UK Contract and Employment Law: The Scenario and the Facts - Essay Example

?The Scenario and the Facts Clarissa has been an employee of Precision Missiles Plc for over thirty years. Her contract of employment would need a six months notice from either side to be terminated. There was no “garden leave” clause in the agreement. As a part of her job profile, she has access to rapidly changing missile technology which includes the secret guidance system. The secret guidance system gives the missiles great accuracy over long range. This gives the company an edge over its competitors in the market. If this information would be shared with a competitor then the company would lose the competitive advantage. As a result of a failed marriage, Clarissa’s work was negatively affected. She became negligent with her work. She committed 2 negligent acts which were both serious in nature and affected the company. After the first incident, Clarissa was informally warned but the manager still showed faith in her. But after the second incidence, manager lost confidence in her and she was fired with a six month notice. Her contract will terminate on 31st March 2012. Also keeping in the mind the safety of her colleagues, she was asked to take “garden leave” wherein she was not needed to come to office during the notice period but would be paid for it. She was not happy with this and wanted to continue working. She has received an offer from Flare Missiles to work for them, provided she joins on the 1st of February 2012. She needs advise on whether she can successfully pursue a claim for unfair dismissal compensation against Cascade and whether she can lawfully accept flare's offer of employment. Unfair Dismissal Compensation The question of whether Clarissa can pursue a claim for unfair dismissal compensation will depend on whether it was an unfair dismissal. The fact that she was dismissed is clearly established in the facts of the case. She will be able to successfully claim the compensation if she can prove that the dismissal was an unfair one. If Precision Missiles had followed all the procedures and abided by the law, then she will not be able to claim the compensation as it will not be an unfair dismissal. First and foremost for Clarissa to have a right against unfair dismissal, she should have worked in the company for at least one year and Clarissa fulfils this requirement as she has been working for over 30 years in the company. Now, Clarissa has to be prove that the dismissal was unfair according to the Employment Rights Act of 1996, Section 98A(1) (‘Procedural fairness’)1 The Employment Rights Act of 1996, Section 98A(1) (‘Procedural fairness’) states that: A dismissal without completion of the standard procedure (wholly or mainly attributable to the failure of the employer) will be unfair. Whether the dismissal was an unfair dismissal will depend on the 2 stage test that any an unfair dismissal must go through2. Stage One: The Reason Once the unfair dismissal compensation claim is made, the responsibility to show that dismissal was based on a reason falls on the employer3. In this case, Precision Missiles will argue that they had a fair reason to dismiss Clarissa. According to the Employment Rights Act of 1996, Section 98(2) they have to prove that their reason was a fair one. In the current scenario the reason for dismissal was negligence and carelessness in carrying out her responsibilities which are a part of her job profile. This was not a one distinct incident but was repeated twice and in both cases the consequences of her negligence could have been critical. In the first, incidence her negligence would directly impact negatively on the brand images that Precision Missiles had built with its client. This could seriously damage its image and affect future business. The second incidence if not rectified by her colleagues could have been a disaster for the company. Even though it was found out that her negligence would not have caused serious damage, a repetition of the incidence could have been critical. The above reason could be justified as a fair one by using either one of the following 2 main reasons for fair dismissal: incapability and conduct. Putting a single reason under both incapability and conduct could be contradictory but Precision Missiles could use either one of the reasoning to prove that it was a fair dismissal. It is to be noted that both incapability and conduct could be clearly distinguished from each other. As per Sutton & Gates (Luton) Ltd v Boxall [1978] ICR 176 incapability is the sheer lack of ability to carry out a function4. The incapability of an employee could arise from various factors such as mental or physical health, aptitude, talent, etc. Therefore an underperforming employee could be fairly dismissed5. In the current scenario, Clarissa was disturbed by her divorce and was mentally not at her potential best. As a result, she was underperforming with respect to her own standards. A warning is very much essential in a case of incompetence and time needs to be given for the employee to improve. But if the employee was already aware of the requirements of her job the absent of a warning could be justified6. In this case, Clarissa was an experienced employee and she was aware of what was required from her. But she failed to meet the