Employment Law Problem Question - Coursework Example

?Employment Law Problem Question Advice to Arinder A detailed examination of the restrictive covenants in Arinder’s employment contract will be made. Restrictive covenants that are triggered after the termination of an employment contract are considered a restraint of trade per se and anti – competitive. Such covenants are void, as they violate public policy. If the employee challenges the validity of such a covenant, it is the responsibility of the employer to prove that the covenant is justifiable.1 PPP will have to defend the use of their restrictive covenant should Arinder contest it. Agreements that prohibit employees from working for a competitor, after the termination of employment are fundamentally void. These covenants are enforceable if the previous employer can prove that these did what was reasonable to protect his legitimate business interests.2 In our case, Arinder sought to take up work with the Dudley Delicacies (DD) Company. Under clause 27 of his employment contract, Arinder should not deal with any existing client of the company or disclose information regarding any process being employed in the company. The restrictive covenant requires Arinder to refrain from dealing with the existing customers of PPP. In addition, he must not disclose any acquired knowledge regarding the recipes from PPP to the latter’s competitors. This may be reasonable in light of case law discussed herein. In Thomas v Farr Plc and another [2007] EWCA Civ 118, the High Court ruled that the non – compete clause was reasonable and enforceable, which was also upheld in the Court of Appeal. 3 The Court of Appeal upheld the decision by stating that the restrictive covenant that prevented Thomas from working in one section of the insurance industry, while permitting him to work with other sections was reasonable. It also ruled that a limitation period of 12 months was reasonable. Moreover, in TFS Derivatives v Morgan, better remuneration had induced a derivatives trader to obtain employment with a rival company. The court accepted the plaintiff’s contention that the non – compete clause was reasonable, as its legitimate business interests had been endangered. 4 The 28th clause of his employment contract with PPP, disallows Arinder from obtaining employment in the food related industry, for a period of 6 months from the termination of employment and within 10 miles of the location of PPP. In accordance with the above discussion, it is obligatory for PPP to establish the reasonableness of this covenant. Moreover, the geographical restriction depends on the nature of the business and the competition. In some cases, the courts consider a restriction of 7 miles from the ex-employer’s premises as reasonable, whereas a one mile radius clause would be unreasonable in central London. In Allan Janes LLP v Johal,5 a solicitor’s post-termination covenant of 6 miles location, was deemed to be void, by the court, as it was very extensive. Nevertheless, a restrictive covenant for a 12 month period, with respect to an anti – client poaching was deemed to be valid.6 Similarly, a restriction of 10 miles from the location of PPP may be void – since it appears unreasonable. It is argued that the clause restricts the employment opportunities of Arinder, to a major extant. In Hivac Ltd v Park Royal Scientific Instruments Ltd, the court dealt with the use of an item of information by an employee, subsequent to the termination of employment. The court ruled that a covenant in the service contract could not restrict disclosure of such information.7 An employer that believes an employee has breached a restriction relating to the period after termination of employment, may apply for an injunction from the court. Such application will seek an interlocutory injunction and delivery up or destruction of confidential information.8 In this problem, Arinder was instructed by DD to make a product that was similar to that he had prepared for PPP, when he was in their employment. Such act may cause damage to the legitimate business interests of PPP. Clause 28 of the employment contract with PPP stipulates that Arinder should not take up employment in any company located 10 miles from the customary place of its work, in the UK. This would appear to be an unreasonable restriction and it is argued that Arinder would not be bound to it. 2. Advice to Bryonie Bryonie was subjected to indecent comments and jokes regarding her body, by her line manager. She lodged a complaint with the managing director of PPP, who made light of the behaviour of the line manager and in addition, made some lewd comments about Bryonie. Section 26(2) of the Equality Act 2010 states that a person harasses another individual if he engages in any manner of unwanted verbal, non – verbal or physical conduct of a sexual nature that has the effect of violating a person’s dignity, or creating a hostile, offensive or degrading environment for the other person. Employers