W1 Flashcards
Who sits on bench in an Employment Tribunal?
Single judge deciding both facts and law, unless judge decides it should be a tripartite panel “having regard to the interests of justice and the overriding objecting”
Auth: Practice Direction
Time Limit for bringing WD claim
Tribunal: 3 months from date of dismissal
County Court: 6 years from date of dismissal
Extension Criteria for bringing WD claim at Tribunal
Only where:- was ‘not reasonably practicable’ to present claim in time;
AND
once practicable, claim brought in reasonable period
Time Limit for bringing Unfair Dismissal Claim
3 months from Effective Date of Termination (i.e. is expired as of last day of 3 month period)
Extension Criteria for bringing an Unfair Dismissal Claim
Only where:- was ‘not reasonably practicable’ to present claim in time;
AND
once practicable, claim brought in reasonable period
Time Limit for bringing a redundancy payment claim
6 months from EDT (i.e. is expired as of last day of period)
What does EDT stand for?
Effective Date of Termination
Extension criteria for redundancy claim
Only where:- was ‘not reasonably practicable’ to present claim in time;
AND
once practicable, claim brought in reasonable period
Time limit for bringing a discrimination claim
3 months from date of:
- ‘unlawful act’ (3 months minus 1 day) or
- ‘last straw ’ act in a series of continuing acts (which taken cumulatively
are unlawful)
Extension criteria for discrimination claim
ET has discretion to extend time limit if deemed to be ‘just and equitable in all the circumstances’
Claim form for Claimant
ET1
Claim form for Respondent
ET3
Court hierarchy
First instance = Employment Tribunal
May be appealed on point of law only
Appeals go to Employment Appeals Tribunal
Then to Court of Appeal
Then Supreme Court
What does ACAS stand for?
Advisory, Conciliation, and Arbitration Services
Before lodging a claim to an ET, the claimant must…
Notify ACAS of intention to make claim
Send prescribed info to ACAS
Receive conciliation certificate
How long is the prescribed conciliation period?
1 month + 14 days
Are the time limits for bringing a claim affected by the prescribed conciliation period?
Yes, ET time limits are paused for up to 6 weeks during EC period.
Pause starts the day after notification
Pause ends when conciliation certificate is received
Is the ACAS Code of Practice on discplinary and grievance procedures legally binding?
No, but ET must take into account when determining fairness of dismissal. Failure to do so is a misdirection of law (thus open to appeal).
Auth: Lock v Cardiff Railway
Lock v Cardiff Railway
Facts: A train conductor was dismissed following a disciplinary hearing; part of the reason for dismissal was a prior warning. C appealed internally and decision was reaffirmed but without reference to prior warning. C took it to an industrial tribunal who deemed it fair dismissal but did not reference ACAS Code of Practice.
Ratio: Appeal allowed and unfair dismissal found, having regard to ACAS Code, which provided that employees should be made aware of the likely consequences for breaking a rule, especially for any misconduct which is dismissable on first breach.
Does the ACAS Code of Practice on disciplinary and grievance procedures have an effect on awards to successful claimants?
Yes. Tribunals may adjust awards by up to 25% for an unreasonable failure to comply with its provisions
Auth: Employment Act 2008, s3
What are the 3 main categories of employment status?
Self-employed
Worker
Employee
What is dual employment?
Where one person is simultaneously an employee/worker for two different employers (e.g. via agency) is “problematic”. See United Taxis Ltd v Comolly.
United Taxis Ltd v Comolly
Facts: A taxi driver brought unfair and wrongful dismissal claims against both the company he worked for and one of its shareholders, claiming he was either a worker or an employee of either/both. The company provided the passengers but the shareholder provided the car. EAT found that the driver was not employed (as worker or employee) by the company, but rather as a worker for the shareholder who subcontracted him to the company.
Ratio: It is possible to work for two employers for the same work, but very difficult to arise on the facts and presents many legal issues.
Byrne Brothers (Formwork) Ltd v Baird
Facts: Carpenters worked exclusively for one building company for significant and indefinite period, paid on a time basis. Were individually required to sign a “subcontracting” agreement saying no holiday or sick pay, no obligation to provide/accept work, and if unable to attend could substitute only with express consent. Found they were workers and fell under Working Time Regs.
Ratio: Workers vs subcontractors. Limited substitution provision didn’t undermine personal service. Were not business undertakings since they were individuals.
What is the statutory definition of an employee?
An individual who has entered into or works under a contract of employment
Auth: s230(1) Employment Rights Act 1996
Does typical contract construction (offer, acceptance, consideration, certainty, ICLR) apply to contracts of employment?
Yes
How to determine if a contract is a contract of employment?
1) Apply multiple factor test from Ready Mixed Concrete:
a) Mutual obligations of employee and employer
b) A personal service provided by employee
c) Control is exerted by the employer
d) Other terms/overall picture is consistent with contract of employment
2) Consider actual situation - Autoclenz Ltd v Belcher/Uber v Aslam
Ready Mixed Concrete v Minister of Pensions
Facts: Hired as an “independent contractor” to transport concrete. Contract required driver to wear concrete co’s uniform, van had to have their branding, the van had to be available to co at all times and exclusively, etc. Question as to whether the contract was a contract of service. Found that driver was an independent contractor.
