Case law

Apprenticeships

Children

Contract

Discrimination

    Disability

    Sex

Illegal contracts

References

Apprenticeships

Dunk v George Waller & Son [1970] All ER 630 CA

Flett v Matheson [2006] IRLR 277 CA

Wallace v C A Roofing Services Ltd [1996] IRLR 435 HC

Whiteley v Marton Electrical Ltd [2003] IRLR 197 EAT

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Children

Ashby v Addison & Another (T/a Brayton News) [2003] All ER [D] 98 [Jan] EAT

Chaplin v Leslie Frewin [Publishers] Ltd [1966] 2 WLR 40 CA

Clements v London & North Western Railway Co [1894] 2 QB 482 HL

De Francesco v Barnum [1890] 45 Ch D 430 CA

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Contract

Avon County Council v Howlett [1983] IRLR 171 CA

Bracebridge Engineering Ltd v Darby [1990] IRLR 3 EAT

Burton Group v Smith [1977] IRLR 351 EAT

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 CA

Cresswell v Board of Inland Revenue [1984] IRLR 190 HC

Delaney v Staples (T/a De Montfort Recruitment) [1992] 1 AC 687 HL

Discount Tobacco & Confectionery v Williamson [1993] IRLR 327 EAT

Dryden v Greater Glasgow Health Board [1992] IRLR 469 EAT

EMI Group Electronics Ltd v Coldicott [1999] IRLR 630 HC

Gascol Conversions Ltd v Mercer [1974] ICR 420 CA

Gibbons v Associated British Ports [1985] IRLR 376 HC

Gill & Others v Cape Contracts [1985] IRLR 499 HC

Hamill v Strong & Co Ltd EAT/1179/99

Hooper v British Railways Board [1988] IRLR 517 CA

Isle of Wight Tourist Board v Coombes [1976] IRLR 413 CA

Marley v Forward Trust [1986] IRLR 369 CA

Miles v Wakefield Metropolitan District Council [1987] IRLR 193 HL

Miller v Hamworthy Engineering [1986] IRLR 461 CA

O'Laoire v Jackel International Ltd (No 2) [1991] IRLR 170 CA

Post Office v Roberts [1980] IRLR 347 EAT

Prestwick Circuits v McAndrew [1990] IRLR 191 CS

Puntis v Governing Body of Isambard Brunel Junior School EAT/1001/95

R v Lord Chancellor's Department ex p Nangle [1992] 1 All ER 897 HC

Rigby v Ferodo [1988] ICR 29 HL

Robertson v British Gas Corporation [1983] IRLR 302 CA

Secretary of State for Employment v ASLEF (No 2) [1972] 2 QB 455 CA

Tayside Regional Council v McIntosh [1982] IRLR 272 EAT

Ticehurst & Thompson v British Telecommunications [1992] IRLR 219 CA

United Bank v Akhtar [1989] IRLR 507 EAT

W A Goold (Pearmak) Ltd v McConnell [1995] IRLR 516 EAT

Western Excavating (ECC) Ltd v Sharp [1978] QB 761 CA

White v Reflecting Road Studs [1991] IRLR 331 EAT

Wiluszynski v Tower Hamlets London Borough Council [1989] ICR 493 CA

Wishart v National Association of Citizens Advice Bureaux [1990] IRLR 393 CA

Woods v W M Car Services (Peterborough) Ltd [1982] ICR 69 EAT

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Discrimination

Disability

Archibald v Fife Council [2004] IRLR 651 HL

Edwards v Royal Devon & Exeter Healthcare NHS Trust [2004] ET/1701114/04

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Sex

Bracebridge Engineering Ltd v Darby [1990] IRLR 3 EAT  

Brennan v J H Dewhurst Ltd [1983] IRLR 357 EAT

Grieg v Community Industry [1979] IRLR 158 EAT

Price v Civil Service Commissioner [1978] 1 All ER 1228 EAT

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Illegal contract

Annandale Engineering v Samson [1994] IRLR 59 EAT

Cole v Fred Stacey [1974] IRLR 73

Corby v Morrison [1980] IRLR 218 EAT

Hewcastle Catering v Ahmed [1992] ICR 626 CA

Hyland v J H Barker [1985] IRLR 403 EAT

Leighton v Michael [1996] IRLR 67 EAT

Rastegarnia v Richmond Design COIT 764/38

Salvesen v Simons [1994] IRLR 52 EAT

Tomlinson v Dick Evans "U" Drive Ltd [1978] IRLR 77 EAT

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References

Gallear v J F Watson & Co [1979] IRLR 306 EAT

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 HL

Spring v Guardian Assurance [1993] IRLR 122 CA

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Apprenticeships

Dunk v George Waller & Son [1970] All ER 630 CA

If an apprenticeship agreement is terminated early there may be damages for loss of future work prospects and loss of earnings for the remaining period of the apprenticeship.

Mr Dunk's four year apprenticeship agreement was terminated 15 months early. Mr Dunk claimed damages for the early termination of his contract of apprenticeship.

The Court of Appeal found that during his apprenticeship Mr Dunk was entitled to receive wages, instruction, training, and work experience. If his apprenticeship had not ended early he would have received a certificate for the full period of his apprenticeship. The Court considered that this would have given him a good start in his career, that this would have lasted for at least two years, and during this period he would have earned more than other workers who had not served an apprenticeship. It was felt that after two years it was likely that he may have earned the same as those who had not served an apprenticeship.

Moreover, it was held that the object of an apprenticeship agreement "was to enable the apprentice to fit himself to get better employment and wages." Mr Dunk was entitled to damages "for the diminution of his future prospects by the loss of the benefit of the training." In addition, he was entitled to "damages for loss of earnings and training during the remainder of the agreement."

The Court held that the essential elements of a contract of apprenticeship are:

  • The payment of wages during the apprenticeship.

  • The instruction and training given to enable an apprentice to acquire valuable skills.

  • The status on completion of the apprenticeship that gives the apprentice a good start in the labour market.

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Flett v Matheson [2006] IRLR 277 CA 

The essential elements of an apprenticeship need to be identified before a contract of apprenticeship is established as in Dunk v George Waller & Son above.

Mr Flett started work in January 2002 as a labourer when he was 16 years old. In September 2002 he entered into a tripartite individual learning plan with his employer. There was also a training provider called JTL who operated under the auspices of the Learning and Skills Council and the electrical contracting industry's Joint Industry Board. It was intended that Mr Flett would become a fully qualified electrician at the end of a 42 month training plan. Throughout this period Mr Flett was referred to as an "apprentice."

Essentially the agreement was that his employer would pay him wages, provide him with an opportunity for work experience and allow him access to training although training would be provided by JLT. Mr Flett was subsequently dismissed without notice and submitted a claim of unfair dismissal and/or breach of contract.

An Employment Tribunal held that there was not a contract of employment, neither was there a contract of apprenticeship. This decision was appealed.

The Employment Appeal Tribunal held that Mr Flett was employed under a contract of employment, but not under a contract of apprenticeship. He was awarded one week's wages for damages as an ordinary employee. Mr Flett appealed against this finding.

The Court of Appeal allowed Mr Flett's appeal. As there were additional obligations on his employer his contract of employment had to be regarded as a tripartite trainee arrangement. Subject to certain provisions in the learning plan, his employer was bound to the arrangements specified in the plan. Those arrangements had the essential elements of a contract of apprenticeship. The fact that some training was provided by JLT did not detract from the character of the relationship which would have lasted until the end of the training period. Mr Flett's claim was remitted to the ET for further consideration of the evidence.

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Wallace v C A Roofing Services Ltd [1996] IRLR 435 HC

It might be possible for an apprentice to be made redundant provided there is a closure or a fundamental change in the character of an organisation. However, an apprentice cannot normally be made redundant and is not redundant at the end of the apprenticeship. In effect the employment is for a fixed-term which expires when the apprenticeship is completed. A potentially fair reason for dismissal is the non-renewal of a fixed-term contract.

Mr Wallace worked under a contract of apprenticeship. After serving 19 months of his apprenticeship he was made redundant due to a downturn in work. He claimed damages on the grounds that he could not be made redundant because he was an apprentice. Mr Wallace did not have a formal written contract of apprenticeship, but his written statement of terms and conditions stated that his job title was "apprentice sheet metal worker." At the end of his apprenticeship he would not be offered a job unless a suitable position was available. He was paid the rate of pay for an apprentice and his hours were typical of an apprenticeship with a focus on training.

The employer argued that he was not an apprentice, that he was employed under a contract of employment, or alternatively a training contract. The employer also argued that there was a term in the contract which allowed for termination of Mr Wallace's employment prematurely on grounds of redundancy and that this had been made clear to him.

The High Court held that the oral agreement between Mr Wallace and his employer was a contract of apprenticeship, rather than a contract of employment or a training contract. Therefore, the contract of apprenticeship could not be terminated unless the company closed down or there was a fundamental change in nature of the company. A contract of apprenticeship is a distinct common law entity, the execution of the employer's work was a secondary consideration as the primary purpose of a contract of apprenticeship is to provide training. A contract of apprenticeship is for a fixed-term and the normal laws of dismissal do not apply to such contracts. It follows that it is not open for employers to terminate a contract of apprenticeship in the same way as a normal contract of employment can be terminated. Mr Wallace's claim was allowed.

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Whiteley v Marton Electrical Ltd [2003] IRLR 197 EAT

Damages for traditional and modern apprenticeships are similar. This case was seen as a test case by Mr Whitely's trade union. He was not awarded any damages beyond September 2000 as he had mitigated the loss of his employment by continuing his apprenticeship with a new employer.