in the UK are required by the law to listen to complaints of unfair treatment at the workplace, by their employees. Such unfair treatment could be on the basis of the employee’s gender, race or disability. Immediately after the complaint has been lodged, the employer is obliged to respond to the grievance. The aggrieved employee can approach the appropriate authority, if the employer ignores her complaint.9 The discrimination of employees can be prevented, if employers include Equal Opportunity and Diversity policies and procedures. Employees are afforded protection from sexual harassment; discrimination at the workplace on the basis of disability, gender and race; and protection from abuse, harassment, and defamation, by the Equality Act 2010. In accordance with the provisions of the Equality Act 2010, she can proceed legally against her line manager and the managing director of the company. As such, Bryonie can approach the employment Tribunal for redressal under the provisions of the Equality Act 2010, against the line manager and the managing director of the company for harassment. 3. Advice to Daniel Daniel requires advice regarding his rights against the management for their failure to make suitable adjustments to the work place. Under the provisions of section 20 of the Equality Act 2010, employers have to make reasonable alteration to the workplace, so that disabled employees can be accommodated. Hence, PPP has to make suitable changes to their workplace, to accommodate Daniel. Discrimination on the basis of the disability of employees is prohibited by the Equality Act 2010. This Act entitles disabled workers to the same rights as the non-disabled workers. Moreover, special provisions have to be made for employees with disability, under the provisions of this Act. Daniel has the same rights as the other employees of PPP. If PPP resorts to discrimination at the work place, it will be liable under the provisions of the Equality Act 2010. The law requires tribunals to ensure a balance between the requirements of the employer and the rights of the employees, as stated in the ruling in Borders Regional Council v Maule.10 As such, the employer has to provide the necessary health and safety arrangements at the workplace.11 Similarly, in our problem the PPP Company has to implement adequate safety measures at the workplace. In addition, Daniel’s office work section is located in the second floor, with no lift facility. This creates several difficulties in employment for Daniel, as he is a disabled person. When Daniel questioned his management about special arrangement for his work needs, they simply expressed their inability to accommodate his requirements. However, the Equality Act 2010 requires organisations to make appropriate adjustments to the work place, so as to make it suitable for the disabled. Under the provisions of this Act, the employer is under a duty to make reasonable adjustments at the workplace, in order to accommodate disabled employees. This duty imposes three conditions upon the employer. First, if a practice at the workplace places a disabled person at a distinct disadvantage in comparison to individuals who are not disabled, then the employer has to take reasonable steps to avoid that disadvantage. Second, if a physical feature places a disabled person at a considerable disadvantage, with regard to a pertinent issue, in comparison to those who are not disabled, then the employer has to adopt whatever is reasonable to circumvent such disadvantage. Third, if a disabled person would be seriously disadvantaged in a relevant matter, in comparison to persons who are not disabled, in the absence of auxiliary aid, then the employer has to take reasonable steps to provide such assisting aid.12 All the same, in our case, the Daniel’s manager refused to provide suitable arrangements in the work place, in order to accommodate Daniel’s disability. Consequently, the manager has breached the provisions of the Equality Act 2010. Daniel can successfully sue his employer for not making suitable adjustments to the workplace, in order to accommodate his special needs. Under the Equality Act 2010, Daniel can approach an Employment Tribunal, in order to enforce his rights, against PPP for not providing special arrangements to address his special needs. Suggestions for Alternative Working The employer has to consult the disabled employee’s physician and determine if an alternative form of work can be provided to the employee, in case that employee is unable to perform the extant job. Moreover, an employment tribunal had held that even if there had been no suitable alternative job at the time of giving notice of dismissal; the employer had to ascertain whether there was suitable alternative employment at the time of actual dismissal. If disability is established as per the provisions of the Equality Act 2010, then the employer has to consider providing alternative employment or effecting suitable adjustments to the workplace.13 4. Advice