Employment Law - Assignment Example

Answer: Before attempt to answer this question, it would be significant to discuss about the meaning of restrictive covenant and its implications to the present context. Employers often seek to incorporate post-termination obligations into an employee’s contract of employment consists of clause which prohibits an employee from competing with his ex-employer, and not to do certain things after he or she leaves the company. (1) In order to discuss this issue that whether Balmoral can change the terms of his contract by imposing new restrictive covenants, it necessitate to consider few general matter of employment contract. The contract of employment is the cornerstone of the employment relationship. In Gascol Conversions Ltd., v Mercer1 Courts found that contracts of employment, like all other contracts, consist of express and implied terms and the written statement is only evidence of the various contractual terms and, unless the employee has agreed that it accurately represents those terms, it is not binding on the employee. Here the argument is that at the time of recruiting the employee, employer can impose these restrictive clauses. Restrictive covenants are terms in a contract of employment that limit the employee's activities following termination of their employment. Now it need to consider the capacity of Balmoral to change or impose new restrict covenant. In RS Components v Irwin2, a case before the National Industrial Relations Court the employer decided that it needed to introduce restrictive covenants. The NIRC held that held that there was nothing in the section to preclude the tribunal from finding. The dismissal on the grounds of the needs to impose the new restriction fells within the some other substantial reason category. If employees refused to sign, the new contract could therefore be dismissed. Here the Court noted that the employer would have to devise covenants that were not void. It is a landmark case that decided in 1973 should demonstrate best practice, rather than Windsor Recruitment v Silverwood and others3, which decided in 2006. Employment law still has the capacity to spring a surprise. In Hanover Insurance Brokers Ltd v Schapiro4 the CA Dillon LJ argued that a restriction that seeks to prohibit a defendant from poaching any employee, irrespective of expertise or juniority and including those who entered employment after the defendant left, is invalid5. In Living Design (Home Improvements) Ltd. v Davidson6 the CA has recognized the possibility of a restrictive covenant sufficient to apply after repudiation though the general rule is that restrictive covenants are extinguished on termination by repudiation. However, the changing terms and conditions of employment can be problematic but it possible to change within the scope of the contract or there is an express power to change the contract on a legitimate basis. From the decision of the case of Windsor Recruitment v Silverwood and others7 Balmoral make sure that it has sound business reason for requiring contractual changes. This case gives some guidelines to change the restrictive covenant. Employer has to consult with employees over any proposed contractual changes. The collective consultation duty applies if 20 or more employees are being dismissed and re-engaged on new terms. Employer has to give them warning and the opportunity of a meeting prior to dismissal and follow the statutory dismissal procedure. Give employees a reasonable opportunity to negotiate the terms with employee, to consider the changes, and to take advice. So now Balmoral has to showed that the follow the guideline which develop by the case law. (2) Whether the restrictive covenants are enforceable: Restrictive covenants apply to stop employees from competing or from going to a competitor for a certain period after the termination of their employment. Whether a restrictive covenant is contractually valid or not depends, on whether adequate consideration has taken into account in exchange for entering into the restrictive covenant. Therefore, the restrictive covenant will be enforceable if it designed to protect his legitimate business interests only if it extends no further than is reasonably crucial to protect those interests. In restrictive covenants may include clauses such as restrictions on the former employee working for a competitor, non-solicitation covenants, which prevent poaching clients and customers of the former employer, non-dealing covenants and non-solicitation of staff covenants. There are clearly two sides to the argument because employers are always concerned to protect their business interests on the other hand some sort of restrictive covenants seek to impose unreasonable restrictions which on the face of it would seriously prevent them from operating in the industry in which they are experienced. Balmoral’s must bear in mind the reason of restrictive covenants. The covenants will be unenforceable if Balmoral goes further than is reasonably necessary to protect their legitimate business interests as otherwise. Now it need to discus whether Clause 4.1 and Clause 8.1 are fall in legitimate business interests or not. In Clause 8.1, Balmoral