Ratio: A contract of service exists if the following three conditions are fulfilled:
1) servant agrees to provide own work and skill in performance of a service in exchange for renumeration
2) servant agrees expressly or impliedly that performance is subject to the other’s control
3) other provisions of the contract are consistent with a contract of service
Autoclenz Ltd v Belcher
Facts: 20 car valets. Contract terms included no obligation on valets to perform work nor for Autoclenz to provide it; valets’ services engaged from time to time; valets could arrange for substitutes to carry out duties; valets paid own tax, purchased own insurance, uniforms, and materials. However, in practice, valets were required to notify Autoclenz whether they would be turning up for work and the substitute clause was not allowed in reality. SC found they were employees.
Ratio: Tribunal must consider whether the words represent the actual legal obligations of the parties. Not necessary to find any deliberate intention to deceive. Written terms are starting point, but tribunal must ask if the parties every realistically intended or envisaged that its terms would be carried out as written. Essential question: what was the true nature of the agreement between the parties? Consider relevant bargaining power as well.
Uber v Aslam
Facts: Uber drivers brought claims saying they were entitled to certain rights as workers. Uber claimed they were contractors and contracted with passengers directly, Uber as just a tech provider. Held that drivers were workers while app was active.
Ratio: Since no written contract, had to look at conduct. Drivers were required to provide documents consistent with applying for a job. Remuneration was fixedn by Uber, choice to accept/reject rides was constrained by Uber (not transparent with info, imposed penalties if too many rides cancelled), Uber exerted significant control through monitoring the drivers, and restricted communication to passengers.
How to determine if casual work is a contract of employment?
Were they separate engagements or is there sufficient continuity to constitute an umbrella contract?
Auth: Carmichael v National Power
Carmichael v National Power
Facts: Carmichael was a guide, paid hourly, as and when required. Employer said self-employed, she said employee. Court found not employee since no mutual obligation from National power to give her work, and no obligation on her to accept the work offered.
Significance: Separate engagements vs sufficient continuity for umbrella contract.
To what extent are the written terms of a contract considered to determine employment status?
Contract terms are the starting point (Autoclenz v Belcher)
They are part of the overall evidence to be considered to determine the parties’ intention towards the relationship (Ter-Berg v Simply Smile)
But the court must consider the actual situation and the reality of the relationship between the parties (Uber v Aslam)
What constitutes a “personal service”?
An obligation on employee to do the work personally, without the right to delegate or nominate someone else to do their job
Auth: Express and Echo Publications v Tanton
Express and Echo Publications v Tanton
Facts: Contract included a term requiring the worker to arrange for another to perform the services should he be unable/unwilling to do them. CoA held that this undermined the personal service obligation inherent in a contract of employment. As such, this was a contract for supply of services.
Significance: Substitution provision vs personal service obligation
Is a personal service obligation undermined by a right to delegate work?
Not if the power to delegate is limited or conditional.
Auth: McFarlane v Glasgow City Council
MacFarlane v Glasgow City Council
Facts: Fitness instructors. C was not entitled to unilaterally appoint a substitute – sub had to be approved by employer, and would be paid directly by employer rather than a contract for services where C would have collected. So, employee.
Significance: Limited power to delegate work not always inconsistent with personal service obligation. Depends on whether right to delegate is fettered and/or nature of duties to be delegated
Pimlico Plumbers Ltd v Smith 2017
Facts: Plumber engaged as a contractor was required to work personally. Was required to wear a company uniform, use a company phone and van, etc. He was expected to work 5 days a week. No express power to substitute in contract but in practice could decline jobs/send a colleague instead.
Ratio: Was a worker as contract required personal service (e.g. “your skills; you will be competent”). Right to substitute was so insignificant as not to be worthy of express terms.
What constitutes “control over an employee”?
The power of deciding the thing to be done, the way, the means, the time, and the place
Auth: Ready Mixed Concrete v Minister of Pensions
Is the power/control of the employer decided by the contract or the actual situation?
Whether the employer has the right of control in the contract - whether or not they have enforced it is beside the point.
Auth: Wright v Aegis Defence Services
Wright v Aegis Defence Services
Facts: C provided security for Australian Gov’t at embassy in Kabul. Specific issue as to control over manner of performing service re: weapons, health and safety, etc. The employer did not exert control over these aspects, but did have the contractual power to do so and the employee was bound to comply in contract. Judge gave examples of chefs and nurses, whose skills and judgement were part of performance but the employer has the power to direct them.
Ratio: To determine control, it’s not about practical manifestations of control being exercised, but rather whether under the contract the employer has the right to direct the Claimant.
White v Troutbeck
Facts: Question as to whether caretakers of a farm who managed it in return for accommodation and payment were employees of the company that owned the farm. Engagement started as an oral agreement, and was written up as an “employment agreement” later, included paid holiday. Company sold the farm and tried to terminate employment; farmers raised unfair dismissal and unpaid wages claims.
Ratio: While not a lot of control exerted in the day-to-day performance of duties, the surrounding circumstances suggested employment to be the parties’ intentions.
How does a court determine if the other terms of the contract are consistent with a contract of employment?