Mr Whitely started work under a modern apprenticeship pact in October 1999. There were three parties to the pact, Mr Whitely, his employer and a local Training and Enterprise Council called Tees Valley Tec Limited. All three parties had signed the pact which was to be supervised by Tees Valley Tec Limited. There was also a training provider called JTL. The pact effectively meant that Mr Whitely would be trained by his employer in the same way as a traditional apprenticeship. At the end of this training Mr Whitely would become a qualified installation electrician. He was dismissed in June 2000 after a downturn in work.

Mr Whitely found work with another employer in September 2000 and continued his apprenticeship. He claimed damages for the loss incurred by him between June and September on the grounds that his employer was not entitled to dismiss him until his training had finished.

The employer argued that he was only entitled to one week's notice of dismissal and referred to a standard-form which purported to be Mr Whitely's terms of employment.

The Employment Appeal Tribunal allowed Mr Whitely's appeal and made a declaration that the employer was to pay damages to Mr Whitely for the period between his dismissal and the start of his new apprenticeship.

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Children

Ashby v Addison & Another (T/a Brayton News) [2003] All ER [D] 98 [Jan] EAT 

A child is not classed as a worker and has no entitlements under the Working Time Regulations. This does not mean that there is no statutory protection for children. See Children and Young Workers. 

Graham Ashby started work as a paper boy in 1998 at the age of 13. He was paid £9.00 a week for delivering about 36 papers a day over a six day week. He was dismissed in October 2000 when he was 15 years old.

Graham submitted a number of claims including a claim for unpaid holiday pay. He argued that he had been dismissed for asserting a statutory right to receive holiday payment.

The employer argued that he did not have such a right. Further to this, it was argued that Graham was self-employed. The employer also argued that if Graham was an employee, he had been dismissed on grounds of poor performance.

The Employment Tribunal held that Graham was an employee, and that poor performance was only one of the reasons for his dismissal. The main reason was that he had asked for too much time off work. The ET held that he had been unfairly dismissed. However, his compensation was reduced by 80% to reflect his own contribution of poor performance. This resulted in an award of £22.50 and a further £9 was added as one week's pay in lieu of notice. The ET also held that Graham was entitled to four weeks paid holiday of £28.50 (less holiday that had already been taken) under the Working Time Regulations 1998.

The employer appealed against the ET's findings. The appeal was funded by the National Federation of Retail Newsagents who represent 22,000 members, with 30,000 outlets which employ 192,000 paper boys, of which about 71% are between 13 and 15 years old.

The Employment Appeal Tribunal held that a 15 year-old paper boy was not a worker for the purposes of the Working Time Regulations. As such, he was not entitled to four weeks paid annual leave. However, he was entitled to two consecutive weeks holiday during school holidays under the Children and Young Persons Act 1933 (as amended).

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Chaplin v Leslie Frewin (Publishers) Ltd [1966] 2 WLR 40 CA

A minor will be bound by a contract if the contract is substantially for the minor's benefit.

Mr Chaplin, who was the son of Charlie Chaplin had a contract to publish his autobiography. He changed his mind as the contract turned out to be less beneficial that had been originally thought.

The Court of Appeal held that the contract was similar to a contract of employment and if a contract is beneficial to a minor, the contract will be binding.

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Clements v London & North Western Railway Co [1894] 2 QB 482 HL

A minor will be bound by a contract if the contract is substantially for the minor's benefit.

Employees of LNWR started an insurance society. LNWR contributed to the insurance society funds. An infant joined the insurance society. In return for being a member of the society and receiving contributions, the infant agreed not to bring any proceedings under the Employers Liability Act which afforded the infant a considerable advantage.

It was held that the contract was of benefit to the infant. On the whole, if a contract is to a child's benefit, then it cannot be repudiated. In this case, as the contract was to the child's advantage, it was not a voidable contract, but one which was binding.

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De Francesco v Barnum [1890] 45 Ch D 430 CA

If the contract is not in the minor's best interests, it will not be binding.

A 14 year old girl was apprenticed for seven years to learn stage dancing. The terms of her apprenticeship deed restricted her in several ways. She was not maintained by Barnum, but was entirely at her employer's disposal. She was unable to accept other work, yet she was not paid unless her master required her to work. Neither was she allowed to marry, if she did, it would have been taken that she had resigned. She accepted an engagement without her master's consent.

It was held that beneficial contracts of service require the beneficial terms to outweigh the onerous terms. In this case they did not and the restrictions on her were too harsh, consequently the contract was not considered binding.

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Contract

Avon County Council v Howlett [1983] IRLR 171 CA

An employer cannot make a deduction from pay to reclaim an overpayment of wages if the employee has been led to believe that the overpayment was his and has acted on that belief.

Mr Howlett was teacher who was employed by his local council. He went on sick leave after an injury at work. While he was on sick leave, he thought that he was being paid too much sick pay. He asked council officials about his pay and he was told that it was correct. After this, it was discovered that he had been overpaid £1,000. In the meantime he had bought a new suit and a second-hand car for about £500. He would not have bought these if it had not been for the overpayment.

The Court of Appeal held that the elements which had to be established for an estoppel defence to succeed were:
  • The employer must have made a representation of fact which led the employee to believe that he was entitled to treat the money as his own.

  • The employee must have, bona fide and without notice of the claim, changed his position as a result.

  • The overpayment must not have been primarily caused by the fault of the employee.

Mr Howlett had been led to believe the overpayment of wages were his and he had acted on that belief. As the overpayment had not been his fault, no deduction could be made to recover the overpayment.

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Bracebridge Engineering Ltd v Darby [1990] IRLR 3 EAT

A failure to seriously consider a genuine grievance, or to operate a grievance procedure ineffectively could be grounds for constructive dismissal. In addition, a single act of harassment, if it is sufficiently serious will be unlawful discrimination.

Mrs Darby was about to finish work when she was grabbed by Mr Smith her works manager and her chargehand Mr Daly. She was taken to Mr Smith's office where the lights were put out. Mr Smith placed her legs around him. She was threatened with a written warning for leaving work early when she tried to get away. Mr Daly felt between her legs and told her "you've got a big one". Eventually she was able to get away and the next day she complained to Miss Reynolds, her general manager. However, as both Mr Smith and Mr Daly denied the allegations, Miss Reynolds decided not to take the matter further.

Mrs Darby resigned and claimed constructive dismissal and unlawful discrimination. An Employment Tribunal upheld her claims. Her employer appealed against these findings.

On appeal her employer argued that a single act, or an incident could not properly be described as "sexual harassment" in accordance with the dictionary definition, and that any "detriment" suffered was not in the context of employment. Conversely, the acts in were not committed by Mr Smith and Mr Daly in the course of their employment. It was also argued that the ET had misdirected itself by finding that Mrs Darby was entitled to treat herself as having been constructively dismissed.

The Employment Appeal Tribunal held:
  • The ET had not erred in finding that a single act of sexual harassment was a "detriment" to Mrs Darby. A single incident of sexual harassment, provided it is sufficiently serious clearly falls within the proper intention and meaning of the Sex Discrimination Act 1975 as it was an act of discrimination against a woman because she was a woman. 

  • There was no error in finding that the "detriment" suffered by Mrs Darby was in the context of employment.

  • Mr Smith and Mr Daly were involved in disciplinary supervision. Additionally, there was no error in finding that the acts perpetrated by them were acts committed in the course of their employment since they were engaged in exercising, or in the course of exercising a disciplinary and supervisory function.

  • There was no error in finding that Mrs Darby had been constructively dismissed. The ET had not misdirected itself, she was entitled to resign because her complaint of sexual harassment was not seriously investigated. On the facts, the ET were entitled to find that the term relating to the obligation of mutual support, trust and confidence, and the obligation not to undermine the confidence of female staff had been breached. Such terms are extremely important in a case where sex discrimination and investigations are concerned.

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Burton Group v Smith [1977] IRLR 351 EAT

A trade union does not act as an agent for its members.

Mr Smith volunteered for redundancy under a scheme that had been negotiated by his trade union. He was due to leave his job sometime between October to December. It was agreed between Burton Group and the union that the termination of Mr Smith's employment would take place on 26 December. Unfortunately, Mr Smith died before he could be advised of the date. Mr Smith's right to a redundancy payment depended on him being under notice of termination, and as he had not been told about his termination date, he was not under notice of termination. It was argued on behalf of Mr Smith's personal representative, that as his union had received notice of termination on his behalf, the union was acting as an agent by agreeing the termination date.

This was rejected by the Employment Appeal Tribunal. The EAT agreed that there was no reason why union representatives could not act as agents to make a contract, or to receive notice, or a binding transaction. But "agency does not stem from the mere fact that they are union representatives and that he is a member". There must be a specific agency, which will only arise is there is evidence to support that there was such an agency.

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Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 CA

A contract can be offered verbally or by advertisement, however, an advertisement is likely to be seen as an invitation to treat, rather than a job offer.

Carbolic advertised a flu remedy and advised that anyone who bought the remedy would receive £100 as a reward if they found that the remedy did not work. Mrs Carlill read the advertisement and bought the remedy. She used it three times a day for nearly two months when she contracted flu. She claimed £100 as advertised. Carbolic refused to pay and Mrs Carlill sue them for the reward.

The Court of Appeal held that Carbolic was bound to the advertisement because the essential elements of a contract were present, and a contract had been formed. The essential elements of a contract were:
  • Offer.

  • Consideration.

  • Acceptance.

  • Intention to create legal relations.

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Cresswell v Board of Inland Revenue [1984] IRLR 190 HC

An employee is under a duty to adapt to new methods of work. However, appropriate training, or retraining should be provided.

