SGS 16 (Employment) Flashcards
What is a PILON clause?
Clause entitling the employee to payment in lieu of notice .
Helps preserve restrictive covenants that would otherwise have been unenforceable if the employment was terminated in breach of contract
What is the aim of restrictive covenants?
aims to prevent employees from:
Non-competition (working with competitor or setting up competing company)
Non-dealing (prevents dealing between ex-employee and customers)
Non-poaching (of customers or staff)
Or disclosing confidential information.
What must an employer bear in mind when drafting restrictive covenants?
ensure they do not go too far as if so, the court considers them void and unenforceable unless:
protect a legitimate interest of the business (e.g. customer connections, stable workforce, trade secrets); AND
go no further than is reasonably necessary to protect that legitimate interest.
What factors does a court consider in the enforceability of a restrictive covenant?
Duration of restraint
Geographical scope
Duties and seniority of the employee: how much influence do they have over clients or staff? Is there a real justification?
What is the purpose of gardening leave?
Company can give alternative duties or no duties at all to employee for same salary and benefits during termination.
Avoids him obtaining confidential information and having contact with clients.
Contractual claim for employment termination?
Wrongful dismissal for breach of a contractual procedure.
Remedy is damages but employee has a duty to mitigate loss by seeking new employment.
Statutory claim for termination of employment?
Unfair dismissal
FAIR REASON
and
FAIR IN ALL CIRCUMSTANCES
Fair reason under unfair dismissal?
capability, conduct, redundancy, statutory illegality
Fair in all circumstances?
Follow guidelines ACAS e.g. Give employee a warning explain problem meeting chance to improve chance to make representations / appeal
Award for unfair dismissal?
Based on employee’s loss of earnings.
Basic = age factor x service x weeks pay
compensatory capped at statutory maximum and changes each year (~£80,000).
Effect of a Shareholders Agreement prescribing unanimous consent to remove a director?
s.168 still valid
Director has claim for breach of contract under SA.
Director could try to get an injunction.
Threat of brach of contract gives minority SH influence over whether or not resolution passed.
Why is unanimity to remove a director not put in AA?
ussell v Northern Bank: a company cannot be a party to any provision which restricts it from exercising its statutory powers under the CA.
Alternative claim?
Unfair prejudice:
Contract which is unfairly prejudicial (s.994(1)).
Court awards relief under s.996(1) - most common is purchase of petitioner’s shares.
Unfairly prejudicial conduct examples?
Breaches of AA: O’Neill and another v Phillips and Others
Bad faith
excessive remuneration
legitimate expectation.
Legitimate expectation?
Re a Company: interests of a member who risked capital in business of a small private company –> legitimate expectation he will continue to be employed as a director
Ebrahimi v Westbourne Galleries Ltd: certain small private companies - SH may have a legitimate expectation that they be involved in management of the company.