Court takes a holistic view, there is no single determinative factor. Examples of factors include: payment structure (e.g. salaried vs commission), tax/NIC, who is responsible for tools/equipment/uniform/materials, provision of sickness/holiday pay, org’s right to dismiss for disciplinary/grievance, and which party carries economic risk for non-performance.
Auth: Pimlico Plumbers or Stringfellows v Quashie
Quashie v Stringfellow Restaurants Ltd
Facts: Lap dancer at nightclub. Had to follow house rules, but not a high enough level of control. Dancer elected to go on the rota or not - neither party obligated to provide/perform work. No continuing obligation between shifts, so no umbrella contract. Dancer negotiated own fees with customers, who paid directly.
Ratio: Not a contract of employment, not enough mutual obligation/continuity of obligation.
What is the statutory definition of a worker?
(a) Works under contract of employment (i.e. an employee is also a worker) OR
(b) Any other contract… whereby the individual undertakes to do or personally perform any work or services… for another party to the contract whose status is not …. that of client or customer of any profession or business undertaking carried out by the individual
s230(3) ERA 1996
(a) Works under contract of employment (i.e. an employee is also a worker) OR
(b) Any other contract… whereby the individual undertakes to do or personally perform any work or services… for another party to the contract whose status is not …. that of client or customer of any profession or business undertaking carried out by the individual
s230(1) and (2) Employment Rights Act 1996
(1) In this Act “employee” means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.
(2) In this Act “contract of employment” means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing
James v Redcat
Facts: Minimum Wage claim for someone engaged as a parcel carrier. Contract included limited ability to substitute for sick or holiday. Question was whether she was engaged as a worker or independent contractor.
Ratio: Key question to determine independent contractor is whether personal service is the dominant purpose of the contract, or just incidental.
How to determine if the party receiving services is a client/customer vs employer?
Consider whether the individual markets the services as an independent person or whether they were recruited by the organisation as integral to org’s operation
Auth: Cotswold Development v Williams
Cotswold Development v Williams
Facts: Carpenter raised a claim under Working Time Regulations, claiming worker status.
Ratio: When deciding whether there’s a contract of employment, first must consider mutuality of obligations (work/pay), then can apply other tests such as control. Mutuality test determines if there was a contract; control determines type of contract. To determine independent contractor operating own business, look at if they actively market their business separately to that of the client/employer.
Is client vs employer decided by contractual terms or actual situation?
Actual situation
Auth: Autoclenz
What is the difference in protections for employees vs workers?
Workers have limited TUPE rights, and no right to claim unfair dismissal or redundancy payments
s1 ERA 1996
Requires an employer to give a worker a written statement of particulars of employment when they start employment.
Is a s1 statement part of the employment contract?
No (Lovett v Metropolitan Borough Council)
BUT no requirement to provide s1 statement if all requirements are included in the written contract
Lovett v Metropolitan Borough Council
Facts: A case remitted from EAT back to ET. Claimant objected to a draft order by employer saying they reserve the right to argue that the s1 statement formed part of contract.
Ratio: When considering the contractual documents in a case, the s1 statement should not be taken as part of contract. It is merely supplied to employee to provide info about terms of employment.
What is the penalty for failing to provide a s1 statement?
ET can award additional compensation of 2 weeks’ gross pay, or up to 4 weeks if just and equitable. However, this is only in combination with another ET claim - cannot make a claim for lack of s1 statement alone.
Can a s1 statement be verbal?
No, must be written
What is the deadline for providing a s1 statement?
On or by 1st day of work
Who is entitled to a s1 statement?
Workers and employees
What is the function of a s1 statement?
To set out the particulars of employment (job title, description, place of work, hours, remuneration, etc)
Do employment contracts need to be written?
No
What are the main risks when drafting express contractual terms?
The job description needs to be wide enough to accommodate small changes in duties
References to other polices (e.g. disciplinary/grievance) must be handled carefully to avoid making them contractual terms (and thereby impossible to unilaterally update)
What are common additional express terms in an employment contract?
Mobility clause
PILON clause
Restrictive covenants
What is a mobility clause?
Ability to instruct employee to work at another location
What is a PILON clause?
Ability to request the employee leave immediately, in exchange for being paid the equivalent to their notice period
Can a term be implied into an employment contract through an employer’s custom/practice?
Yes - Park Cakes Ltd v Shumba
Park Cakes Ltd v Shumba
Facts: Re: enhanced redundancy payments. A historic company policy provided for enhanced redundancy payments. E’er claimed they were offered as policy, not contractual obligation, and was not brought to e’ee’s attention.
Ratio: Objective analysis of employer’s conduct (including consistency and period over which the benefits were offered) implied the term into the employment contract. Terms can be implied by custom/practice.
What are the key statutes implying terms into employment contracts?
National Minimum Wage Act 1998
National Minimum Wage Regulations 2015
Working Time Regulations 1998
s1 National Minimum Wage Act 1998
Workers in the UK over compulsory school age must be paid at least the National Minimum Wage
s17 National Minimum Wage Act 1998
Failure to pay NMW entitles the person to the outstanding pay and compensation
s19 National Minimum Wage Act 1998
Power to issue enforcement notice against employer
s19A National Minimum Wage Act 1998
Financial penalty if employer fails to comply with enforcement notice
s49 National Minimum Age Act 1998
The Act cannot be contracted out of
Who falls under the National Minimum Wage (employment status)?