requirements. Also she was given a warning and time to improve and get back to her potential best. Misconduct could also be cited as a fair reason. Misconduct is the failure of an employee to fully exercise the possessed talent due to carelessness, laziness, misbehaviour or negligence7. In the current scenario, Clarissa was talented as she has been in the company for 30 years and was given the responsibility to handle the most confidential information of the company. It was repeated failure of part of Clarissa to completely utilise her talent which lead to her dismissal. An employee can be warnings and on persistent misconduct can be dismissed. The employee can also be dismissed on one individual incident if the incident was serious in nature. In Clarissa’s case both could be applied and proven that there was a fair reason for dismissal. Therefore, the company would be pleading that the reason was a fair one (by stating either one of the above reasons). Stage Two: Fair Procedure This part would be a tricky one. The fair procedure is essential for a dismissal even if there was a fair reason. According to the facts of the case, Clarissa does not complain about a fair hearing but only complaints about the “garden leave” clause. So it is assumed that she was given a fair hearing. According to the Employment Rights Act of 1996, Section 98(4)8 the employer must have acted reasonably under the circumstances and treated the reason as sufficient to dismiss the employee. The employer must have reacted reasonably considering the merits of the case in dismissing an employee. In the current case, Clarissa was given an informal warning and also given time to improve. But there was no formal written warning given to Clarissa before she was dismissed. This could be used to argue that a fair procedure was not followed. But again, considering the merit of the case and seriousness of the incidence the tribunal can think otherwise as Precision Missiles could argue that any other reasonable employer would have reacted the same way as the nature of the business and the responsibilities of Clarissa were of highest priority and a failure would mean serious damage not just to the employee but also to the society. The second incidence would be cited to show that a formal written warning and more time for Clarissa to improve would mean risking the safety of her colleagues as well as the society. Therefore, Precision Missiles would have acted reasonably on the fair reasons it had to dismiss Clarissa without a formal written warning. The advice to Clarissa would be that, she will not be able to successfully claim for unfair dismissal compensation. “Garden Leave” The question with respect to Clarissa lawfully accepting Flare’s offer of employment will depend upon the validity of the “Garden leave” injunction imposed by Precision Missiles and if the her role with Flare is in direct competition with that of Precision Missiles. First and foremost, there is no “garden leave” clause in the actual agreement of employment between Clarissa and Precision Missiles. Therefore, the injunction can be refused by the court as there is no express garden leave clause. It has happened in William Hill Organisation Ltd -v- Tucker 19989. But the decision was upheld in the case of Symbian Ltd v Christensen [2001] IRLR 77 CA but it was stated that the garden leave clause can be enforced only to a reasonable extent10. According to Evening Standard Co. Ltd. v Henderson [1987] ICR 588 it is possible to have a “garden leave” clause enforced on an employee through injunction11. Therefore, in the current case the “garden leave” cause can be enforced on Clarissa. But again the “garden leave” clause will be applicable only if there is a proper reason to believe that there is a need for such an injunction, if not the injunction will not be applicable. For example, there must be a valid reason to believe that an employee taking up a job with a competitor will cause damage to the company’s business12. In the current scenario, there are 2 valid reasons: One, the safety of Clarissa’s colleagues who can be affected by Clarissa’s repeated negligence; and the other would be the confidential information that Clarissa is aware of that can directly help the competitor, Flare Missiles. Therefore, the injunction of a garden leave clause will be justified. Also, Clarissa wanted to continue working during the notice period and was not happy with garden leave. But according, to SG&R Valuation Service Co LLC v Boudrais [2008] IRLR 77 an employee has a right to work but should not have demonstrated unwillingness or readiness to working13. In the current case, it is evident that Clarissa was not ready to continue working with the same responsibilities. Therefore, her plea to right to work will not be upheld and at the same time she will not be allowed to work for a competitor. Therefore, as the “garden leave” will be permitted in the court, Clarissa will not be able to lawfully take up the offer from Flare Missiles as she will still be subjected to her contractual duties with Precision Missiles. If she still accepts the offer, Precision Missiles can bring an injunction opposing it. Also, her benefits of garden leave clause will not be applicable. She can also be fined and asked to compensate for breach of agreement with Precision. Read More