The Inland Revenue installed a computerised system for PAYE. The Inland Revenue Staff Federation initially agreed to cooperate. However, this was later withdrawn because there were no guarantees that there would not be any compulsory redundancies. Employees who were members of the union refused to cooperate, although they made it clear that they were willing to continue with the previous manual system. They were informed by the Inland Revenue that they would not countenance the use of manual methods of operation, and that they would not be paid while they were refusing to work. They were also told that their contracts were not ending, and they would be paid if they returned to full time work and operated the computerised system. It was made clear that there was no intention to suspend, or to take any disciplinary action against employees.

The employees considered that the Inland Revenue were acting in breach of contract. They argued that the work which they performed, and which was habitually carried out by them involved a considerable amount of dealing manually with files or records and correspondence. The employees felt that there was an implied term in their contracts that they would not be required to perform tasks, or carry out functions other than those expressly stipulated in those contracts, or their terms and conditions of service which were habitually carried out by custom and practice. Alternatively, they argued that it was an implied term of their contracts that they could not be required to change the manner in which tasks had been habitually carried out, either at all or in such a manner as to make those tasks different in nature from those previously performed.

The employees asked for a declaration from the High Court that:
  • They were not bound by their contracts of employment to operate computer systems and related equipment.

  • That the Inland Revenue were in breach of their contracts of employment by instructing to operate computer systems and related equipment.

  • That the Inland Revenue were in breach by suspending employees without pay, or even by suspending them at all.

The High Court held that there was no breach by requiring employees to carry out their job duties associated with the administration of the PAYE scheme by means of a new computerised system. It was accepted that the way in which some jobs were carried out had been significantly altered, but this was not out with the original description of the contracts of employment. In particular, the Court held:

  • An employee will be expected to adapt to new methods and techniques introduced in the course of employment. However, the employer must provide training or retraining. After the computerised system was installed, each of the jobs remained the same, although carried out in a different way.

  • There was no breach of contract in refusing to allow employees to continue working manually, and refusing to pay employees for as long as they refused to work the new computerised system.The action of the Inland Revenue did not amount to the suspension of employees.

  • Neither did the Inland Revenue need to resort to suspension through disciplinary procedures before they were free of any obligation to pay wages. The Inland Revenue had made it clear that employees were free to return to work at any moment provided they carried out their duties in accordance with the requirements.

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Delaney v Staples (T/a De Montfort Recruitment) [1992] 1 AC 687 HL

A failure to pay wages will be held as a deduction under the Employment Rights Act 1996. Note, that since this case, the extension of jurisdiction which Lord Browne-Wilkinson refers to below was confirmed by the enactment of the Industrial Tribunals Extension of Jurisdiction (England and Wales) Order 1994, and the Industrial Tribunals Extension of Jurisdiction (Scotland) Order 1994.

Ms Delaney worked for Mr Staples as a recruitment consultant. She was summarily dismissed after seven months. She was entitled to one week's notice of termination and was given a cheque for £82 as payment in lieu of notice. In the meantime, Mr Staples discovered that Ms Delaney was in breach of her duty of confidentiality and stopped the cheque. He claimed that he could dismiss Ms Delaney without notice because of the breach. When she was dismissed, Ms Delaney was also owed £18 for unpaid commission and £37.50 holiday pay.

Ms Delaney submitted a claim to an Employment Tribunal on the basis that withholding her payment in lieu of notice, outstanding commission, and holiday pay was an unlawful deduction of wages. The ET ordered Mr Staples to pay Ms Delaney £55.50 for the outstanding commission and holiday pay, but held that it had no jurisdiction to hear her claim for £82 for payment in lieu of notice.

The Employment Appeal Tribunal held that there had not been a deduction as no payment had been made for commission or holiday pay, and there was not a payment in lieu of wages.

On a further appeal, the Court of Appeal restored the claims for holiday pay and commission, but not the claim for payment in lieu of notice.

Ms Delaney appealed to the House of Lords about the payment in of lieu of notice. It was held that a payment in lieu of notice is used to describe a number of different categories of payments as follows:

  • A payment for garden leave where an employee receives the correct notice. In effect, the employee receives a lump sum and is not required to work during the notice period. In this case there is no breach as the lump sum is simply an advance payment of wages and employment continues until the end of the notice period.

  • Where there is an express provision in the contract for termination, either with notice. or without notice on payment of pay in lieu of notice. If the employee is summarily dismissed, there is no breach of contract if the payment in lieu of notice is paid.

  • However, the payment is not wages in the normal way for work carried out.There is an agreement to end the contract immediately when a payment in lieu of notice is paid where there is no breach. The payment in lieu of notice is not wages.

In Ms Delaney's case, her employer summarily dismissed her without her agreement with a payment in lieu of notice. Her employer was in breach of contract, and the payment in lieu of notice was a payment on account of her claim for damages for breach of contract which an ET (at that time) did not have the jurisdiction to hear..

The Lords concluded that a payment in lieu of notice was not wages, that a line had to be drawn between payments for rendering services during employment, and payments for termination of the contract. It followed that an advance of wages, such as a lump sum for garden leave was wages under a continuing contract, but that all other payments in lieu of notice, whether or not provided for in the contract, are not wages.

Lord Browne-Wilkinson conceded that this conclusion was unsatisfactory because it meant that an employee might be obliged to complain to an ET for unpaid holiday pay, but would need to complain to a separate Court for damages for proper notice. His Lordship said that this is "wasteful of time and money" and it "brings the law into disrepute". He said that the position could be remedied if the jurisdiction of the ET's were to be extended to deal with claims for breach of contract, as the Courts have been suggesting for nearly 20 years. 

Consequently, a failure to pay wages in lieu of notice is not a deduction, this is held to be damages for wrongful dismissal. But see EMI Group Electronics Ltd v Coldicott below.

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Discount Tobacco & Confectionery v Williamson [1993] IRLR 327 EAT

An employer cannot make a deduction for a shortfall in cash, or stock shortage unless the employee has expressly agreed to the deduction before any shortfall or shortage occurs.

Mr Williamson was the manager of a retail outlet where stock shortages were discovered for December 1988 and February 1989. On 14 March 1989 Mr Williamson signed a document to the effect that his employer could deduct £3,500 from his wages. The shortages were to be repaid by 175 weekly instalments of £20.

There were further stock shortages two months later and Mr Williamson was dismissed. He was told that any monies due to him would not be paid to offset the money he still owed. An Employment Tribunal upheld Mr Williamson's claim of unlawful deductions of wages. The ET held that the document that Mr Williamson had signed was not enough to make the deductions legal.

On appeal, it was submitted by the employer that a deduction is legal if the employee gives his written consent after the event had occurred, but before any deduction were made.

The Employment Appeal Tribunal held that Mr Williamson's authorisation did not render the deductions lawful because the losses in question had occurred before the authorisation was given.

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Dryden v Greater Glasgow Health Board [1992] IRLR 469 EAT

An employer is entitled to introduce rules for the conduct of its employees, provided the rules are for a legitimate purpose. This case concerns a smoking ban which is likely to be supported by the vast majority of people. However, the outcome may have been different in a comparable situation which was not related to a smoking ban..

Following consultation, smoking was banned in Mrs Dryden's workplace. Prior to this, there were areas where she could smoke. After the ban, she was not able to leave her workplace for a cigarette. Shortly after the ban, she resigned and claimed that she had been constructively dismissed.

The Employment Appeal Tribunal dismissed her claim and stated that there was no implied term that an employee was allowed to smoke at work. Her employer had not acted in any way that would prevent her from carrying out her work, and there was no breach to the duty of mutual trust and confidence. An employer is entitled to make rules provided the rule is for a legitimate reason, and the fact that it is hard on for an employee will not lead to a breach of contract.

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EMI Group Electronics Ltd v Coldicott [1999] IRLR 630 HC

A failure to pay wages will be held as a deduction under the Employment Rights Act 1996.

Two managers were made redundant and received payments in lieu of notice. Their contracts stated: "The company will give its senior managers six months notice in writing of its intention to terminate employment" and "The company reserves the right to make payment of the equivalent of salary in lieu of notice and to terminate employment without notice or payment in lieu for gross misconduct". However, the Inland Revenue claimed that the payments in lieu of notice were taxable under the Income and Corporation Taxes Act 1988.

The employer appealed , firstly to the Commissioners and then to the High Court. They argued that the payments in lieu of notice did not arise from employment, but from the disappearance of employment. Consequently, a distinction had to be made between payments made by an employer as an inducement to becoming an employee, or for having been an employee, all of which are subject to tax and payments for ceasing, or having ceased to be an employee, such as pay in lieu of notice which is not taxable. It was common ground that if payments in lieu of notice were not taxable, the payments would fall as payments for retirement, or removal from office or employment, which is not taxable unless the payments exceed £30,000.

The Court of Appeal held that a payment in lieu of notice, in pursuance to the contract which is agreed at the outset of employment, which allows the employer to terminate the employment on making a payment, is properly regarded as an compensation from that employment, and thus taxable. The answer to the question: "Why is the employee entitled to a payment equal to his salary for the remainder of the notice period if his employment is terminated by less than the contractual notice period?" must be: "That was the security, or continuity, of salary which the employee required as an inducement to enter employment."

A payment in lieu of notice, made pursuant to an obligation which was entered into at the start of employment is to be treated differently to a payment on termination, which is made pursuant to an agreement to waive or release an existing obligation which was entered into at the start of employment. It also contrasts with a payment in lieu of notice made by way of compensation or damages for breach of contract.

In the present case, the bargain made with each employee at the start of employment was that the employee should have the security of employment, or the security of a right to continue receiving salary, for a period of six months after the employer gave notice of termination to dismiss, or alternatively, and at the option of the employer, the employee should receive an additional payment on termination. Therefore, when the employees were dismissed on grounds of redundancy without due notice, they were entitled to the additional payments in lieu of salary from continuing employment under the terms of the contracts. Accordingly, those payments were compensation from the employment, and therefore taxable.

But see Delaney v Staples (T/a De Montfort Recruitment) above.