Workers (and by extension, employees since they are also workers)
Auth: National Minimum Wage Regulations 2015
What is a s4 statement?
In the event of changes to the particulars of employment covered by s1 statement, a s4 written statement containing the particulars of the change must be issued.
Who falls under the Working Time Regulations (employment status)?
Workers (and by extension, employees since they are also workers)
Auth: Working Time Regulations 1998
Reg 4 Working Time Regulations 1998
Max weekly working time is 48 hours averaged over 17 weeks
Reg 5 Working Time Regulations 1998
Worker may opt out of the max weekly working time, for either a specific period or indefinitely
Reg 10 Working Time Regulations 1998
Workers entitled to 11 consecutive hours of rest in every 24 hour period
Reg 11 Working Time Regulations 1998
Workers entitled to 24 hours of rest in every 7 day working period
Reg 12 Working Time Regulations 1998
Workers entitled to daily rest break of 20 minutes if working 6 hours or more
Reg 13 Working Time Regulations
Workers entitled to 5.6 x worker’s normal working week as annual paid holiday (including 8 bank holidays, pro-rated). Works out to 28 days including bank holidays for a 5 day week.
Reg 35 Working Time Regulations
Parties cannot contract out of the regulations
What employer obligations are implied into the employment contract at common law?
Payment of wages
Mutual trust and confidence
Health and safety
Reasonable notice of dismissal
Indemnify employees for expenses/liabilities in course of employment
Provide work (in limited circumstances)
In which circumstances are employers obliged to provide work by operation of implied term?
Depends on construction of contract and surrounding circumstances, but includes:
Where work depends upon publicity, e.g. performers
Where employees are paid by commission/piece workers
Where there’s a need to maintain skills
Auth: William Hill v Tucker
William Hill v Tucker
Facts: E’er tried to enforce a garden leave without an express term in the employment contract.
Significance: Depends on construction of contract. Is the e’er obligated to provide work, or only pay? If only pay, then can prevent e’ee from working during garden leave. Does require similar justifications for other restraint of trade (i.e. non-compete) clauses.
What employee obligations are implied into the employment contract at common law?
To act in good faith/with mutual trust and confidence
Follow employer’s reasonable and lawful instructions
Exercise reasonable skill and care in performance of duties
Provide personal service to employer
Protect highly confidential info/trade secrets post-employment
What is included in the employee’s implied term of acting in good faith/trust and confidence?
Not to work elsewhere in a way which harms employer’s business
Not to disclose confidential information/trade secrets during employment
Not to solicit customers, employees, or copy customer list
Not to make a secret profit (i.e. use employer’s resources to make own profit)
Hivac Ltd v Park Royal Scientific Instruments
Facts: Two employees worked for a competing company in their spare time and encouraged colleagues to do so as well. No evidence that they divulged confidential information. Employer seeking injunction.
Ratio: Injunction was granted as employees were not upholding implied duty of good faith and fidelity, as on the facts they were behaving very secretively in a manner indicating they knew they were breaking an implied term. Regard was also had to the very direct competition between the two companies (only 2 providers of pieces of hearing aid), the work was highly skilled, and the employees were only paid expenses for the additional work.
Faccenda Chicken v Fowler
Facts: Sales manager for chicken supplier. Left his job and set up a competiting business. No express post-termination covenants. CoA found that sales info was not a trade secret and not protected.
Significance: Ex-employee may use confidential info (but not trade secrets) from prev. employment but not to extent of memorising or recording such info during employment for the purpose of such use afterwards. Only trade secrets can be protected via express or implied terms. To determine trade secret, consider: nature of employment, nature of info, whether it had been expressly communicated as confidential to the employee, and whether the info could be isolated from other non-confidential info.
Sanders v Parry
Facts: A solicitor and his assistant. A client said they would move their legal work to the assistant if the assistant set up their own practice. Solicitor sued for damages - breach of good faith and fidelity.
Significance: Soliciting customers while in the job (even if instigated by client) still undermines good faith/fidelity if e’ee doesn’t talk to e’er about it.
Pepper v Webb
Facts: Gardener’s work deteriorated over time. Was asked to plant some plants, and refused rudely. Was summarily dismissed by employer.
Ratio: Insolent comments and refusal to obey a lawful/reasonable order amount to a repudiation of contract and summary dismissal is appropriate.
Lister v Romford Ice and Cold Storage Ltd
Facts: Lorry driver took his dad on board for a job, then backed the lorry into him. Father sued the company, and the company sued the son to help contribute to the damages.
Significance: Implied duty to exercise reasonable care and skill in performing work duties, breach of which entitles e’er to damages claim.
Do employment contracts include an implied term of post-termination non-solicitation?
No
Do employment contracts include an implied term of post-termination non-competition?
No
Do employment contracts include an implied term of post-termination confidentiality?
Yes but only for highly confidential info/trade secrets
What are the conditions for a post-termination restrictive covenant to be vald/enforceable?
