Archive for the ‘Breach of Contract’ Category
By Philip - Tuesday, June 10th, 2008
A question that is regularly asked is can an employer not pay an employee if that employee is in breach of contract. The question normally arises when the employment relationship ends.
The position is clear. Unless the employer has signed authority from the employer to authorise the deduction then no deduction is allowed.
The case reported here illustrates the point. An employment agency worker agreed with an employment agency to work for a client for a fixed term from January to May.
The worker only completed two days of the assignment and then left. The agency did not pay the worker on the basis that the client had not paid them and they believed the worker was in breach, having left 2 days into employment.
The EAT held that the failure to pay the wages amounted to an unlawful deduction as there was no lawful basis to withhold the sum due.
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By Philip - Monday, December 3rd, 2007
An employer is under an implied duty to draw to an employee’s attention a contractual term (even a discretionary one) which may benefit him or her where there is a time limitation on the benefit.ie the right to the benefit expires at a given time.
In this case an employee was due to retire. The employer did not point out to the employee that there was a discretionary past added year’s scheme. That scheme would have entailed the employee putting in £12,000.00 to her pension (and the employer £24,000.00) but would have resulted in an added 6 pensionable years service. On a 60th scheme that would have boosted retirement income by 10%.
The question for the Tribunal to resolve is whether the past added year’s scheme was time limited, if it was the employer would have been in breach for not bringing it to the employee’s attention.
Employers need to be aware that there is an implied contractual term to bring to employee’s attention time limited benefits.
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By Philip - Thursday, November 1st, 2007
Some of our readers may have been reading in their newspapers about an attempted rape victim suing a lottery winner for damages for a crime he committed on her 16 years ago. The detail is here. The possible implications for employers are not readily apparent but there are potentially serious consequences, depending on the outcome.
The case is before the House of Lords who have to decide whether to allow the case to hearing as it is 10 years outside the 6 year limitation period to bring claims for damages.
If the House of Lords allow the case and disapply the 6 year limitation period, then employers may need to be careful about keeping records for employees who left more than 6 years ago as, second guessing the decision I know,ex-employees might have the right to bring claims for breach of contract or personal injury outside the 6 year limitation period.
Sticking my neck out, it is for this very reason, I think the House of Lords will find in favour of the criminal rather than the victim. The limitation period is there for a reason. It allows parties to draw a line. If that line shifts then there is considerable scope for uncertainty. The law is there partly to provide certainty. The decision will stick in the craw as the criminal will not have to pay reparation to the victim, despite having the means to do so. The key point is that during the limitation period he did not have the means and was not worth suing. Watch this space
Posted in Breach of Contract | 1 comment »
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By Sarah - Tuesday, August 28th, 2007
New research has found that nearly a third of British workers admit to moonlighting. Of these around 47% say they do it for the money, 25% as their talents are not recognised in their day job and 20% to broaden their horizons.
According to the survey, most workers keep their employers in the dark about their behaviour with 70% saying that their main employer was unaware of their other jobs. Of those surveyed 43% stated that holding multiple jobs was forbidden by their main employer.
It is not uncommon for there to be such clauses in contracts of employments, which require employees to devote their whole time to the main employer and not to hold other employment. Working a few hours in a bar at the weekend may not cause many employers too much of a problem but an issue can arise however in a number of ways.
The first way, is where the second job starts to impact on the first job. Ways we have seen this occur are with nightclub doormen or other moonlighting which is just that. The employee then finds it difficult to get to work on time or pulls false sickness etc to rest. These are of course matters of conduct which could land an employee in disciplinary proceedings.
The second way this can impact on the first job, is where the employee is working for a competitor or in a way which which may be detrimental to the business. Where the contract expressly forbids such action, this again may be a disciplinary matter. The other issue is where the employee is not taking sufficient rest periods between jobs which can impact on their health and safety.
The issue of moonlighting can be a difficult one to manage. Share your experiences with us.
Posted in Breach of Contract, Health and Safety | 1 comment »
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By Sarah - Friday, July 13th, 2007
A Scottish case has ruled that Pay in lieu of Notice (PILON) clauses cannot be implied into contracts of employment. If an employer wishes to pay their employees a PILON, then there must be an express term allowing it otherwise it will be a breach of contract.
