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bee l p > 15. employment law > Flashcards

15. employment law Flashcards

1
Q

Russell v Northern Bank Development Corporation

A

provisions in articles vs. provisions in SH agreement

held:

  • agreement outside articles between SH on how to vote on resolutions to alter articles is enforceable
  • it is a private agreement
  • SH is not an unlawful fetter on CA06
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2
Q

Re a Company

A

unfair prejudice (s.994)

  • unfairly prejudicial conduct includes LEGITIMATE EXPECTATION
  • interests of a member who risked his cap in a business of small private company extends to his legitimate expectation that he will continue to be employed as director
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3
Q

Ebrahimi v Westbourne Galleries Limited

A

Small private companies are often referred to as quasi-partnerships

(unfair prejudice)

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4
Q

O’Neill and another v Phillips and others

A

BREACHES OF ARTICLES OF ASSOCIATION

Held:
- SH not entitled to complain of unfairness unless there has been some breach of the terms which he agreed that affairs of company should be conducted

  • Sometimes equitable considerations make it unfair for those conducting affairs to rely upon their strict legal powers
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5
Q

removing director - CONSEQUENCES of ending being a director

A

termination req.: removal (OR s.168(1))

  • compensation payments for loss of office as director of company (s.215 defines)
  • must be approved by OR (s.217)
  • unless in good faith (s.220) or de minimis (s.221)
  • comp under contract = no need for OR
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6
Q

removing of directors -

CONSEQUENCES of ending SH

A

termination requires: buy back (diff. if he and connected persons have above 25% as then they can block SR)

ONE - possible breach of SH agreement (contract) if it required unanimous (OR still valid but claim for breach of contract)

TWO - possible s.994 claim if small company

  • unfair prejudice because losing legitimate expectation
  • Ebrahimi v Westborne - small companies are like quasi-partnership
  • Director can have a legitimate expectation that they can continue to be part of the running of the company so are unfairly prejudiced if removed as director (s.994(1))
  • court may award relief
  • buying min SH shares = most common remedy
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7
Q

removing of directors -

CONSEQUENCES of ending employment

A

termination req.: dismissal

follow procedure in service contract
- WD (contractual claim) - if notice req. and no notice given (and no PILON) unless gross misconduct

  • UD (statutory claim) - dismissed for unfair reasons and not fair in all the circumstances (damages based on loss of earnings)
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8
Q

INTERLINKED DOCUMENTS TO CONSIDER when removing director

A

EMPLOYMENT CONTRACT

SH AGREEMENT

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9
Q

WHY DO YOU NEED TO CONSIDER EMPLOYMENT CONTRACT WHEN DISMISSING DIRECTOR?

A
  1. Employment might continue after directorship ends.
  2. WD claims (employment contract might state period of notice D is entitled to or PILON, if yes, employer must terminate on full notice or less than (or no) with lump sum)
  3. RESTRICTIVE COVENANTS (e.g. non-compete, non-engage) may be struck out by court if unreasonable (make sure it is for legitimate business interest, and reasonable in terms of time, geographical area, needs, and interests of business) and may be unenforceable if contract breached
  4. CLAUSES PREVENTING DIRECTOR TURNING UP AT THE PREMESIS
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10
Q

WHY DO YOU NEED TO CONSIDER shareholder agreement WHEN DISMISSING DIRECTOR?

A
  • Clause saying there must be unanimous approval to remove?
  • Weighted voting rights clause?
  • Transfer provisions?

Unanimous vote to remove director would be in SH agreement rather than articles because this provision would be against the provisions of CA 2006

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11
Q

settlement agreement must comply with s.203 EREA 1996

A
  1. Be in writing
  2. Relate to the particular proceedings or the specific claim being settled
  3. Identify a relevant independent advisor from whom the employee has received advice
  4. Ensure that the advisor is covered by professional indemnity insurance
  5. State that the above conditions are satisfied
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12
Q

ADVANTAGES of settlement agreement

A

Ex gratia payment = tax free for first £30,000

No need for OR to remove director (the director will just resign)

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13
Q

DISADVANTAGES of settlement agreement

A

Will require SH approval if ex gratia payment is over £200 (s.221)

(NB. PILON does not require SH approval – s.220(1)a, it is a discharge of legal obligation so exempt from SH approval)

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14
Q

negotiating terms: claims to be included in settlement

A

EMPLOYER

  • WIDE AS POSS
  • must incl. at least WD and UD claims

EMPLOYEE

  • RESTRICTIVE AS POSS
  • must excl. PI and pension claims
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15
Q

negotiating terms: RC and confidentiality

A

EMPLOYER

  • as many as poss
  • not too far to be struck out by the court

EMPLOYEE
- as few as possible

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16
Q

negotiating terms: buyback

A

EMPLOYER

  • make sure reasonable price
  • make sure subject to independent valuation
17
Q

negotiating terms: director’s replacement and handover period

A

EMPLOYER

  • go smoothly
  • make sure dir handsover and teaches replacement the job
18
Q

negotiating terms: employer’s ref and PR statement

A

EMPLOYEE
- make sure E given ref that is:
NOT DEFAMATORY
ADEQUATE reflection of work

  • ref usually agreed
  • agree PR statement too that he chose to resign (not fired)
19
Q

negotiating terms: settlement figure

A

EMPLOYER
- starting point: PILON (absolute basic)

EMPLOYEE
- argue for ex-gratia (golden parachute) (not legal, just sum in return for waiving potential claims)

  • holiday pay
20
Q

WD - what is it?