Employer must be protecting a legitimate business interest
Restrictive terms must be clear and reasonable
Employer must not be in repudiatory breach
How to determine if an employer has a legitimate business interest to protect
Legitimate interest exists where the employee has information which:
1) is used in employer’s trade/business
2) If disclosed, would cause real harm to the employer
3) Employer has tried to limit its dissemination
Auth: Lansing Linde v Kerr
Lansing Linde v Kerr
Facts: A director gave notice and mutually agreed with employer to leave early. Had a 1 year non-compete/non-solicit. Started a job as a director at rival firm within days. Original employer applied for interim relief while pursuing a breach of contract action. Interim injunction was refused since trial unlikely to take place for a long time, so interim relief would essentially decide the case. Applicant was deeemed unlikely to succeed since scope of worldwide covenant was too wide.
Significance: For restrictive covenants to be enforceable post-termination, there must be a legitimate business interest to protect, and must be limited to that interest.
In what ways must restrictive covenants be clear and reasonable?
Reasonable per type of work prohibited - Scully v Lee
Reasonable in duration and area - Hollis & Co v Stock
Limited to customers with whom individual had personal contact - WRN Lyd v Ayris
No wider than necessary to protect the business interest
Scully v Lee
Facts: No-dealing covenant for 24 months post-termination. Clause was drafted to prevent lots of different types of work and dealings with clients, each clause was interdependent on the other to be understood. The clauses were found to be wider than necessary to protect legitimate interests, the time period was unreasonable, and severance of the parts of the covenant wouldn’t work since they were interdependent. Severance only works where the obligations are truly separate.
Significance: Restrictive covenant terms must be clear and reasonable re: type of work prohibited.
Hollis & Co v Stock
Facts: Solicitors. Injunction granted to enforce a covenant restraining him from working within 10 miles of previous employer for 1 year.
Significance: Covenant was reasonable in scope. Should be interpreted objectively to only apply to work as a solicitor.
WRN Ltd v Ayris
Facts: Non-solicit covenant for 6 months, later extended to 12 months, applicable to all e’er’s customers. Old e’er sought injunction but e’ee argued hadn’t breached the clause.
Significance: Extended covenant not enforceable as no consideration. Reasonableness of covenants is to be assessed when entered into, i.e. at commencement of employment. They were too wide as not limited to customers with actual dealings. Non-solicits should be limited to people the employee had contact with prior to termination.
When are non-poaching/staff non-solicit restrictive covenants reasonable?
When restricted to senior staff where employer has legitimate interest in protecting the stability of workforce
Coppage v Safetynet Security
Facts: Business development director with non-solicit of anyone who had been company’s customer within 6 months of leaving. The day he resigned, a competing business opened. Covenant was found to be appropriate as e’ee had contact with all customers of the business, and clause was limited to the purpose of soliciting business which the company could undertake.
Significance: Reasonable scope is fact dependent.
What duration of a non-compete is generally considered justifiable?
One year. More than that is only justifiable in exceptional circumstances.
What geographical scope is generally justifiable for a non-compete?
When restricted to only the areas where the previous employer’s business in fact operates.
How can an express post-employment confidentiality RC improve upon the implied term?
An express RC can clarify what the employer considers highly confidential information.
What can an express post-employment confidentiality RC not do to the implied term?
Cannot increase the scope of the implied term to cover all confidential information
What are the relevant factors to consider when identifying highly confidential information?
1) Nature of person’s employment and the information
2) Whether the employer informed the employee that the information was confidential
3) Whether the information was easily isolated from other information
Auth: Faccenda Chicken v Fowler
True or False: A post-employment duty of confidentiality, express or implied, can prevent the individual from using the skills and experience they gained in work at their next job.
False. Auth: Faccenda Chicken v Fowler
When a court is adjudicating the validity of a RC, what can they do?
Strike out the part of the clause which is too wide, provided the remainder makes sense, to leave an enforceable clause. Known as a “blue pencil test”.
When a court is adjudicating the validity of a RC, what can they NOT do?
They cannot rewrite the clause/substitute words in the clause, nor can they choose between two alternatives. As such, a nesting doll approach with minimum three options is best when writing RCs.
If an employee has a valid wrongful dismissal claim, do they need to uphold the restrictive covenants in their employment contract?
No. The employer has committed a repudiatory breach of the contract, so restrictive covenants become invalid and unenforceable.
Auth: General Billposting Company v Atkinson
General Billposting Company v Atkinson
Facts: Manager of billposting company, had a 12 month notice period and a 2-year non-compete. Was dismissed without notice - pursued a WD claim and then began to trade as a billposter for himself. Confirmed that the dismissal in breach of contract was a repudiatory breach demonstrating e’er no longer had the intention to be bound.
Significance: If an employer wrongfully dismisses an employee – that is in repudiatory breach of contract – any otherwise valid restrictive covenants become invalid and cannot therefore be unenforceable.
What is the only post-employment RC that may remain effective in the event of wrongful dismissal?
Duty of confidentiality.
Auth: Campbell v Frisbee
Campbell v Frisbee
Facts: A PA for fashion model was wrongfully dismissed, leaked info to newspapers in breach of confidentiality clause. Model sued, assistant argued the contract had been repudiated. Application for summary judgment was overturned, saying the law on confidentialty post-repudiation is unclear, and neither party pursued the claim to a satisfactory end.
