Smith v Trafford Housing Trust

The recent case of Smith and Trafford Housing Trust has highlighted some of the dangers employers now face when dealing with conduct issues that arise out of the use of social media.

Background

Mr Smith was a Housing Manager at Trafford Housing Trust (the Trust), on the 13th February 2011 he posted a link on his Facebook page to a BBC news story entitled: “Gay church marriages set to go ahead”, to which he commented “an equality too far”. Mr Smith’s Facebook page clearly identified himself as working for the Trust as a Housing Manager. Mr Smith then proceeded to have a discussion on the matter on his page with his work colleagues. A complaint about this was reported to the Trust by a work colleague, and as a result an investigation was launched into the matter to establish whether the conduct of Mr Smith breached the Trusts Code of Conduct and Equal Opportunities policy, whether his Facebook comments caused offence to other employees, whether his comments damaged the reputation of the Trust and whether he failed to take managerial responsibility.

The disciplinary panel took into account two previous written warnings Mr Smith received, one of which resulted in Mr Smith receiving mentoring sessions regarding the use of his Christianity in the workplace. As a result, the disciplinary panel found that the conduct of Mr Smith constituted gross misconduct but due to Mr Smith’s loyal service the decision was made that Mr Smith would be demoted into a non managerial position; which was a permitted sanction under the Trust’s disciplinary policy. As a consequence of the demotion, Mr Smith’s pay was also reduced by 40 per cent to reflect the change in role. However, it was agreed that the reduction in salary would be made over a one year period. The matter was appealed but the decision of the Disciplinary was upheld save for the reduction in salary would be made over a two year period. Throughout this procedure the Trust followed their policies and received legal advice on the matter.

The Claim

Mr Smith issued proceedings in the High Court and brought a claim of breach of contract (the Trust were not entitled to demote him as he did not breach any policy) and breach of Articles 9 and 10 (Freedom of Expression) the Human Rights Act 1998. At this point the Trust instructed Devonshires Solicitors to represent them in defending this claim.

The Result

Human Rights

Devonshires made an application to the Court for the Human Rights aspect of the claim to be struck out as the Trust was not a public body for the purposes of the Human Rights Act 1998. Furthermore Devonshires argued that the ‘act’ (commencing disciplinary proceedings) in question was wholly private in nature and therefore the Human Rights Act was not engaged.

The Court agreed with our arguments and found that Trust was not a public body for the purposes of the Human Rights Act 1998 and that it was a hybrid body that exercised private and public functions. Furthermore, the act complained of was wholly private as it related to an employee/employer relationship. It was not pursuant to or in connection with a function that was public in nature. Although this concept is not new (see London & Quadrant v R (on the application of Weaver) and the EHRC [2009] EWCA Civ 587) it does give Registered Providers some reassurance that there would have to be exceptional circumstances for the Human Rights Act to apply to them when considering employment issues.

The Court struck out the Human Rights aspects of the case and held that the claim had no real prospects of success and awarded costs against Mr Smith.

Breach of Contract

The High Court considered the breach of contract claim some seven months after the strike out application. Mr Smith’s Schedule of Loss claimed damages for £69,802.48 plus pension loss.

The Court found that the conduct of Mr Smith was not misconduct that warranted a demotion and therefore Mr Smith had not breached his contract of employment; in particular:

1)     Mr Smith’s Facebook wall was not related to work but used for personal purposes and therefore his comments could not be considered to be made on the Trust’s behalf despite him holding himself out as working for them.

2)     Mr Smith’s posting on Facebook did not bring the Trust into dispute or damage its reputation.

3)     Facebook had not acquired a sufficiently work-related context in this case to attract the application of the employer’s disciplinary policies

4)     Although Mr Smith’s comments had clearly upset some employees the Court found that the comments were widely espoused views which are aired on television and radio. The Court stated that ‘the frank but lawful expression of religious or political views may frequently cause a degree of upset, and even offence, to those with deeply held contrary views, even where none is intended by the speaker. This is a necessary price to be paid for freedom of speech’.

As a result Mr Smith was entitled to damages that flowed from the demotion. Mr Smith argued that the Trust had varied his existing contract of employment and therefore he was entitled to on-going losses and that his losses would continue until his salary reverted to that of a Manger’s salary. The Trust argued that Mr Smith had effectively been dismissed from his position and accepted a ‘new’ contract for the demoted role. As such, the breach of contract claim was effectively a claim for wrongful dismissal and damages for wrongful dismissal are limited to financial loss during his notice period which was 12 weeks. The Court agreed that Mr Smith was effectively dismissed from his managers role and awarded him damages in the sum of £98.00.

The Court also had to decide the issue of costs. The general rule for costs orders is that the unsuccessful party will be ordered to pay the costs of the successful party. However, in order to protect the Trusts position on costs Devonshires made a Part 36 offer under the Civil Procedure Rules to Mr Smith which was rejected. The Trust argued that as Mr Smith failed to beat the Trusts offer to settle the claim under Part 36 he should pay the Trusts costs. However, the Court exercised its discretion and decided to make no order as to costs.

Consequences

This case raises a number of issues. Technological and social advances have in this last decade progressed faster than the law has, this is especially indicative of the social media culture. We are entering a new era in inter personal communications, with over 1 billion Facebook users world-wide and half a billion Twitter users world-wide. People’s views opinions and beliefs are being published for the entire world to see, via the medium of Twitter, Facebook and more.

Employers must ensure that they have clear policies on the use of social media in and out of the workplace. Employers should have in place a Social Media Policy which sets boundaries for their employees on what is acceptable and unacceptable conduct when using social media.

Although the High Court held that the Facebook page was considered a personal page and not related to work, there have been tribunal cases where it was held that employees should not have any expectation of privacy with their Facebook profile so an employer could take disciplinary action for comments made on the employees profile. This is clearly still a developing area of law.

This case also highlights the importance of the use Part 36 offers. Although the damages awarded to Mr Smith in this case was only £98.00, if a Part 36 offer had not been made to protect the Trusts position on costs, the Trust could have also been liable to pay Mr Smith’s legal costs which would have been substantial.

For further information contact Ronnie Tong, Solicitor, or Philip Barden, Partner and Head of Litigation and Dispute Resolution Department on Ronnie.tong@devonshires.co.uk or Philip.barden@devonshires.co.uk

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1 Response to Smith v Trafford Housing Trust

  1. I do not even know how I ended up here, but I thought this post was great.

    I don’t know who you are but definitely you are going to a famous blogger if you aren’t already 😉 Cheers!

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