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Gascol Conversions Ltd v Mercer [1974] ICR 420 CA

The written statement of employment particulars can be evidence of the terms and conditions of employment.

Mr Mercer was made redundant following the conversion to North Sea Gas. In 1970 a national agreement had been reached with the trade union for 40 hours per week. There was an expectation of overtime, but there was no contractual right to this. A local agreement to revert to a 54 hour week was reached in 1971. This agreement covered the area where Mr Mercer worked. Mr Mercer was sent a new contract of employment in 1972 which followed the national agreement. Mr Mercer signed this and returned it. When Mr Mercer was made redundant, he claimed that his redundancy should be based on a 54.5 hour week which were the hours he actually worked.

Mr Mercer submitted a claim on the basis of what was a week's pay for the purpose of redundancy pay? Mr Mercer argued that the hours worked were evidence of a 54 hour week, and that any written contract to the contrary had been varied.

The employer argued that whatever the original contract was, and whatever hours were actually worked, in 1972 the contract was varied to a 40 hour week, plus voluntary overtime. 

The Court of Appeal held that Mr Mercer had worked a 40 hour week for redundancy purposes.

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Gibbons v Associated British Ports [1985] IRLR 376 HC

An employer cannot unilaterally vary a contract. However, collective agreements are not always suitable for incorporation into the contract. It will be a question of fact in each case.

The employer ignored a collectively agreed local wage rate and paid the national rate instead. Mr Gibbons was a registered dock worker whose employment was in accordance with the Dock Workers Employment Scheme which provided: "It shall be an implied condition of the contract between a registered dock worker and a registered employer that the rates of remuneration and conditions of service shall be in accordance with the national or local agreements for the time being in force".

Mr Gibbons' pay was covered by the Port of Southampton Productivity Agreement 1970. In July 1982, an agreement with the union was reached which removed remunerative night shift in return for a six day guarantee payment.

In September 1984, after a downturn in business, the employer gave formal notice that the six day guarantee was to be withdrawn. In November the union responded by giving formal notice to terminate the 1970 collective agreement. Following this, the employer wrote to all dock workers to advise that as the local agreement had been terminated, the National Joint Council agreement would govern their terms of employment. Since the national agreement had no provision for rates of pay, new arrangements were to be introduced for a guaranteed minimum rate of £82.75 compared with the previous rate of £123.38.

Mr Gibbons brought a test case. He asked for a declaration that under his contract that he was entitled to receive a weekly minimum basic wage of £123.38, a six day guarantee payment of a further £42.65, and arrears of pay.

The High Court held that the employer could not reduce Mr Gibbons' weekly minimum basic wage because the union had terminated the local collective agreement. The agreement was of a hybrid nature, and where appropriate, its terms were incorporated into individual contracts. Even although the agreement was entered into by the union on behalf of employees, it was not intended by the parties to be a contract that was legally enforceable. Therefore, it had no effect on terms relating to the payment of wages. Wages could only be varied with the agreement of the employee, and Mr Gibbons was entitled to refuse to accept the attempt to unilaterally amend his contract.

Neither could the employer terminate the agreement for a six day guarantee payment, as the agreement was not a part of the contract. The agreement "was an integral part of the term of the contract relating to remuneration and could not be varied unilaterally by the employer".

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Gill & Others v Cape Contracts [1985] IRLR 499 HC

There may be recoverable damages if a job offer which is a collateral contract is withdrawn.

Mr Gill worked for Harland and Wolff. He was one of a number of employees who were offered work at Sullom Voe by Cape Contracts. Mr Gill and his colleagues claimed that they were told the job would last for six months. The jobs were accepted by Mr Gill and his colleagues. There was also a one-month notice clause. Cape Contracts terminated their contracts before the work started. They claimed breach of contract.

The high Court held that there was a collateral contract, and under that contract the work would last for six months. In addition, the notice clause would not apply during that time. When they had accepted work from Cape Contracts, they had accepted the standard contract and the collateral warranty which guaranteed six months work.

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Hamill v Strong & Co Ltd EAT/1179/99

A series of incidents can result in a "last straw" situation and give rise to a constructive dismissal claim.

Mr Hamill was subjected to a number of incidents leading up to his resignation. None of those incidents, alone were enough to make Mr Hamill resign. However, he resigned from his employment in February 1999 and claimed constructive dismissal. His claim was based the series of incidents that he had been subjected to, and which culminated with a "last straw" incident that led to his resignation. The incidents in question were:

  • In June 1997, oil was poured into his ear defenders, and grease was put inside his wetsuit.

  • In July 1997, he had an argument with his foreman, and as a result he cut his head in his employer's van. In March 1998, dog faeces were placed in his bag.

  • In April 1998, rancid milk was poured into his boots.

Before he resigned, Mr Hamill spoke about these incidents with the managing director in April 1998. Although the managing director expressed disgust, nothing was done, no support was offered, and neither were any steps taken to curtail any further incidents.

In June 1998, Mr Hamill volunteered to work at another location. After he moved to the new location, there were no further incidents until someone from his previous location moved to where Mr Hamill was working in August 1998. Mr Hamill alleged the attitude of his colleagues changed when this person began to spread rumours about him. In February 1999 there was a heated exchange between Mr Hamill and his supervisor about some work that had not been completed. Mr Hamill claimed that this had not been his fault because a delivery had been late. He complained to a foreman about the supervisor and was told: "you needed a bollocking, so you got one". There was also an issue about whether or not the supervisor was senior to Mr Hamill, and when this was confirmed, Mr Hamill took this as the "last straw" and resigned.

An Employment Tribunal found in Mr Hamill's favour on the basis that the overall sequence of incidents justified him regarding the conduct in February 1999 as a fundamental breach of the implied terms of trust and confidence. The employer appealed.

The Employment Appeal Tribunal held that as far the relationship of the parties were concerned, there was a common thread running through the different incidents. That common thread was a failure to provide the support that Mr Hamill was entitled to expect. He ought to have been believed when he was telling the truth, to have his complaints properly investigated, and after an investigation, for steps to be taken to ensure that no further incidents happened again. It was found that at the end of this sequence of events, Mr Hamill was left vulnerable in his own mind to anything that might come next, knowing that management would not support him, or at least feeling that there was a risk that it would happen again. The ET were entitled to find that these incidents were sufficiently serious to enable it to find that there was a fundamental breach of the implied terms of trust and confidence.

Further to this, the EAT did not accept that Mr Hamill had waived the original breaches by continuing to work. He had taken advantage of an opportunity to move to another site in order to find a solution to his problems.

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Hooper v British Railways Board [1988] IRLR 517 CA

A breach of contract does not necessarily result in a dismissal being unfair.

Mr Hooper was employed as a senior technical officer by British Rail Property Board. On 22 September 1981, he left work feeling ill following a dispute about his duties. He submitted a medical certificate which stated tension state as the reason for his absence. On 26 October 1981 he returned to work, but left after objecting to the duties he was given. Another medical certificate was submitted stating tension state. He applied for another job with his employer and returned to work on 23 November 1981. He left when he discovered that he did not get the job that he had applied for. He submitted another medical certificate stating tension state.

Mr Hooper was certified fit to return to work on 22 January 1982. He was examined by a railway medical officer on this date who certified that he was permanently unfit to return to his former job due to the dispute about his duties. The medical officer recommended that Mr Hooper should be transferred to alternative work in another department. After this, Mr Hooper remained at home on basic pay. He was sent a weekly list of vacant jobs, and he applied for some, but was not successful. Mr Hooper was given notice on 30 September 1983 that he would be dismissed if suitable alternative employment was not found by 21 February 1984. No employment was found, and he was dismissed with effect from 22.February 1984.

Mr Hooper submitted an unfair dismissal claim on the basis that a clause in the Railway Staff Joint Council had become incorporated into his contract, which meant that if he was ill, he was to be paid his basic pay until he returned to work, either in his own position, or in another suitable position, and that he had been paid for over two years without working on this basis. He argued that his dismissal was unfair, and referred to the fact that the provision was not subject to any time limitation.

The employer argued that the clause was only intended to apply to short term illness and that they had made this clear in negotiations subsequent to the year in which the provision was agreed.

The Court of Appeal held that the employer was in breach of contract, although by itself, this was not decisive in determining whether the dismissal was unfair.

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Isle of Wight Tourist Board v Coombes [1976] IRLR 413 CA

A breach of the duty of mutual trust and confidence can lead to constructive dismissal.

Mrs Coombes was the personal secretary to a director of the board. An argument took place during which the director said to another employee in Mrs Coombes presence that: "She is an intolerable bitch on a Monday morning". Mrs Coombes resigned and claimed constructive dismissal.

An Employment Tribunal found that Mrs Coombes had been constructively dismissed, that the dismissal was unfair and awarded compensation. The employer appealed.

The Employment Appeal Tribunal dismissed the appeal and held that a director calling his secretary a "bitch" was conduct that would entitle her to terminate her contract without notice and to be treated as dismissed in law. The relationship between a director and his personal secretary must be one of complete confidence. They must trust and respect each other. In calling his secretary a "bitch" the director had shattered their relationship.

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Marley v Forward Trust [1986] IRLR 369 CA

Terms incorporated into the contract are enforceable.

Mr Marley's contract expressly incorporated the terms of a collective agreement agreed with his trade union. The terms were subject to modifications. There was also a mobility clause in the contract which meant that he could be asked to work in various departments.

In 1983 the union negotiated an amendment to the collective agreement. This included particular redundancy provisions which meant that in the event of redundancy employees would have the right to a six month trial period if their terms were changed. At the end of the trial period any employees who did not want the job were entitle to claim redundancy under the redundancy agreement.

The Bristol office were Mr Marley worked was closed in 1983 and he transferred to London. Mr Marley was not happy in the new location and he decided to leave and claim redundancy under the redundancy agreement.