to Florence Section 230(1) of the Employment Rights Act 1996 (ERA), defines an employee as a person who enters into or works under a contract of employment. A contract of employment, as per section 230(2) ERA is a contract, which could be oral or in writing, and express or implied. Some of the laws relating to employment are also applicable to workers. A few of these are the National Minimum Wage laws and the Working Time Regulations. In addition, the Equal Pay Act, Sex Discrimination Act, Race Relations Act and the Disability Discrimination Act apply to every individual, regardless of whether that person is an employee, independent worker or under an apprenticeship. As such, these Acts apply to both employees and self – employed workers.14 The courts developed three tests to assess the status of the working people, as either an employee or a worker. These are the multiple or economic reality test, the integration test and the control test. The control test concentrates on the extent of control exercised by the employer, with respect to the worker. A contract of employment can be deduced, if the employer specifies what the worker has to do, as well as how to do it. If such a large degree of control is not present, and if the employer exerts a small degree of control, then the engagement would be classified as self – employment. In our case, Florence has to follow the rules framed by PPP or face disciplinary action. Moreover, she has to wear a uniform during working hours and adhere to the time schedule stipulated by the company. These conditions satisfy the requirements of the control test. Florence delivers PPP’s goods to the latter’s customers, which is part and parcel of the company’s business. Hence, she satisfies the conditions of the integration test. In some employment situations, several of the rights and benefits accrue only after some explicit term of continuous employment. Mutuality of obligation is in general considered in such situations. It is very important to ascertain, whether work is conducted under discrete contracts or under a single all – encompassing contract. In the former benefits, usually do not accrue; whereas, in a single umbrella contract benefits and rights are generally present.15 The courts employ the language of reciprocity to reintroduce the control test in a new garb, while addressing issues relating to casual workers. Mutuality of obligation requires the worker to consent to being available for work on a continuing basis. The important factor is the existence of a specific variety of mutuality that requires the worker to relinquish autonomy to the employer. Such surrender has to be with regard to the physical location and time schedules of the work.16 The presence of such conditions makes the worker an employee. With regard to Florence, work schedules will be determined by PPP. The former should be ready for work, whenever it is offered by PPP. As per the discussion, such control, conduct and practice in respect of the worker amounts to an employment relationship. Thus, Florence can be deemed an employee of the company. Thus, in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance, the existence of a contract of service was determined by ascertaining that the following conditions had been satisfied. First, the servant had consented to provide his own work and skill in return for wages or other remuneration. Second, the servant had agreed to be under control, during the performance of that service, to the extent that would render the other person the master. Third, the remaining contractual provisions were in accordance with what obtains in a contract of service.17 If work is offered and accepted on a regular basis, it could result in a continuous contract of employment. It could be contended that after the work is completed there is no obligation to offer or accept work. However, as per the ruling in Nethermere (St Neots) Ltd v Gardiner and Another,18 a contract of service can be inferred on the basis of continuous dealing between the parties over time. In addition to enforcing rules and maintaining standards, disciplinary procedures should promote improvement in employees, and not be restricted to inflicting punishment. Disciplinary procedures address deficiencies in an employee’s conduct or performance, and provide a means of making the employee effective. Such procedures should be equitable, effective and applied uniformly. 19 If a contract permits a worker to use a substitute, this could prove detrimental to establishing a relationship of employment. For instance, in Express and Echo Publications Ltd v Tanton, the contract enabled Tanton to substitute another worker to perform his duties. Furthermore, Tanton had carried out such substitution on several occasions. The Court of Appeal considered this right of substitution to be inconsistent with a contract of employment, which fundamentally consisted of providing services, personally by the employee.20 However, this does not apply to our case since the substitution of employees is controlled by the company. Several terms of her employment show that the control exerted by PPP makes her status that of an employee working under a contract of employment. 