Employment law implications PDF

Preview

Summary

Summary of employment law...

Description

SGS 16 – Internal disputes 2

Employment law implications

CLAUSES IN AN EMPLOYMENT CONTRACT: •

Notice period – written notice

•

PILON CLAUSE: Full notice or pay for notice period instead of giving notice o if employer decides to terminate and pay in lieu then they are complying with the contract and there is no breach of contract à restrictive covenants likely to survive o no PILON clause where the employer dismisses the employee is a breach of contract à the restrictive covenants are unenforceable o PILON clause preserves the restrictive covenants

•

Restrictive covenants: to guard against competition from former employees prima facie void unless: o go no further than reasonably necessary o to protect legitimate business interest o e.g. client connections, stable workforce, confidential info

•

Gardening Leave clause: agreement terminated – discretion to request further action during notice period o during notice period the employee is still employed = can't work for a competitor o “absolute discretion to assign, reduce or give alternative duties or no duties at all to the [Employer] and shall be entitled to require the [Employer] to act at the direction of the Company, including the right to exclude the [Employer] from its premises and/or prevent the [Employer] from discussing its affairs with the Company’s employees, agents, clients or customers.”

CONTRACTUAL CLAIM: Breach of contract claim of wrongful dismissal – terminated the employment and have failed to give notice or pay (PILON)

STATUTORY CLAIM: Unfair dismissal: Fair reason + Fairness in all the circumstances Given the opportunity to improve, given warnings, due process followed Capability or Conduct

COMPENSATION Basic award: calculated in accordance with a statutory formula using his length of servce, age and gross weekly pay – subject to a cap of £16,140 Compensatory award: based on the loss of earning resulting from the unfair dismissal – capped to a maximum of £88,519 or one year’s gross pay, whichever is the lower

SHAREHOLDER’S AGREEMENT •

Could enter into agreement that all shareholders need to give consent – higher threshold than s.168 CA – OR

•

OR still effective but shareholders who voted to remove the Director would be in breach of contract and therefore could be sued by the Director

COURT ACTION FROM DIRECTOR IN THEIR CAPACITY AS SHAREHOLDER Quasi partnership? – Ebrahimi v Westbourne Galleries Limited: > legitimate expectation of being involved in the company’s management (O’Neill and another v Phillips and others) > removal may be unfairly prejudicial conduct under s.994 CA Re a Company No 00477 – the interests of a member who had risked his capital in the business of a small private company may include the legitimate expectation that he will continue to be employed as a director, so that his dismissal will be unfairly prejudicial to his interests as a member.

Remedy: > Court has discretion to make order it sees fit (s.996(1)) o most common order is the purchase of Tim’s shares by the company or the members (independently valued) (s.996(2)(e))

SHAREHOLDER’S AGREEMENT VS ARTICLES OF ASSOCIATION Agreement between shareholders vs contract between members and the company Russell v Northern Bank: company cannot be a party to any provision which restricts it from exercising its statutory powers under the CA...