Forward Trust resisted his claim on the grounds that Mr Marley had transferred under the provisions of the mobility clause and not the redundancy agreement. In addition, the redundancy agreement could not be enforced because the collective agreement was expressed as "binding in honour only".

The Court of Appeal held that such terms can be incorporated into a contract and when they are, they are enforceable.

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Miles v Wakefield Metropolitan District Council [1987] IRLR 193 HL

An employer can make a deduction if an employee takes industrial action.

Mr Miles was employed as a superintendent register and did not have a contract. He refused to carry out marriages on a Saturday due to industrial action. However, he was willing to carry out other duties on a Saturday and work extra hours during the week. His employer did not pay him for working on a Saturday and deducted the pay that he would have received on from his salary.

Mr Miles brought a successful action to recover the deductions. His employer appealed against this.

The House of Lords held that although Mr Miles did not have a contract, he was paid by the employer and had promised to work particular hours in the performance of his duties which included conducting marriages on a Saturday. The fact that he might work extra hours during the week, or carry out other work on a Saturday, did not prevent his failure to conduct marriages on a Saturday from being a breach of duty. Neither could Mr Miles argue that he was willing to work as he had refused to carry out his duties on a Saturday. This breach entitled his employer to make the deductions.

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Miller v Hamworthy Engineering [1986] IRLR 461 CA

An employer's decision to put employees on part-time hours who were on salaries did not have the right to do this.

Mr Miller was put on to a three day week without his agreement or any agreement from his union. He claimed the net loss for the period that his salary was reduced:

The Court of Appeal held that just because the employer could not provide work, an express reference to short-time working in terms that adjustments would be made following short-time working, did not give the employer the authority to refuse to pay an employee. The employee was willing and able to work. The reference to short-time working concerned short-time working by agreement, and unless the employer could show some variation of the terms that was binding on the employee there had been no right to alter the employee's salary.

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O'Laoire v Jackel International Ltd (No 2) [1991] IRLR 170 CA

The promise of work is not a job offer.

Mr O'Laoire was offered a position as deputy managing director. He was told that it was envisaged that he would be appointed managing director when that position became vacant. However, someone else was appointed to the position when the existing managing director retired.

The Court of Appeal held that there was no contractual right to become managing director. What had been envisaged fell short of being a promise.

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Prestwick Circuits v McAndrew [1990] IRLR 191 CS

An employee cannot be relocated at short notice to work 15 miles away.

Mr McAndrew was employed as a process operator in Ayr from 1975. In 1983 another factory was opened 15 miles away in Irvine. Employees who had been taken on from 1983 onwards had an express clause in their contracts which meant that they could be asked to work at either factory. This clause was not in Mr McAndrew's contract, although he and his colleagues worked at one factory or another either on a temporary or a permanent basis.

New machinery was installed in January 1987 at the factory in Ayr. When this machinery began operating Mr McAndrew's job became redundant. There was no suitable alternative work available for him at the factory in Ayr. It was decided to transfer Mr McAndrew to the factory in Irvine. Mr McAndrew was advised of this on 1 May 1987 and instructed to start in Irvine on 5 May 1987. Mr McAndrew asked for a meeting with his production manager. He stated that he was unhappy and did not want to move. That he had not been given enough notice and that the move would involve working under the supervision of a person who he did not get on with. Nothing came of this meeting and he was still required to go to Irvine.

Mr McAndrew did not go to Irvine on 5 May 1987. He turned up for work at Ayr instead. He attended a meeting with the personnel officer and was given a week's extension before going to Irvine. He received an assurance that an attempt would be made to sort out any problems with the supervisor, and advised that if he persisted in refusing to go to Irvine that this would be regarded as the equivalent of a resignation.

Mr McAndrew continued to refuse to go to Irvine. He attended another meeting where he signed a letter which had been prepared by the personnel officer to the effect that he was resigning as from 8 May 1987.

Mr McAndrew submitted a constructive dismissal claim. At the hearing it was agreed the employer had an implied contractual right to transfer Mr McAndrew from one location to another. The Industrial Tribunal held that the implied right was subject to the implied qualifications of reasonable distance and reasonable notice. The IT held that Mr McAndrew had not been given reasonable notice and this amounted to a fundamental breach of contract. The IT made a basic award of compensation, but did not make a compensatory award on the grounds that in not complying with the order to go to Irvine, Mr McAndrew had failed to mitigate his loss.

The Employment Appeal Tribunal dismissed the employer's appeal against the finding of constructive dismissal. Mr McAndrew's appeal against the finding that he had failed to mitigate his loss was allowed.

On appeal to the Court of Session the employer submitted that both the EAT and the IT had erred in implying a reasonableness condition to the implied mobility clause.

The Court of Session held that the EAT and the IT had not erred in holding that the employer's implied contractual right to transfer Mr McAndrew from one place of work to another was subject to the implied qualification that the employee be given reasonable notice of any proposed transfer. They had not erred in holding that the employer's conduct in requiring Mr McAndrew to transfer at short notice was a fundamental breach of contract. The submission on behalf of the employer that, in so holding, the EAT and the IT had applied a test of reasonableness rather than of necessity could not be accepted.

An implied right to order an employee to transfer from one place of employment to another must be subject to the implied qualification that reasonable notice must be given in all the circumstances of the case. Where the right of an employer to transfer an employee is necessary to be implied into the contract of employment, it is also necessary to imply some qualification of that term making the employer's right subject to qualifications both of reasonable distance and reasonable notice. Even where the proposed transfer involves a reasonable distance, it is necessary to imply the qualification that the employee be given reasonable notice so as to preclude a contractual right of the employer to transfer the employee to some other place at a moment's notice. Whether the notice given in a particular case was reasonable is a question of fact and degree for the Industrial Tribunal to determine.

In the present case there were no grounds for interfering with the IT's finding, endorsed by the EAT that the notice given to the employee initially four days and later extended by a further week, was insufficient and therefore not reasonable.

The EAT had not erred in overruling the decision of the IT that the appellant had failed to mitigate his loss by refusing to agree to the transfer. The EAT had correctly held that conduct before dismissal is not relevant to the question of mitigation of loss.

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Post Office v Roberts [1980] IRLR 347 EAT

Providing an unfavourable report without consideration can result in a constructive dismissal.

Miss Roberts was employed as a clerical assistant in the Brighton area. This was the most junior of clerical grades. Her annual appraisals indicated that she was fully capable in her duties, but her suitability for promotion to the next grade assessment was a qualified one. At the end of 1978 the senior officer who had to countersign her assessment came to a different view. He asserted that she was unlikely to qualify for promotion and that she was irresponsible and lacked sufficient interest. Miss Roberts was not informed of this.

At the same time she applied for a transfer to the Croydon area because she was getting married. Her application was rejected and the reason for this was that there were no suitable vacancies. A month later Miss Roberts noticed an advertisement for clerical assistant vacancies in the area. She contacted her union representative who found that the real reason for her refusal was due to her poor assessment. When she was told about this she resigned and claimed that she had been constructively dismissed.

An Industrial Tribunal upheld her complaint. The IT found that the transfer application had not been dealt with fairly and that this conduct was a breach of the implied term that "an employer will treat an employee in a reasonable manner" and also a breach of the implied term of mutual trust and confidence.

The Employment Appeal Tribunal held that the IT had not erred by determining that the employer's conduct was a breach of the implied contractual obligation of mutual trust and confidence which amounted to a repudiation, and that this entitled Miss Roberts to terminate her contract on grounds of constructive dismissal.

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Puntis v Governing Body of Isambard Brunel Junior School EAT/1001/95

An assurance that a job will be offered is too vague to form a contract and is not a job offer.

Ms Puntis was employed as a teacher at Isambard Brunel Junior School in October 1990. In 1991 she was given additional duties and acted as a four year co-ordinator. In November 1992 she was given a temporary promotion to a Grade A allowance till August 1992. Ms Puntis was disappointed that the promotion was temporary. She raised this with Mr Levett the head teacher who told her that all teachers on Grade A allowances were on temporary contracts. Her promotion was extended till August 1993. She was also advised that the Grade A allowance was temporary. She received some encouragement about her chance of being appointed a permanent promotion, particularly by Mr Lodge the deputy head teacher who gave her an assurance that her promotion would be made permanent. When this did not happen and the Grade A allowance ended in August 1993 Ms Puntis submitted an application to an Industrial Tribunal for a declaration that the statement of terms and conditions of her employment should show that she was permanently promoted to the higher grade.

The Industrial Tribunal rejected her application.

The Employment Appeal Tribunal held that there was no evidence of any intention to enter into a contractual relationship on the basis of their conversations. In addition, there had been no "offer and acceptance" and no "consideration" of an offer. Therefore, the basic legal principles of forming a contract had not been met.

It was also held that the deputy head had no authority to enter into a contract in any event. The appeal was dismissed.

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R v Lord Chancellor's Department ex p Nangle [1992] 1 All ER 897 HC

The parties must intend to create legal relations

Mr Nangle who was a civil servant could not challenge a decision to discipline him. Therefore, his contract was not enforceable. His employer sought an order that his application for judicial review of the decision to discipline him be dismissed. They contended that the application of disciplinary procedures to a Crown servant was not a matter of public law and consequently could not be determined by way of judicial review.

Mr Nangle conceded that he had no public law remedy if he was employed under a contract of service. Therefore, he relied on the Civil Service Pay and Conditions of Service Code which provided that a civil servant did not have a contract of employment enforceable in the courts.