A

Employer dismissed employee, in breach of employment contract (OR constructive dismissal) (e.g. by failing to give sufficient or any notice)

NOT REQUIRED IF SERIOUS BREACH OF CONTRACT BY EMPLOYEE (e.g. assaulted another member of staff/caught stealing)

NB. STATUTORY MIN AMOUNT OF NOTICE IMPLIED INTO CONTRACT

  • employed more than 1m = w week notice
  • employed 2 years or more = 1 weeks’ notice for every completed year of service (max.12 years, 12 weeks’ notice)
21
Q

WD - where claim heard?

A
  • CC
  • HC
  • ET (limited damages of £25k, must be brought within 3m of dismissal subject to mandatory early conciliation procedure using ACAS for up to 1m before claim presented at ET)
22
Q

WD - remedy?

A

Damages for breach of contract

Amount: put innocent party in position he would be in if contract was properly performed

(So the amount of pay he would receive in notice period)

Employee is under duty to mitigate (if find new job = take that into account and reduce damages)

If no mitigation = damages reduced

IF BOTH WD AND UD - UD comp reduced by payment received by WD (no double recovery)

23
Q

PILON CLAUSES

A

allows employer to pay the employee rather than require employee to work during notice period

If PILON clause and PILON is paid = no breach of contract = no claim for WD

This preserves any RC that would otherwise be enforceable because employment would be terminated in breach of contract

 

24
Q

UD - what is it?

A

ERA 1996: employee has a right not to be unfairly dismissed by his employer

25
Q

UD - how to make claim?

A
  1. dismissed
  2. for QP of 2 years service
  3. not exlcuded category

R has burden of showing

  1. R had fair reason
  2. dismissal was fair in all the circumstances
26
Q

where is UD claim heard?

A

Employment Tribunal

APPEAL:

  • Employment Appeals Tribunal
  • CA
  • (very occasionally): SUPREME COURT

Appeal allowed on questions of law only

27
Q

limitation period for UD

A

3 MONTHS from effective date of termination (subject to early conciliation procedure)

28
Q

UD remedies

A

3 remedies:
ONE – reinstatement (returning employee to same job)
TWO – re-engagement (placing employee in similar job with same or associated employer)

ONE and TWO = fewer than 2% of cases

THREE – compensation

29
Q

UD compensation

A

(1) basic award
(2) compensatory award

basic award:

  • calculated solely on past service
  • Amount awarded depends on length of service, their age, and weekly pay
  • [AGE FACTOR] X [SERVICE] X [WEEK’S PAY]
  • weekly salary subject to statutory maximum

compensatory award:

  • cover actual loss
  • there is a statutory max
  • immediate loss of wages
  • fringe benefits
  • mitigation applies
  • if ACAS not complied with, comp award increase by up to 25% (or decrease if complied with)
30
Q

redundancy

A

3 possible circumstances in which genuine redundancy situation can arise:

Business shut down altogether

Place of business where employee works shut down

Reduction in need for employees (most common example)

31
Q

what if genuine redundancy - what claim?

A

If genuine redundancy situation = E entitled to statutory redundancy payment (in addition to proper notice entitlement) if employed for last 2 years continuously

amount = same as basic award for UD

32
Q

if redundancy, no UD claim if:

A

ONE – Correct redundancy payment was made (incl. any notice payment) AND

TWO – Proper procedure was followed and R acted reasonably in carrying it out

  • reason for redundancy
  • consultaion
  • selection process
  • suitable alternative employment
  • possible to appeal?
33
Q

RESTRICTIVE COVENANTS

A

No implied restrictions on an employee once contract of employment has ended EXCEPT prohibition on employee disclosing confidential information

Basic premise: all restraints are prima facie VOID AND UNENFORCEABLE unless they:

  • Protect a legitimate interest of the business (e.g. customer connections, stable workforce, trade secrets)
  • Go no further than is reasonable necessary to protect legitimate interest
34
Q

RC - if breach of contract

A

RC NOT LIKELY TO BE ENFORCEABLE if employer dismissed employee in breach of contract (or employee resigns as a result of constructive dismissal) because employer committed repudiatory breach of underlying employment contract entitling employee to free themselves from obligations under contract

35
Q

types of RC

A

3 COMMON TYPES:
ONE – non-competition (onerous – least popular with courts)
- Prevent ex-employee from: working for competitor or settling up a competing company

TWO – non-dealing
- Prevent dealings between ex-employee and customers (even if customers approached him)

THREE – non-solicitation/poaching

  • Of customers (prevents the ex-employee soliciting business of customers) or
  • Of staff (prevents ex-employee poaching members of the team to join new business)
36
Q

reasonableness of RC?

A
  • DURATION
  • geographical scope
  • interests of business
  • details of employees (seniority)
  • interest business seeking to protect (would a lesser restriction suffice)

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