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How far can employers dictate what their employees can and cannot say online? As social media is increasingly used by individuals to express views and share information, employees’ rights on social media are a growing concern for employers.

In Herbai v Hungary (Application no. 11608/15) the European Court of Human Rights (ECtHR) heard a claim against Hungary for breach of the right of freedom of expression under Article 10 of the European Convention of Human Rights (ECHR).  This followed the dismissal by a Hungarian bank of an employee for publishing personal blog posts aimed at HR professionals.

Background

Mr. Herbai worked as an HR manager at the bank and was dismissed in 2011 after it was discovered he had written blog posts on an HR knowledge-sharing website. He had designed the website to provide guidance for HR management-related publications and events. It featured a profile and photograph of Mr. Herbai, describing him as an expert in HR management at a large domestic bank. It did not mention the bank by name. Two articles were posted by Mr. Herbai and another individual, providing information in general terms about current issues, such as HR strategies and tax rates. The bank argued that Mr. Herbai’s conduct, characterised as providing educational services on HR management, had damaged its economic interests.  It also said he had breached its code of ethics which prohibited employees publishing information relating to the activities of the bank. It argued that, given the nature of Mr. Herbai’s position, he had access to confidential information about the bank that could be damaging to the bank’s interest if made public.

What was the court’s approach?

The Hungarian Kúria (Supreme Court) upheld the dismissal of Mr. Herbai on the grounds that his conduct could have endangered the bank’s business interests and that it led to him sharing confidential information. The court said that, in an employment relationship, the right to freedom of expression can be restricted if this is absolutely necessary and proportionate. Mr. Herbai appealed to the ECtHR complaining that the termination of his employment had breached his right to freedom of expression under Article 10 ECHR.

The ECtHR found that the Hungarian courts had failed to carry out the requisite balancing exercise between the individual’s right to freedom of expression and the employer’s right to protect its legitimate business interests. In considering these two interests, it focused on the following four elements:

1. The nature of the speech. The court rejected the argument that Mr. Herbai’s comments fell outside the scope of Article 10 ECHR because the published comments were addressed to HR professionals, i.e. a specific group of individuals, rather than to the public as a whole. They instead ruled that free speech in the workplace was not limited solely to information in the public interest.
2. The motives of the author. It was clear that Mr. Herbai’s comments were not motivated by a personal grievance or antagonism and there was no malicious intent. Rather, his intention was simply to share knowledge with a professional readership.
3. The damage caused by the speech to the employer. The court did not feel that any attempt had been made to show how the speech might have detrimentally affected the bank’s interests.
4. The severity of the sanction imposed. Mr. Herbai’s dismissal, without any lesser sanction being considered, was seen as too severe a penalty.

What can we learn from this case?

This decision underlines the importance of striking a fair balance between the protection of an employer’s business interests and an employee’s right to freedom of expression when dealing with information shared online. Before dismissing, employers should make sure they have carefully considered this balance – otherwise they run the risk of failing to discharge their positive obligations under Article 10 ECHR. A post online which informs in a general manner, without jeopardizing the employer’s business interest, is not excluded from the protection of the right to freedom of expression so cannot be the basis of a lawful termination. This applies even when the subject matter relates to employment.

HMRC has released an updated Check Employment Status for Tax tool (CEST) service. The tool can be used to find out whether HMRC are likely to class an individual as employed or self-employed for tax purposes.  It works by asking a series of questions about the relationship between the employer and the worker.

The questions cover areas such as whether the worker is an office holder, the worker’s right to send a substitute, the control that the employer has over the worker’s hours, place of work and workplace duties and who bears the costs of the worker’s equipment and other working necessities. HMRC have stated that, provided answers are given accurately and there are no tax planning arrangements, they will stand by the outcome that the CEST tool gives.

IR35

The updates that have been made to the CEST tool have been long awaited as CEST has been under review for some time. These changes have been introduced in response to substantial criticisms of the previous version of the tool which did not really take account of the individual’s wider working arrangements.  HMRC also wanted to reflect a number of IR35 decisions which have been made since the CEST tool was introduced and in anticipation of the extension of the requirement to deduct tax at source under IR35 to much of the private sector. HMRC has made almost 40 changes to the tool which cover Financial Risk, Worker Contracts and Personal Service. The tool asks for more information if the employer knows how the worker operates but will still provide an answer in cases where they do not have this detail. HMRC does recommend that the tool is used again once the employer has this information but maintain they will stand by this decision even if the employer does not re-check the answer.  That will still depend on the information provided being accurate – so if the employer becomes aware that the original information was wrong it would be advisable to re-check the result using the tool.

Mutuality of Obligation

The greatest criticism of the updates at this stage is that they do not take into account the Mutuality of Obligation factor. This is the obligation on the employer to provide work to the worker and the reciprocal obligation on the worker to accept this work. This has been deemed a particular fault of the CEST tool given that mutuality of obligation has been a key factor in determining employment status in a number of recent IR35 tribunals. The fact that the tool appears to assume this obligation exists is not in line with the outcome of many of these cases at tribunal.

HMRC has defended the updates saying that it has worked with more than 300 stakeholders to “make CEST clearer, reduce user error and consider more detailed information”.