5. Advice to Florence if it is Assumed that She is an Employee This problem relates to examining whether Florence had been unfairly dismissed. She has a right not to be dismissed, just like the other genuine employees. As Florence had been working with PPP Company, since 1995, continuity of service with the same employer makes her eligible for employment protection under the provisions of the Employment Act. Moreover, the application of the three - pronged test against her employment contract terms as well as her obligations under the contract revealed that Florence had been working under the control of PPP. Dismissal without proper notice attracts severance pay. Such pay should be for the same period as the notice period and at the rate of the normal wages. Failure to provide severance pay entitles the employee to raise a grievance with the employer. If this elicits no favourable response, the employee can make a claim of wrongful dismissal before an employment tribunal. 21 As such, Florence is an employee, and she can claim unfair dismissal against her employer, as she had not been provided with any notice, before her dismissal. She is entitled to all the benefits and rights available to the other employees. Therefore, Florence can initiate grievance proceedings against the company. In accordance with the ruling in Mennell v Newall, if an employer terminates the services of an employee, without providing adequate notice, then that employer will be liable to the aggrieved employee. An employee, as per the provisions of the Employment Act 1996, has to be provided with a notice period, prior to dismissal. Such notice should provide a minimum period of time that depends on the length of employment. Under no circumstances can such notice period be reduced in duration. In order to be eligible for protection against unfair dismissal, the employee should have completed at least one year of continuous service with the same employer. The Employment Act 2002 (Dispute Resolution) Regulations 2004 oblige employers to implement procedures related to disciplinary action and grievances. These procedures have to be first initiated by the employee, prior to approaching the Employment Tribunal. Similarly, the employers have to initiate these disciplinary procedures, prior to dismissal. Failure to do so makes the employer liable for unfair dismissal. It is necessary for employers to clearly inform their employees, regarding the type of misconduct that will result in dismissal, without the normal notice period or pay in lieu of notice. Offences that constitute such gross misconduct should be stipulated in the rules. Acts that serve to nullify the contract between the employer and an employee are classified as gross misconduct, and these justify summary dismissal. However, an employee with a year or more of service is entitled to request the reasons for dismissal in a written form.22 In our problem, the management of the PPP did not give Florence, prior warning for her late delivery. She was not allowed to appeal against the decision. In addition, no action had been initiated against the other drivers, who had regularly made late deliveries. Florence can make a claim for redressal against the management in the Employment Tribunal. Bibliography Allan Janes LLP v Johal[2006]ICR 742,ChD. Borders Regional Council v Maule [1993] IRLR 199. Cushway, B, The employer's handbook 2009-10: an essential guide to employment law, personnel policies, and procedures, 6th edn, Kogan Page Publishers, 2009. Defamation Act 1996. Disability Discrimination Act 1995. Emplaw, Restrictive covenants, 2011, retrieved 12 November 2011, . Employment Act 2002 (Dispute Resolution) Regulations 2004. Employment Equality (Sex Discrimination) Regulations 2005. Employment Rights Act 1996. Equality Act 2010. Express and Echo Publications Ltd v Tanton [1999] IRLR 367. Gender Equality in the UK – The Legal Framework, 2008, retrieved 14 November 2011, . Health and Safety at Work etc. Act 1974. Hivac Ltd. v Park Royal Scientific Instruments Ltd [1949] Ch 169. Johnstone v Bloomsbury Health Authority [1991] 2 All ER 293. Lewis, J & G Thornbory, Employment Law and Occupational Health: A Practical Handbook, John Wiley and Sons, 2010. Mennell v Newell & Wright (Transport Contractors) Ltd [1997] IRLR 519. Protection from Harassment Act 1997. Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497. Restrictive covenants in employment contracts, 2011, retrieved 14 November 2011, < http://www.out-law.com/page-7086>. Scully UK Ltd V Lee [1998] IRLR259. Scrope, H, Employment Law Handbook, Daniel Barnett Publisher, 2008. Sexual, Racial, Disabled Anti-Discrimination Laws, retrieved 15 November 2011, . TFS Derivatives v Morgan [2005] IRLR 246. Thomas v Farr Plc and another [2007] EWCA Civ 118. Read More