restricts an employee to recruit any attempt to recruit any employee or ex-employee of the company to work for him, he cannot work for any other person, or organisation 12 months after his employment has ended. Clause 4.1, which prevents an employee for 12 months after the employment ends, the employee will not work for any business, which is or is likely to be wholly or partly in competition with the company may be enforceable to protect legitimate business interests. Balmoral provides technical advice and support to small businesses and has suffered recently from rival companies poaching staff and business from them. In this context, it is reasonable to impose this clause. But the counter argument may come that the employee are experienced and they have developed a specific set of skills in this area. However, the covenants still need to be reasonable to be enforceable. There are simply no hard and fast rules to reach a decision. However, some recent cases where employer was successfully change the restrictive covenant and become enforceable according to court order. In Allan Janes LLP v Johal8 the claimant sought an injunction to enforce the restrictive covenants and in this case to protect the employer's legitimate interests Court held that the Injunction would be granted because the employee (solicitor) breach the covenant by entered into partnership with another solicitor9. In the case of Windsor Recruitment v Silverwood and others10, Windsor's directors asked all staff to sign new contracts containing detailed restrictive covenants and gave the employees 30 minutes in a busy working environment to sign. Those who refused to sign were dismissed. The tribunal first considered whether there was a fair reason in law for the dismissals under the category of “some other substantial reason”. The EAT held that the dismissals could have been made on the ground of SOSR. On further appeal, the Court of Appeal affirmed the EAT decision. The Cs held that the employees had refused to accept a covenant proposed by the employer for the protection of its legitimate interests was valid ground for dismissal. Therefore, the restrictive covenants by Balmoral will be enforceable in this situation. (3) Ali refused to sign and was dismissed following a disciplinary hearing. Dave (his law student friend) panicked because he realised that the deadline for submitting Ali’s claim was submitted the server until five minutes past midnight and so was technically late. Here it needs to consider whether he is able to bring a claim for unfair dismissal even though he submitted the claim late. The general rule is that an employee has the right not to be unfairly dismissed by his employer and right to complain of an unfair dismissal, is only applicable to those who possess the relevant employment right according to Employment Rights Act 1996, s. 94(1). Section 111(2)(a) of the Employment Rights Act 1996 provides that Employment Tribunal shall not consider a complaint under this section unless it is presented to the tribunal before the end of the period of three months beginning with the effective date of termination. Though an employee has a right to appeal against dismissal but here it need to consider whether he is able to bring a claim for unfair dismissal even though he submitted the claim late. If an employee wants to claim unfair dismissal, he must be submitting his claim to the Tribunal within three months of the date of employment ends. Employee should put his grievance in within the above three-month period and this will extend the period for putting in a Tribunal claim for a further three months. It is also important to check by the device such as telephone that the Tribunal receives the claim, whether he send it online, or by fax or post. An employee will only have complied with the deadline when his form actually reaches the Tribunal before the deadline. It need to say that it is employees responsibility to make sure that the application reach even if there was a problem with the Tribunal's website or fax machine. In the case of Marks & Spencer v Williams-Ryan11 the Employment Tribunal held that whether it had been “reasonably practicable” for a claimant to bring his claim within the prescribed three- month period. Lord Phillips M.R. in a judgment with which Latham and Keene LJ agreed that it is necessary to consider not merely what the employee knew, but what knowledge the employee should have had had he or she acted reasonably in all the circumstances. In Crofton v Yeboah12 Mummery LJ it ought only to succeed if employee can show reasonable evidence. In Fishley v Working Men’s College13, upheld a decision of the Employment Tribunal that it had no jurisdiction to hear an application to the Employment Tribunal, which was presented 11 minutes late because of breakdown in a printer. In Beasley v National Grid Electricity Transmission14, the claimant appeal against unfair dismissal presented by e-mail 88 seconds outside the prescribed three-month period although the Claimant that the three month period expired on 5 May 2006. Employment Tribunal held that it was “reasonably practicable” to present claim in time he misread the e-mail address of place to which the