The High Court held that it was clear that the parties intended to create legal relations, which meant that they intended to enter into a contract which was legally enforceable in the courts. The Code dealt with matters such as pay, pensions, hours, holidays, sick leave and discipline all of which are found in a contract of employment. Although Mr Nangle had no remedy in public law he could sue for damages for breach of contract if he could establish that there had been a failure to comply with the express or implied provision of the disciplinary code. The application for judicial review was dismissed.

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Rigby v Ferodo [1988] ICR 29 HL

Continuing to work is not necessarily an affirmation of a breach.

Ferodo were facing financial difficulties and decided to reduce wages to avoid redundancies. The union who represented the majority of employees agreed to the proposal. However, an affiliated union who represented a minority of employees which included Mr Rigby did not agree. Despite this the employer imposed the reduction of wages on all employees.

Mr Rigby remained in his job but he sued his employer for the shortfall in his wages and a declaration that the reduction had been a breach of contract.

The House of Lords held that employees had the right to enforce any wages due under the contracts. In effect, the difference between what they should have been paid and what they had actually received. The fact that the employees had continued to work was not an indication of an implicit agreement to this change.

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Robertson v British Gas Corporation [1983] IRLR 302 CA

If a term is incorporated into the contract by a collective agreement it cannot be unilaterally varied.

Mr Robertson was employed as a meter reader. He received an offer letter in 1970 which said that: "Incentive bonus scheme conditions apply to meter reading and collecting work". His contract was subject to a collective agreement. The amounts payable under the bonus scheme were regulated by British Gas in agreement with the union. In 1977 employees received a statement from British Gas which said: "The provisions of the agreement of the National Joint Council for Gas Staffs relating to remuneration will apply to you. Any payment which may, from time to time, become due in respect of incentive bonuses will be calculated in accordance with the rules of the scheme in force at that time".

In 1981 British Gas served notice on the union to the effect that they were terminating the incentive bonus scheme agreement at the end of the year. This resulted in Robertson losing a third of his wages. Robertson (and others) successfully sued British Gas in the County Court for loss of wages.

At the Court of Appeal British Gas argued that the contracts were in the statement that was issued in 1977. This was to be interpreted as meaning that if there was no bonus scheme in force, then no bonus was to be paid.

The Court of Appeal disagreed with this interpretation. In the Court's view, even if this was correct, the statement could not be used as an interpretation of the letter which was issued in 1970 as this was the contract itself.

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Secretary of State for Employment v ASLEF (No 2) [1972] 2 QB 455 CA

There is an implied duty to co-operate and not to disrupt an employer's business.

Rail workers were involved in industrial action regarding a pay claim. The action was a work to rule and an overtime ban. In order to enforce a ballot the Secretary of State had to prove that the rail workers were acting in breach of contract.

The union claimed that it was merely following the rule book.

The Court of appeal held that rail workers were acting in breach. The rail workers had agreed to abide by the rules, which were not terms in a contract of employment. They were instructions to workers as to how to do the work.

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Tayside Regional Council v McIntosh [1982] IRLR 272 EAT

A job advert can be used to interpret the express terms of a contract.

Mr McIntosh was able to find a job on the basis of an advertisement. The advertisement advised that job applicants had to have a clean driving licence. He was also advised of this at the job interview. However, nothing was mentioned in his letter of appointment. Three years later Mr McIntosh was disqualified from driving. After this he was dismissed.

An Industrial Tribunal found that Mr McIntosh had been unfairly dismissed. This was decided on the basis that the letter of appointment was a formal written contract which did not mention anything about having a clean driving licence.

The Employment Appeal Tribunal held that where a document was ambiguous or silent on an essential matter, the Court would look outside the document. In the circumstances the requirement for a clean licence was an essential and continuing requirement. The dismissal was fair and the appeal would be allowed.

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Ticehurst & Thompson v British Telecommunications [1992] IRLR 219 CA

The contract can include the implied term of fidelity and good faith.

During a pay dispute Mrs Ticehurst took part in a withdrawal of co-operation which had been organised by her trade union. Among other things, this included working strictly to conditioned hours. She was asked to sign a document in which she would agree to work normally. She refused to sign this and was told to leave the premises. This happened each day until the pay dispute had been settled. She was not paid for the days she was sent home.

The Court of Appeal held that implied terms can include fidelity and good faith, and "to serve the employer faithfully within the requirements of the contract".

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United Bank v Akhtar [1989] IRLR 507 EAT

An employee must be able to comply with the term.

Mr Akhtar's contract contained an express mobility clause. He received six days notice to move from his office in Leeds and relocate to another office Birmingham with no financial assistance. He refused in part for family reasons and resigned claiming constructive dismissal.

Even although there was an express mobility clause, the Employment Appeal Tribunal held that he had been constructively dismissed. The EAT that a term had to be implied to the effect that an employer should not exercise a term in such a way that an employee was unable to comply with it.

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W A Goold (Pearmak) Ltd v McConnell [1995] IRLR 516 EAT

A failure to allow an employee access to a grievance procedure or to operate a grievance procedure effectively could amount to constructive dismissal.

Mr McConnell and Mr Richmond were employed as salesmen. They were paid on the basis of salary plus commission. In 1992 they were concerned about a change in sales methods which meant there was a substantial drop in their pay. They had never been given a written statement of their terms and conditions specifying the method of pursuing a grievance, so there was no procedure in place to deal with their concerns. They spoke about their concerns with their manager but nothing was done.

In July 1992 a new managing director was appointed and they took their grievance up with him. They had several discussions after which the managing director said that he would deal with their concerns, but that nothing could be done immediately. The employees then tried to have an interview with the chairman of the company but were told by his secretary that an appointment had to be made through the managing director. The following day they resigned and claimed that they had been constructively dismissed.

The Industrial Tribunal held that the employer's failure to provide and implement a grievance procedure amounted to a breach contract and that this was sufficiently serious to justify them resigning. The IT also found that the employees had been unfairly dismissed.

The Employment Appeal Tribunal held that the IT had not erred in holding that the employer had failed to provide and implement a procedure to deal with the grievances relating to a reduction in pay. This amounted to conduct that entitled the employees to resign and be treated as constructively dismissed.

It was held that there is an implied term in a contract of employment that an employer will reasonably and promptly afford a reasonable opportunity for employees to obtain redress of any grievance that they may have. The written statement which employers have to provide to their employees in compliance with statutory requirements, must include a note specifying to whom and in what manner the employee may apply for the purpose of seeking redress of any grievance.

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Western Excavating (ECC) Ltd v Sharp [1978] QB 761 CA

The test for constructive dismissal is not a test of "reasonableness". In order to claim constructive dismissal, an employee will have to show that there was a breach, that this breach was fundamental and went to the root of the contract and that the employee resigned because of the breach.

Mr Sharp's contract allowed for time off in lieu if he worked extra hours. In February 1976 he asked for the afternoon off to play cards for a team. He was not allowed the time off because of there was a lot of work that had to be carried out. Despite this he took the time off. When he came into work the next day he was dismissed with two weeks notice. He appealed against his dismissal. It was decided that his dismissal would be withdrawn but he was suspended for five days without pay.

Mr Sharp's take home pay was £42.40 and he had no savings. He received £6.45 from Social Security, but this was not enough to meet his household expenses. He asked his employer for an advance of accrued holiday pay which amounted to £177.17. He was refused as it was against company policy to do this unless the holiday was actually taken. He asked for a loan of £40.00 and he was told that his employer could not make a loan of this amount but he was invited to discuss this further. Mr Sharp advised his employer that he did not want to leave his employment, but the circumstances forced him to resign so that he could get his holiday pay. Consequently, Mr Sharp resigned with immediate effect and received £117.17 holiday pay.

Mr Sharp submitted a constructive dismissal claim to an Industrial Tribunal. The IT found in his favour and ruled that Mr Sharp had been constructively dismissed. The IT felt that Mr Sharp's employer should "have leant over backwards to ensure that the same result as the discredited dismissal was not .... achieved". He was awarded £658 compensation for unfair dismissal.

The Employment Appeal Tribunal dismissed an appeal by the employer. The employer appealed to the Court of Appeal.

The Court of Appeal held that the IT had applied the wrong test. The test of reasonableness which is applies in an unfair dismissal claim is not applied in the determination of the question whether there had been a dismissal. The test for constructive dismissal is a "contract" test according to the law of contract and not a "reasonableness" test. An employee had the right to treat himself as discharged from his contractual obligations only where his employer is guilty of conduct which goes to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract.

Consequently, if the IT had applied the correct test they could not have treated Mr Sharp as having been dismissed because his employer had neither repudiated his contract of employment, nor had his employer been in breach of the contract. The employer's appeal was allowed.

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White v Reflecting Road Studs [1991] IRLR 331 EAT

The test for constructive dismissal is not a test of "reasonableness". The test is based on an employer's conduct that clearly shows that there is no longer any intention to be bound by one or more of the essential terms in the contract.

Mr White began working in June 1982. For the first four years he worked in the despatch department. He asked to be transferred to the rubber mixing department because he could earn more pay. Mixing was the highest paid job but it was also the hardest work with the longest hours. Employees worked in teams and received a bonus calculated on the work of the team.

After a year Mr White asked to be moved to lighter work. This was not possible and he continued to work in the mixing department. After this his attendance began to deteriorate and the workers who were members of his team complained about the effect his absence was having on team. In June 1988 Mr White received a formal warning and was advised that if his attendance did not improve he would be transferred from the mixing department. His attendance did not improve and in October 1988 he was transferred to the pressing department. As a result he suffered a significant reduction of pay.

In April 1989 he resigned without notice and claimed constructive dismissal and that the decision to move him from the mixing department to the pressing department was a fundamental breach of contract.

Mr White's contract included a flexibility term that provided: "The company reserves the right, when determined by requirements of operational efficiency, to transfer employees to alternative work and it is a condition of employment that they are willing to do so when requested".