Significance: Duty of confidentiality after employment may remain effective in cases of wrongful dismissal.
What is a good alternative to a post-employment RC?
Garden leave
Does garden leave need to be expressly included in the employment contract?
Yes, or negotiated and agreed at the time.
Restrictive Covenant PBL Structure
1) Identify and explain the express terms
2) Stake key principle: RCs in employment contracts are prima facie void for restraint of trade UNLESS:
a) The employer has a legitimate interest to protect; and
b) The RCs are reasonable in their effect
3) Apply law to specific facts:
a) Is there a legitimate business interest to protect on the facts? How is the employee a danger?
b) Is the RC reasonable? Activity prohibited/time/area?
c) If too wide, consider blue pencil test – will clause still make sense?
d) Consider available remedy if RC upheld – injunction
e) Consider effect of wrongful dismissal – reasonable express RCs will no longer be valid
f) Consider if any relevant implied terms/other express terms e.g. garden leave?
g) Conclusion
Facts: A train conductor was dismissed following a disciplinary hearing; part of the reason for dismissal was a prior warning. C appealed internally and decision was reaffirmed but without reference to prior warning. C took it to an industrial tribunal who deemed it fair dismissal but did not reference ACAS Code of Practice.
Ratio: Appeal allowed and unfair dismissal found, having regard to ACAS Code, which provided that employees should be made aware of the likely consequences for breaking a rule, especially for any misconduct which is dismissable on first breach.
Lock v Cardiff Railway
Facts: A taxi driver brought unfair and wrongful dismissal claims against both the company he worked for and one of its shareholders, claiming he was either a worker or an employee of either/both. The company provided the passengers but the shareholder provided the car. EAT found that the driver was not employed (as worker or employee) by the company, but rather as a worker for the shareholder who subcontracted him to the company.
Ratio: It is possible to work for two employers for the same work, but very difficult to arise on the facts and presents many legal issues.
United Taxis Ltd v Comolly
Facts: Carpenters worked exclusively for one building company for significant and indefinite period, paid on a time basis. Were individually required to sign a “subcontracting” agreement saying no holiday or sick pay, no obligation to provide/accept work, and if unable to attend could substitute only with express consent. Found they were workers and fell under Working Time Regs.
Ratio: Workers vs subcontractors. Limited substitution provision didn’t undermine personal service. Were not business undertakings since they were individuals.
Byrne Brothers (Formwork) Ltd v Baird
Facts: Hired as an “independent contractor” to transport concrete. Contract required driver to wear concrete co’s uniform, van had to have their branding, the van had to be available to co at all times and exclusively, etc. Question as to whether the contract was a contract of service. Found that driver was an independent contractor.
Ratio: A contract of service exists if the following three conditions are fulfilled:
1) servant agrees to provide own work and skill in performance of a service in exchange for renumeration
2) servant agrees expressly or impliedly that performance is subject to the other’s control
3) other provisions of the contract are consistent with a contract of service
Ready Mixed Concrete v Minister of Pensions
Facts: 20 car valets. Contract terms included no obligation on valets to perform work nor for Autoclenz to provide it; valets’ services engaged from time to time; valets could arrange for substitutes to carry out duties; valets paid own tax, purchased own insurance, uniforms, and materials. However, in practice, valets were required to notify Autoclenz whether they would be turning up for work and the substitute clause was not allowed in reality. SC found they were employees.
Ratio: Tribunal must consider whether the words represent the actual legal obligations of the parties. Not necessary to find any deliberate intention to deceive. Written terms are starting point, but tribunal must ask if the parties every realistically intended or envisaged that its terms would be carried out as written. Essential question: what was the true nature of the agreement between the parties? Consider relevant bargaining power as well.
Autoclenz Ltd v Belcher
Facts: Uber drivers brought claims saying they were entitled to certain rights as workers. Uber claimed they were contractors and contracted with passengers directly, Uber as just a tech provider. Held that drivers were workers while app was active.
Ratio: Since no written contract, had to look at conduct. Drivers were required to provide documents consistent with applying for a job. Remuneration was fixedn by Uber, choice to accept/reject rides was constrained by Uber (not transparent with info, imposed penalties if too many rides cancelled), Uber exerted significant control through monitoring the drivers, and restricted communication to passengers.
Uber v Aslam
Facts: Carmichael was a guide, paid hourly, as and when required. Employer said self-employed, she said employee. Court found not employee since no mutual obligation from National power to give her work, and no obligation on her to accept the work offered.
Significance: Separate engagements vs sufficient continuity for umbrella contract.
Carmichael v National Power
Facts: Contract included a term requiring the worker to arrange for another to perform the services should he be unable/unwilling to do them. CoA held that this undermined the personal service obligation inherent in a contract of employment. As such, this was a contract for supply of services.
Significance: Substitution provision vs personal service obligation
Express and Echo Publications v Tanton
Facts: Fitness instructors. C was not entitled to unilaterally appoint a substitute – sub had to be approved by employer, and would be paid directly by employer rather than a contract for services where C would have collected. So, employee.