claim form had to be sent. The claim form was returned to the Claimant, the Claimant then sent the claim form to the correct address so it was late. Employment Tribunal had considered the reasonable practicability that claims was brought in time and the impediments preventing him from bringing the claim within the prescribed three-month period. Here delay is less than two minutes, which is “reasonably practicable”. However, in the light of the words of section 111(2) of the 1996, the appeal must be dismissed. In this circumstance, it can be said that if Court consider Ali’s claim reasonably practicable though he was five minutes late. (4) Before moving on to the concept of fairness, first it is necessary to consider the reason for dismissal. An employer has to show that it was potentially fair and the reasons clear of dismissal. Here there is a dual test that the employers decision to dismiss fall with a “band of reasonable responses” and whether or not the employer has adopted a fair procedure in relation to the employees dismissal. In RS Components v Irwin15 an employee’s refusal to sign up to a new contract containing a reasonable restraint, which had been held a potentially fair reason for dismissal. Here Irwin was the employee would be dismissed if he did not sign a new agreement containing a 12-month non-solicitation of customer’s clause. The majority of the tribunal, Sir John Brightman said that although the restrictive covenant was reasonable, the employee’s refusal to sign it was not some other substantial reason, because it concluded that dismissal for such a reason did not, on a proper construction of the then equivalent of s.98 (1)(b), fall within the ambit of some other substantial reason. Sir John Brightman left open the question of whether it is open to an employer to assert his employee’s refusal to sign up to an unreasonable restraint as being a potentially fair reason for his dismissal. In Alidair Ltd v Taylor16 it was held that an employer should show honest belief in the employee's lack of capability and that belief was reasonable, it should be shown that medical advice was sought. In general, a dismissal is likely to be unfair if the procedure used does not involve an element of consultation with the effected worker. The CA in Foley v The Post Office17 reaffirmed that tribunals should apply the words of the statute. The CA suggested that the idea of applying “band of reasonable responses” might help as stated in the case of British Home Stores v Burchell18. In Polkey v AE Dayton Services Ltd19 the Court gives significant guidance on the crucial factor of fairness and consultation. In this case court apply dual test. Under s98 (1) (b) and s98 (2) ERA the employer must prove that an employee was dismissed for a potentially fair reason. In this case the Court held that it is unfair to penalize an employer for a shortcoming, which made no difference to the outcome of a dismissal. Ali is able to bring a claim, if and only if he can show that the reason for dismissal was unfair and it needs to consider that the employers decision to dismiss fall with a “band of reasonable responses”. Conclusion: From the above discussion for first issue it can be said Balmoral has to showed that the follow the guideline which develop by the case law. For second situation the restrictive covenants by Balmoral will be enforceable. In third situation, the question arise whether the Court consider Ali’s claim reasonably practicable though he was five minutes late. At last situation, Ali is able to bring a claim, if and only if he can show that the reason for dismissal was unfair. Bibliography: Hugh Collins, 'Regulating the Employment Relation for Competitiveness', Industrial Law Journal Vol 30 No1 March 2000, 17 Painter, Holmes & Migdal, 'Cases & Materials on Employment Law', 3rd Edition, Blackstone Press, 2000 The Inns of Court School of Law, 'Employment Law in Practice', 5th Edition, Oxford University Press 2001. Alan Neal, 'Recent Developments in Unfair Dismissal', New Law Journal, 7th December 2001 p 1801. Thomas, G. Industrial Law, (London: LexisNexis, 2003) 8th edition [ISBN 0406963819]. Collins, H., K.D. Ewing and A. McColgan Labour Law: Text and Materials, (Oxford: Hart Publishing, 2005)2nd edition [ISBN 1841133620]. Selwyn, NM, Selwyn's Law of Employment, (2006), 14th edition, oxford university press, ISBN: 0195026821 Table of Cases Allan Janes LLP v Johal [2006] EWHC 286 Ch Alidair Ltd v Taylor [1978] ICR 445 Beasley v National Grid Electricity Transmission [2006] UKEAT Crofton v Yeboah [2002] IRLR 634 Fishley v Working Men’s College [2004] UKEAT 0486/04 Foley v The Post Office [2000] ICR 1283 Gascol Conversions Ltd., v Mercer [1974] ICR 420 Hanover Insurance Brokers Ltd v Schapiro [1994] IRLR 82 Home Stores v Burchell [1980] ICR 303 Living Design (Home Improvements) Ltd. v Davidson [1994] IRLR 69 Marks & Spencer v Williams-Ryan [2005] IRLR 562 Polkey v AE Dayton Services Ltd [1988] AC 344 RS Components v Irwin [1973] ICR 535 Windsor Recruitment v Silverwood and others (2006) List of Acts Employment Rights Act 1996, s. 94(1). Section 111(2)(a) Clause 4.1 and Clause 8.1 Section 111(2) of the 1996 S.98 (1)(b) s98 (1) (b) and s98 (2) ERA Read More