An Employment Tribunal held that although his employer genuinely considered that operational efficiency in the rubber mixing department would be improved by transferring Mr White, the transfer amounted to a fundamental breach of contract. The ET found that the express right to transfer an employee to alternative work was subject to two fundamental implied terms that the right would be exercised in a reasonable manner, and that there would be no unilateral reduction in pay. The ET felt that the transfer was in breach of both these implied terms and found that Mr White had been constructively dismissed. However, the ET held that the dismissal was not unfair. Mr White appealed against that finding. The employer cross-appealed against the finding of constructive dismissal.

The Employment Appeal Tribunal held that the ET had erred in finding that the express term which give his employer the right to transfer Mr White to alternative work was subject to implied terms that the right would be exercised in a reasonable way and that there would be no unilateral reduction in pay. It was not necessary as a matter of law to imply either of those terms. In this respect the ET had erred in holding that the transfer was a breach of fundamental contractual terms which entitled Mr White to claim constructive dismissal.

To imply a term that a transfer in accordance with an express term should be handled reasonably would be to reintroduce the reasonableness test into constructive dismissal cases. The ET had also erred in finding that Mr White's reduction of pay amounted to a breach of a fundamental implied term that there would be no unilateral reduction in pay. It is clear on binding authority that if an employer acts within the terms of the contract, and there is a loss of income this will not be a breach of contract.

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Wiluszynski v Tower Hamlets London Borough Council [1989] ICR 493 CA

Industrial action can be a breach of contract on the part of the employee.

Mr Wiluszynski refused to carry out certain duties because of industrial action by his trade union. His employer regarded this as a breach of contract and refused to pay him unless he carried out all of his duties. He was also advised that if he turned up for work, that it would be unauthorised and in a voluntary capacity. Mr Wiluszynski continued to turn up for work and worked conscientiously, but continued not to carry out certain duties. He claimed remuneration for that work on basis that he had performed his duties substantially and that his employer had acquiesced, and had taken the benefit of that work.

The Court of Appeal held that an employee who claims remuneration under a contract of employment has to show that he is ready and willing to discharge his obligations under the contract. The principle of substantial performance was not applicable in that he had carried out most of his work and although the amount of work that he did not carry out was comparatively small, it was of considerable importance. It did not matter that his employer knew that he was working and benefited from this work, there were no directions given on that work and neither had his employer accepted or acquiesce to it.

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Wishart v National Association of Citizens Advice Bureaux [1990] IRLR 393 CA

A job offer can be conditional and based on receiving a satisfactory reference.

Mr Wishart was conditionally offered employment subject to a suitable reference being received. The reference that was received stated that he had been absent from work for some considerable time. The job offer was withdrawn.

Mr Wishart sought an interlocutory injunction to stop the defendants from employing anyone else and claiming that he should be appointed to the post that he had been offered. The Court of Appeal felt that it was possible to for an employer to make a conditional offer subject to the offer being objectively considered. The only obligation on the part of the employer was to consider the reference. The question whether the reference was satisfactory or not was a subjective matter.

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Woods v W M Car Services (Peterborough) Ltd [1982] ICR 69 EAT

An employer should not without good reason act in a manner that is calculated or likely to destroy, or seriously damage the relationship of confidence and trust between the employer and employee.

Mrs Woods had been employed since 1952. In January 1980 the business where she worked was taken over. Despite having previously advised Mrs Woods that she would be employed on the same terms and condition, her new employer tried on several occasions to vary her contract in several ways. This ranged from reducing her pay to increasing her hours. Mrs Woods refused to accept these variations. She was given a verbal warning regarding her conduct and new terms and conditions which included a change of job title. Mrs Woods refused to accept the new terms and conditions and her employer revised them.

Following this there was a significant change to her duties which involved her spending 80% of her time on company accounts. She was given a job specification which had been prepared by the company's accountant. Mrs Woods felt that the specification involved more work than she could handle and she told her employer that she would not accept it. She was told she would be dismissed if she did not accept the new specification. Mrs Woods resigned and claimed constructive dismissal.

The Employment Tribunal rejected her claim and found that the work which she was required to do was within the terms of her contract. The ET also found that none of the company's actions taken in isolation amounted to a repudiatory breach. The ET then went on to consider if the events when taken together had amounted to a breach of an implied term in the contract and decided that there was no breach an implied term. Mrs Woods appealed against the decision of the ET.

The Employment Appeal Tribunal considered that the ET's decision was wrong. However, the EAT could not uphold the appeal as it could not be held that there was no evidence to support the ET's finding of fact. Neither could it be held that the ET had misdirected itself with regard to the correct principles of law. The issue of whether or not there has been a breach of contract and if the breach is fundamental must be regarded as mixed questions of fact and law. In these circumstances the EAT could not substitute its own decision for that of the ET.

The EAT stated that: "It is clearly established that there is implied in a contract of employment a term that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee". The EAT stated that it was not necessary to prove that the repudiation was intended. The function was to look at the conduct as a whole and determine if the cumulative effect, when judged reasonably and sensibly was such that an employee could not be expected to put up with it. The EAT also stated: "If the matter were for the EAT to decide, it would hold that the conduct of the employers in the present case did amount to a breach of this implied term".

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Discrimination

Disability

Archibald v Fife Council [2004] IRLR 651 HL

There is a positive duty to consider reasonable adjustments when considering dismissal or when applying for work.

Ms Archibald was employed as a road sweeper by the local Council. Following an operation she was left almost unable to walk. She applied for sedentary office jobs within the Council and was not successful. Eventually she was dismissed on grounds of capacity.

She claimed disability discrimination. Her claim was unsuccessful at the Employment Tribunal, Employment Appeal Tribunal and the Court of Session. Following this she appealed to the House of Lords.

The House of Lords allowed her appeal and held that the terms, conditions and arrangements relating to the essential functions of her employment were "made by the employer" within the meaning of the Disability Discrimination Act 1995. Because there was a risk of dismissal, this meant that she was disadvantaged when compared with other staff who were not disabled. A positive duty to make reasonable adjustments were triggered. It may have been reasonable for the Council to transfer her to an existing post, even at a slightly higher grade even if she was not the best person for the job. The case was remitted back to an Employment Tribunal to consider whether it was reasonable for the Council to carry out that adjustment in this case.

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Edwards v Royal Devon & Exeter Healthcare NHS Trust [2004] ET/1701114/04 ET

There is a positive duty to consider reasonable adjustments when applying for work.

Mrs Edwards had a chronic back problem. She applied for a job as an assistant in a medical laboratory. Her employer accepted that she was academically capable for the job. Anyone with a disability was guaranteed an interview if they met the minimum requirements for the job. Despite this Mrs Edwards was not offered an interview until she questioned her employer's failure to offer her one. After this Mrs Edwards was offered the job subject to a medical examination.

Various recommendations were made following the medical examination. In particular, it was suggested that an analysis of tasks carried out by laboratory assistants could be used as an assessment of her abilities. This suggestion was not taken up as her employer said that it could not implement the recommendations. As a result the job offer was withdrawn, despite the fact that the recommendations had never been shown to Mrs Edwards or discussed with her. After this Mrs Edwards asked for a copy of the recommendations and a meeting was held where she challenged them. In the event the decision to withdraw the job offer was confirmed.

Mrs Edwards made a claim to an Employment Tribunal. The ET found that Mrs Edwards had been treated less favourably and discriminated against. She was not offered the job and the reason for this was related to her disability. Her employer also failed to make reasonable adjustments. It was assumed when her application was received that she was not capable of doing the job, which was the reason why she never received an initial interview in the first place. When Mrs Edwards challenged the recommendations, they were ignored and the offer was withdrawn. This was on the basis that it was assumed that what she said was incorrect.

The ET said that it did not know whether her health would have withstood the rigours of the job. There was no evidence before it, and more relevantly there was no evidence before her employer at the time to suggest that carrying out the job would worsen her condition. Her employer had failed to show that the treatment or the failure to make reasonable adjustments was justified.

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Sex

Bracebridge Engineering Ltd v Darby [1990] IRLR 3 EAT

A failure to seriously consider a genuine grievance, or to operate an ineffective grievance procedure could be grounds for constructive dismissal. In addition, a single act of harassment if it is sufficiently serious will be unlawful discrimination.

Mrs Darby was about to finish work when she was grabbed by Mr Smith her works manager and her chargehand Mr Daly. She was taken to Mr Smith's office where the lights were put out. Mr Smith placed her legs around him. She was threatened with a written warning for leaving work early when she tried to get away. Mr Daly felt between her legs and told her "you've got a big one". Eventually she was able to get away and the next day she complained to Miss Reynolds, her general manager. However, as both Mr Smith and Mr Daly denied the allegations Miss Reynolds decided not to take the matter further.

Mrs Darby resigned and claimed constructive dismissal and unlawful discrimination. An Employment Tribunal upheld her claims. Her employer appealed against both findings.

On appeal, her employer argued that a single act or an incident could not properly be described as sexual harassment in accordance with the dictionary definition. That any detriment suffered was not in the context of employment. Conversely, the acts were not committed by Mr Smith and Mr Daly in the course of their employment. It was also argued that the ET had misdirected itself by finding that Mrs Darby was entitled to treat herself as having been constructively dismissed.

The Employment Appeal Tribunal held:

  • The ET had not erred in finding that a single act of sexual harassment was a detriment to Mrs Darby. A single incident of sexual harassment, provided it is sufficiently serious clearly falls within the proper intention and meaning of the Sex Discrimination Act 1975. It was an act of discrimination against a woman because she was a woman.

  • There was no error in finding that the detriment suffered by Mrs Darby was in the context of employment since Mr Smith and Mr Daly were involved in disciplinary supervision. Additionally, there was no error in finding that the acts perpetrated by Mr Smith and Mr Daly were acts committed in the course of their employment since they were engaged in exercising, or in the course of exercising a disciplinary and supervisory function.