Significance: Limited power to delegate work not always inconsistent with personal service obligation. Depends on whether right to delegate is fettered and/or nature of duties to be delegated
MacFarlane v Glasgow City Council
Facts: Plumber engaged as a contractor was required to work personally. Was required to wear a company uniform, use a company phone and van, etc. He was expected to work 5 days a week. No express power to substitute in contract but in practice could decline jobs/send a colleague instead.
Ratio: Was a worker as contract required personal service (e.g. “your skills; you will be competent”). Right to substitute was so insignificant as not to be worthy of express terms.
Pimlico Plumbers Ltd v Smith 2017
Facts: C provided security for Australian Gov’t at embassy in Kabul. Specific issue as to control over manner of performing service re: weapons, health and safety, etc. The employer did not exert control over these aspects, but did have the contractual power to do so and the employee was bound to comply in contract. Judge gave examples of chefs and nurses, whose skills and judgement were part of performance but the employer has the power to direct them.
Ratio: To determine control, it’s not about practical manifestations of control being exercised, but rather whether under the contract the employer has the right to direct the Claimant.
Wright v Aegis Defence Services
Facts: Question as to whether caretakers of a farm who managed it in return for accommodation and payment were employees of the company that owned the farm. Engagement started as an oral agreement, and was written up as an “employment agreement” later, included paid holiday. Company sold the farm and tried to terminate employment; farmers raised unfair dismissal and unpaid wages claims.
Ratio: While not a lot of control exerted in the day-to-day performance of duties, the surrounding circumstances suggested employment to be the parties’ intentions.
White v Troutbeck
Facts: Lap dancer at nightclub. Had to follow house rules, but not a high enough level of control. Dancer elected to go on the rota or not - neither party obligated to provide/perform work. No continuing obligation between shifts, so no umbrella contract. Dancer negotiated own fees with customers, who paid directly.
Ratio: Not a contract of employment, not enough mutual obligation/continuity of obligation.
Quashie v Stringfellow Restaurants Ltd
(a) Works under contract of employment (i.e. an employee is also a worker) OR
(b) Any other contract… whereby the individual undertakes to do or personally perform any work or services… for another party to the contract whose status is not …. that of client or customer of any profession or business undertaking carried out by the individual
s230(3) ERA 1996
(1) In this Act “employee” means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.
(2) In this Act “contract of employment” means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing
s230(1) and (2) Employment Rights Act 1996
Facts: Minimum Wage claim for someone engaged as a parcel carrier. Contract included limited ability to substitute for sick or holiday. Question was whether she was engaged as a worker or independent contractor.
Ratio: Key question to determine independent contractor is whether personal service is the dominant purpose of the contract, or just incidental.
James v Redcat
Facts: Carpenter raised a claim under Working Time Regulations, claiming worker status.
Ratio: When deciding whether there’s a contract of employment, first must consider mutuality of obligations (work/pay), then can apply other tests such as control. Mutuality test determines if there was a contract; control determines type of contract. To determine independent contractor operating own business, look at if they actively market their business separately to that of the client/employer.
Cotswold Development v Williams
Requires an employer to give a worker a written statement of particulars of employment when they start employment.
s1 ERA 1996
Facts: A case remitted from EAT back to ET. Claimant objected to a draft order by employer saying they reserve the right to argue that the s1 statement formed part of contract.
Ratio: When considering the contractual documents in a case, the s1 statement should not be taken as part of contract. It is merely supplied to employee to provide info about terms of employment.
Lovett v Metropolitan Borough Council
Facts: Re: enhanced redundancy payments. A historic company policy provided for enhanced redundancy payments. E’er claimed they were offered as policy, not contractual obligation, and was not brought to e’ee’s attention.
Ratio: Objective analysis of employer’s conduct (including consistency and period over which the benefits were offered) implied the term into the employment contract. Terms can be implied by custom/practice.
Park Cakes Ltd v Shumba
Workers in the UK over compulsory school age must be paid at least the National Minimum Wage
s1 National Minimum Wage Act 1998
Failure to pay NMW entitles the person to the outstanding pay and compensation
s17 National Minimum Wage Act 1998
Power to issue enforcement notice against employer
s19 National Minimum Wage Act 1998
Financial penalty if employer fails to comply with enforcement notice
s19A National Minimum Wage Act 1998
The Act cannot be contracted out of
s49 National Minimum Age Act 1998
Max weekly working time is 48 hours averaged over 17 weeks
Reg 4 Working Time Regulations 1998
Worker may opt out of the max weekly working time, for either a specific period or indefinitely
Reg 5 Working Time Regulations 1998
Workers entitled to 11 consecutive hours of rest in every 24 hour period
Reg 10 Working Time Regulations 1998
Workers entitled to 24 hours of rest in every 7 day working period
Reg 11 Working Time Regulations 1998
Workers entitled to daily rest break of 20 minutes if working 6 hours or more
Reg 12 Working Time Regulations 1998
Workers entitled to 5.6 x worker’s normal working week as annual paid holiday (including 8 bank holidays, pro-rated). Works out to 28 days including bank holidays for a 5 day week.
Reg 13 Working Time Regulations
Parties cannot contract out of the regulations
Reg 35 Working Time Regulations
Facts: E’er tried to enforce a garden leave without an express term in the employment contract.
