer to work in partnership with employers on conformity rather than imposing sanctions. “......we’ll keep an open mind about whether we need to go further in terms of regulations and sanctions, but the important thing is to win over hearts and minds.”
The Equality and Human Rights Commission stated on their website that where they had evidence that companies were not publishing the data, they will take steps to make sure that they do, by improving companies’ awareness and understanding of the new requirement.
Research by the Commission has found that there are still substantial pay gaps throughout Britain. This year, they intend to publish a report that will help employers to look at possible causes of their pay gap and suggest action they can take to improve it. In addition, they will make recommendations to the government to help close the gender pay gap across Britain.
The Women’s Equality Party have said that the current proposals do not go far enough and that businesses should be leading the way in tackling the complexity of the gender pay gap.