  • There was no error in finding that Mrs Darby had been constructively dismissed and the ET had not misdirected itself. She was entitled to resign because her complaint of sexual harassment was not seriously investigated. On the facts, the ET was entitled to find that the term relating to the obligation of mutual support, trust and confidence and the obligation not to undermine the confidence of female staff had been breached. Such terms are extremely important in a case where sex discrimination and investigations are concerned.

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Brennan v J H Dewhurst Ltd [1983] IRLR 357 EAT

Discrimination can result from deliberately refusing to offer employment.

Ms Brennan applied for a job as butcher's assistant. The district manager organised recruitment for the post, but delegated initial interviews to the shop manager where the butcher's assistant would work. The shop manager indicated to Ms Brennan that he did not intend to employ a woman. Meanwhile the district manager had decided that no one would be appointed to the position until later. However, Ms Brennan was told that the position had been filled when it had not been.

The Employment Appeal Tribunal held that there was unlawful discrimination under the Sex Discrimination Act 1975. The arrangements that had been made included allowing the shop manager to filter out who he thought were not suitable applicants for the position. If he did so by excluding all women who applied, then the arrangements had operated to discriminate unlawfully against Ms Brennan.

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Grieg v Community Industry [1979] IRLR 158 EAT

A good intention is no defence for failing to ensure equal opportunities.

Miss Grieg was not allowed to work in an all-male painting and decorating team. Her employer believed this was in the best interests of Miss Grieg and the business.

The Employment Appeal Tribunal stated that the wording of the Sex Discrimination Act 1975 makes it clear that the question to be asked is: "Was the woman less favourably treated than a man, and was she treated less favourably because she was a woman"? This needs to be considered without regard to the motive behind what was done.

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Price v Civil Service Commissioner [1978] 1 All ER 1228 EAT

The question whether a smaller number in one group can comply is a question of fact.

Miss Price married when she was 20 and had two children. Due to her childcare responsibilities she worked intermittently in part time positions. When she was 35 she applied for a job as an executive officer in the Civil Service. She was sent a booklet which stated that candidates should be aged 28 years or under. As a consequence, she could not comply with the condition.

She submitted a claim to an Industrial Tribunal about the term on the grounds that it was discriminatory against women because a smaller proportion of women could comply with it than men due to their role bringing up children. The Civil Service thought that the words of Sec 1(1)(b) of the Sex Discrimination Act 1975 should be narrowly construed. Therefore, if it was physically possible for women to comply with the term, there was no breach of the Act. Further, they argued that 53% per cent of applications accepted for the job of executive officer were women (in 1976) which constituted evidence of a lack of discrimination.

The Employment Appeal Tribunal stated that whilst it was theoretically possible for any woman under 28 to apply for employment as an executive officer in the Civil Service, in practice a significant number of women in their mid twenties to thirties take time off to have children and look after them. Consequently many women in practice cannot work in their late twenties and only return to work in their early thirties.

In practice the term was easier for men to comply with than women. With regards to breach of the Act, the EAT stated that the words "can comply" in Sec 1(1)(b) "were not to be narrowly construed as meaning physically possible to comply. It should not be said that a person "can" do something merely because it was theoretically possible for him to do so: it was necessary to see whether he could do so in practice." The EAT concluded that the term requiring applicants for the post of executive officer was discriminatory against women in practice.

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Illegal contract

Annandale Engineering v Samson [1994] IRLR 59 EAT

Accepting occasional one-off payments does not necessarily make the contract illegal.

Mr Samson was employed as a kennel hand in greyhound kennels owned by a director of the company. The kennels were located on property owned by the company. The Inland Revenue knew about the kennels. Mr Samson was paid weekly wages. However, if a dog won the owner would give a sum of money to the trainer who distributed it among the kennel staff. The sums varied in amount and were paid about six times a year. Mr Samson understood that the sums were presents and not part of his wages.

After he was dismissed an Employment Tribunal awarded Mr Samson compensation for unfair dismissal. The ET rejected the employer's submission that payment of occasional cash sums made the contract illegal. The employer appealed against the decision.

The Employment Appeal Tribunal held if an employee was aware that part of his pay was not taxed, then the contract would not be enforceable. It did not follow that small irregular payments that were not taxed made the contract illegal. The contract had not been illegally performed and the employer's appeal was dismissed.

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Cole v Fred Stacey [1974] IRLR 73

Accepting that only a part of pay will not be taxed will make the contract unenforceable.

Mr Cole received additional payments which were not taxed. He was made redundant and claimed a redundancy payment.

It was held that his contract was illegal and he could not claim the redundancy payment.

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Corby v Morrison (T/a The Card Shop) [1980] IRLR 218 EAT

Even if there is no intent to defraud the contract can become unenforceable.

An Employment Tribunal could not hear Ms Corby's unfair dismissal claim when it discovered that she had received a weekly tax free sum of £15 which was over and above her basic wage.

On appeal, it was argued that the ET should have considered her application in view of their finding that she had not deliberately and wilfully intended to defraud the Inland Revenue. Further or alternatively, it was submitted that because the sum in question was paid in addition to her basic wage which was properly treated for tax purposes, it could be severed and the other parts of the contract enforced.

The Employment Appeal Tribunal upheld the ET's decision that she could not pursue her unfair dismissal claim.

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Hewcastle Catering v Ahmed [1992] ICR 626 CA

If an employee does not make a profit or gain from an illegal act, the contract may be enforceable.

Mr Ahmed's employer operated a system to avoid paying VAT. Although Mr Ahmed operated this system for his employer, he did not gain from the non-payment of VAT and consequently the contract could be enforced.

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Hyland v J H Barker (North West) Ltd [1985] IRLR 403 EAT

Agreeing to an illegal act even for a short time could result in the contract being illegal.

Mr Hyland was employed for 16 years when he was dismissed. During the year prior to his dismissal, he had received an illegal tax-free lodging allowance for four weeks.

An Employment Tribunal held that it had no jurisdiction to hear his claim because he had received the allowance. The illegal arrangement had also broke the continuity of his employment which meant the he had not been continuously employed for the qualifying period of one year to claim unfair dismissal.

The Employment Appeal Tribunal held that his contract had been illegal during the four week period in which he had received payment of the allowance. This did not mean that Mr Hyland's contract was illegal either before or after the four week period. What it meant was that the four week period when he had received the allowance had broken his continuity of employment. His appeal was dismissed by the EAT.

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Leighton v Michael [1996] IRLR 67 EAT

An employee should not be barred from presenting a discrimination claim through any illegality in the contract.

The Sex Discrimination Act 1975 protects employees from discrimination. Employment is defined as employment under a contract of service, or a contract personally to execute work or labour.

The Employment Appeal Tribunal held that an employee will not be barred from bringing a discrimination claim through any illegality in the contract of employment. Consideration has to be given to whether the individual was "employed" in determining whether the individual is entitled to protection against discrimination.

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Rastegarnia v Richmond Design COIT 764/38

An employee must be legally entitled to work in the UK.

An Iranian worker had been granted a work permit for a specific job in the UK. He changed jobs without getting official permission.

An Industrial Tribunal held that Mr Rastegarnia would not able to pursue his claim for unfair dismissal when the unofficial job was terminated.

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Salvesen v Simons [1994] IRLR 52 EAT

The contract will be unenforceable even when the parties genuinely do not believe that they are involved in an illegal act.

Mr Simons owned a farming consultancy service whilst working for Salvesen. At his request Salvesen agreed that part of his salary would be paid as a fee to his consultancy service, even although no consultancy services were provided. It was agreed that he would be paid this amount monthly and that he would be responsible for deductions for tax and national insurance. Both Mr Simons and Salvensen genuinely believed that this arrangement was above board and legitimate.

The Employment Appeal Tribunal held that nether Mr Simons or his consultancy provided any services to Salvesen, other than the fact that Mr Simons worked for Salvensen in accordance with his contract of employment. Under this contract Mr Simons was required to devote his full-time to his employment. The EAT also held that in effect the arrangement, specifically the non-deduction of tax and national insurance was in contravention of taxation legislation and ruled that the arrangements were illegal.

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Tomlinson v Dick Evans "U" Drive Ltd [1978] IRLR 77 EAT

Accepting that only a part of pay will not be taxed will make the contract unenforceable.

A redundancy claim was dismissed when the Employment Tribunal discovered that there had been weekly cash payments of £15 and that no tax had been paid on this amount. The ET held that this arrangement vitiated the whole contract.

The Employment Appeal Tribunal held that the scheme to defraud the Inland Revenue made the whole contract of employment illegal. A party to an illegal contract cannot claim the statutory right to a redundancy payment or redress for unfair dismissal.

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References

Gallear v J F Watson & Co [1979] IRLR 306 EAT

There is no legal duty to provide a reference.

The Employment Appeal Tribunal held that there is no legal duty to provide a reference, but the EAT felt that in the absence of a legal obligation, it might be necessary to imply a term or a duty for an employer to provide a reference.

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Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 HL

An employer has a duty of care when providing a reference.

The House of Lords held that the relationship between the parties was "sufficiently proximate" to create a duty of care. It was reasonable to have known that any information which was given would be relied on. This would give rise to a "special relationship" in which sufficient care should have been taken to avoid any negligence liability.

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Spring v Guardian Assurance [1993] IRLR 122 CA

There may be damages if there is a failure to exercise a duty of care.

The Court of Appeal held that future job prospects may be damaged by refusing to provide a reference where the employee has no redress, even if the employer's refusal is on "whimsical grounds". As the Court stated ".... an employer who provides a reference in respect of one of his employees to a prospective future employer will ordinarily owe a duty of care to his employee in respect of the preparation of the reference".

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