Significance: Depends on construction of contract. Is the e’er obligated to provide work, or only pay? If only pay, then can prevent e’ee from working during garden leave. Does require similar justifications for other restraint of trade (i.e. non-compete) clauses.
William Hill v Tucker
Facts: Two employees worked for a competing company in their spare time and encouraged colleagues to do so as well. No evidence that they divulged confidential information. Employer seeking injunction.
Ratio: Injunction was granted as employees were not upholding implied duty of good faith and fidelity, as on the facts they were behaving very secretively in a manner indicating they knew they were breaking an implied term. Regard was also had to the very direct competition between the two companies (only 2 providers of pieces of hearing aid), the work was highly skilled, and the employees were only paid expenses for the additional work.
Hivac Ltd v Park Royal Scientific Instruments
Facts: Sales manager for chicken supplier. Left his job and set up a competiting business. No express post-termination covenants. CoA found that sales info was not a trade secret and not protected.
Significance: Ex-employee may use confidential info (but not trade secrets) from prev. employment but not to extent of memorising or recording such info during employment for the purpose of such use afterwards. Only trade secrets can be protected via express or implied terms. To determine trade secret, consider: nature of employment, nature of info, whether it had been expressly communicated as confidential to the employee, and whether the info could be isolated from other non-confidential info.
Faccenda Chicken v Fowler
Facts: A solicitor and his assistant. A client said they would move their legal work to the assistant if the assistant set up their own practice. Solicitor sued for damages - breach of good faith and fidelity.
Significance: Soliciting customers while in the job (even if instigated by client) still undermines good faith/fidelity if e’ee doesn’t talk to e’er about it.
Sanders v Parry
Facts: Gardener’s work deteriorated over time. Was asked to plant some plants, and refused rudely. Was summarily dismissed by employer.
Ratio: Insolent comments and refusal to obey a lawful/reasonable order amount to a repudiation of contract and summary dismissal is appropriate.
Pepper v Webb
Facts: Lorry driver took his dad on board for a job, then backed the lorry into him. Father sued the company, and the company sued the son to help contribute to the damages.
Significance: Implied duty to exercise reasonable care and skill in performing work duties, breach of which entitles e’er to damages claim.
Lister v Romford Ice and Cold Storage Ltd
Facts: A director gave notice and mutually agreed with employer to leave early. Had a 1 year non-compete/non-solicit. Started a job as a director at rival firm within days. Original employer applied for interim relief while pursuing a breach of contract action. Interim injunction was refused since trial unlikely to take place for a long time, so interim relief would essentially decide the case. Applicant was deeemed unlikely to succeed since scope of worldwide covenant was too wide.
Significance: For restrictive covenants to be enforceable post-termination, there must be a legitimate business interest to protect, and must be limited to that interest.
Lansing Linde v Kerr
Facts: No-dealing covenant for 24 months post-termination. Clause was drafted to prevent lots of different types of work and dealings with clients, each clause was interdependent on the other to be understood. The clauses were found to be wider than necessary to protect legitimate interests, the time period was unreasonable, and severance of the parts of the covenant wouldn’t work since they were interdependent. Severance only works where the obligations are truly separate.
Significance: Restrictive covenant terms must be clear and reasonable re: type of work prohibited.
Scully v Lee
Facts: Solicitors. Injunction granted to enforce a covenant restraining him from working within 10 miles of previous employer for 1 year.
Significance: Covenant was reasonable in scope. Should be interpreted objectively to only apply to work as a solicitor.
Hollis & Co v Stock
Facts: Non-solicit covenant for 6 months, later extended to 12 months, applicable to all e’er’s customers. Old e’er sought injunction but e’ee argued hadn’t breached the clause.
Significance: Extended covenant not enforceable as no consideration. Reasonableness of covenants is to be assessed when entered into, i.e. at commencement of employment. They were too wide as not limited to customers with actual dealings. Non-solicits should be limited to people the employee had contact with prior to termination.
WRN Ltd v Ayris
Facts: Business development director with non-solicit of anyone who had been company’s customer within 6 months of leaving. The day he resigned, a competing business opened. Covenant was found to be appropriate as e’ee had contact with all customers of the business, and clause was limited to the purpose of soliciting business which the company could undertake.
Significance: Reasonable scope is fact dependent.
Coppage v Safetynet Security
Facts: Manager of billposting company, had a 12 month notice period and a 2-year non-compete. Was dismissed without notice - pursued a WD claim and then began to trade as a billposter for himself. Confirmed that the dismissal in breach of contract was a repudiatory breach demonstrating e’er no longer had the intention to be bound.
Significance: If an employer wrongfully dismisses an employee – that is in repudiatory breach of contract – any otherwise valid restrictive covenants become invalid and cannot therefore be unenforceable.
General Billposting Company v Atkinson
Facts: A PA for fashion model was wrongfully dismissed, leaked info to newspapers in breach of confidentiality clause. Model sued, assistant argued the contract had been repudiated. Application for summary judgment was overturned, saying the law on confidentialty post-repudiation is unclear, and neither party pursued the claim to a satisfactory end.
Significance: Duty of confidentiality after employment may remain effective in cases of wrongful dismissal.
Campbell v Frisbee