This decision which can be read here is important for tax reasons and for the employer in particular. If the employer breaches the contract, then they are unlikely to be able to enforce restrictive covenants against the employee. In this case by making a PILON instead of allowing the employee to work his twelve month notice, the employer was depriving the employee of a bonus payment.
The Court of session stated that “it had strong reservations as to whether, in the 21st Century, there is any scope for the implication of such a term” as it would contrary to the express right for him to receive notice.
Posted in Breach of Contract, Wrongful Dismissal | No comments »
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By Sarah - Friday, June 29th, 2007
The Court of Appeal has ruled on another case involving restrictive covenants. Again, the case is fact sensitive but the Court held that a 12 month non-dealing restriction was reasonable having regard to the nature of the business and the seniority of the employee involved. You can read the full Judgment here
Restrictive covenants are always a tricky subject to deal with, as it is a question of interpretation and different in every case. Employers need to consider whether the restrictive covenants are protecting a legitimate business interest and ensure that they are drafted wide enough to protect them and not too wide to render them unenforceable. This is particularly the case with non-competition clauses as the Courts are less keen to restrict an employee’s right to work in a given market. As always there are exceptions but if in doubt when drafting your contracts seek specialist advice.
Posted in Breach of Contract | 1 comment »
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By Liam - Friday, May 11th, 2007
The EAT in Abbey National PLC v Fairbrother (relating to an employee raising a grievance when, amongst other things, colleagues referred to her as Frau Fairbrother and made Nazi salutes to her after she gave detailed instructions to colleagues about how to perform some work) have held that when considering an Unfair (Constructive) Dismissal claim following a resignation due to an employer failing to uphold an employee’s grievance, Tribunals should apply a range of reasonable responses test to the employers treatment of the grievance.
An employer is under a duty to act reasonably. They must not act irrationally or perversely and must not take account of irrelevant material and must not fail to take account of relevant material. They must not take decisions that no reasonable employer would take.
This decision gives employers a wide band of discretion when dealing with grievances as irrationality and perversity requires far more than an employer simply preferring one account of events to another, which is what a large number of grievances boil down to. As long as employers follow a reasonable procedure and come to a reasonable and justifiable conclusion on the available evidence gathered in the course of the grievance, there is unlikely to be a significant risk of a successful Unfair (Constructive) Dismissal claim based on giving a grievance outcome with which the employee disagrees.
Posted in Breach of Contract, Unfair Dismissal | No comments »
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By Liam - Friday, April 27th, 2007
The EAT have held in BLACKFORD FARMS LTD v MR C MULQUEENEY that a failure to pay the NMW can be brought as a breach of contract claim or as a deduction from wages claim. This confirms that employers’ liability for such claims could date back as far as 6 years rather than the three months that would apply to most Tribunal claims (subject to time extensions in specific circumstances).
The EAT also emphasised that ET1 forms should make it clear under what cause of action a claim is brought (deductions or breach of contract). In this case, the claim was held to have been brought as a deductions claim as the Claimant had not made it clear that it was intended to be a breach of contract claim. The claim was therefore out of time.
Posted in Breach of Contract, Employment Tribunal Procedure, National Minimum Wage | No comments »
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By Philip - Friday, March 9th, 2007
The fomer managing director of insurance broker Farr has lost his claim that a ban on competing with his former employer was unfair. The restrictive covenant that appeared in his contract has been upheld by the Court of Appeal. The Court found that the 12 month period was reasonable as an estimate of the period for which the confidential information would be valuable. Whilst at first glance a victory for the employer - employers should be aware that the case is very fact sensitive as the market which was restricted by the covenant was very limited. Not a carte blanche for other restrictive covenants being enforceable but thank you to Tanya (you know who you are!) for forwarding this one to me.
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By Philip - Friday, February 9th, 2007
This may sound obvious, but 12 weeks is not the same as 3 months. 3 months is actually 13 weeks. Who cares? It is common for contracts to give an entitlement to “3 months’ notice”. This means that employees are entitled to 13 weeks’ notice or 13 weeks’ PILON - not 12 weeks’. This can make a significant difference to redundancy costs for high earners - for an employee on £52k p.a. the difference is an extra £1000.00. An easy mistake to make, but a costly one for employers, especially in collective redundancy cases!
Posted in Breach of Contract | 5 comments »
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