Part 4 Business resources
■ although consultation does not have to end in agree- separate group of employees put in place as a result of
ment, it must always be carried out. consultation requirements under the ICE Regulations.
■ Where there is a separate group of employee rep-
It is, perhaps rather obviously, direct discrimination resentatives set up under the ICE Regulations, the
not to consult an employee about redundancy because employer will only be required to consult that group
she is on maternity leave and presumably also those who if he has agreed to do so as part of a ‘negotiated agree-
are on parental or adoption leave (see McGuigan v T & ment’ under the ICE Regulations.
G Baynes (1999)). ■ An employer who is subject to the standard informa-
tion and consultation provisions in the ICE Regula-
Redundancy and other consultation tions need not consult employees under those provisions
requirements if notification is made to those representatives on
each occasion, that the 1992 Act consultation duties
The DTI (now BERR) has published a new guidance docu- have been triggered and that consultation will take
ment on redundancy consultation and notification. The place under the 1992 Act.
document also explains how the rather long-standing
obligations contained in Part IV of the TULR(C)A 1992 The role of ACAS
(see above) fit in with the new duties of consultation
under the Information and Consultation of Employees ACAS has now taken on redundancy pay entitlement
Regulations 2004 (SI 2004/3426) (ICE), which came into as an issue on which it has a duty to conciliate. The
force for the larger companies on 6 April 2005. Employment Rights (Dispute Resolution) Act 1998 con-
fers a duty on ACAS to conciliate if a person puts in
As an answer to the question ‘Is there a minimum an application to an employment tribunal concerning
period for consultation?’ the guidance states that ‘the entitlement to redundancy pay.
employer must begin the process of consultation in good
time and complete the process before any redundancy notices Collective agreements on redundancy
are issued’ (DTI (now BERR) emphasis). The guidance
refers to a decision of the ECJ in Junk v Kühnel (2005). The Secretary of State may, on the application of the
This case dealt with redundancy in Germany and in employer and the unions involved, make an order mod-
fact the 1992 Act does not impose such an obligation. ifying the requirements of redundancy pay legislation if
However, the then DTI’s statement could well be relied he is satisfied that there is a collective agreement which
upon in tribunals by those seeking to obtain a purposive makes satisfactory alternative arrangements for dealing
judgment of the 1992 Act, i.e. the Act may not say this, with redundancy. The provisions of the agreement must
but this was its purpose and intention. be ‘on the whole at least as favourable’ as the statutory
provisions, and must include, in particular, arrangements
The ICE Regulations require consultation and infor- allowing an employee to go to an independent arbitra-
mation to be undertaken or given to employees on an tion or to make a complaint to an employment tribunal.
ongoing basis about issues affecting the business in which
they work. From 6 April 2005 the regulations applied Other methods of termination of
to employers with at least 150 employees. From 6 April the contract of service
2007 they applied to undertakings employing at least
100 employees, and from 6 April 2008 to those with at Having considered the termination of the contract by
least 50 employees. unfair or discriminatory dismissal or redundancy, we must
now turn to other ways in which the contract of service
The guidance states that the ICE Regulations are may be brought to an end. These are set out below.
in addition to the 1992 Act provisions and makes the
following points: By notice
■ An employer who proposes to make collective redund- A contract of service can be brought to an end by either
ancies must comply with the 1992 Act, even though party giving notice to the other, although, where the
he has established separate consultation arrangements
under the ICE Regulations. Thus, if a trade union is
recognised in regard to employees affected by proposed
collective redundancies, the employer must consult with
representatives of that union, even where there is a
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Chapter 16 Employing labour
employer gives notice, even in accordance with the con- Breach of the provisions relating to minimum periods
tract of service or under the statutory provisions of the of notice do not involve an employer in any penalty, but
ERA 1996, he may still face a claim for unfair dismissal the rights conferred by the ERA 1996 will be taken into
or a redundancy payment. account in assessing the employer’s liability for breach
of contract. Thus an employer who has dismissed his
The most important practical aspect is the length employee without due notice is generally liable for the
of notice to be given by the parties, in particular the wages due to the employee for the appropriate period of
employer. The ERA 1996 contains statutory provisions notice at the contract rate.
in regard to minimum periods of notice and the only
relevance of the express provisions of a particular con- It should be noted that the ERA 1996 provisions
tract of service on the matter is that a contract may regarding minimum periods of notice do not affect the
provide for longer periods of notice than does the ERA. common law rights of an employer to dismiss an em-
Under the ERA an employee is entitled to one week’s ployee at once without notice for misconduct, e.g. dis-
notice after employment for one month or more; after obedience, neglect, drunkenness or dishonesty. An
two years’ service the minimum entitlement is increased example is to be found in Connor v Kwik Fit Insurance
to two weeks, and for each year of service after that it is Services Ltd (1997), where the managing director of an
increased by one week up to a maximum of 12 weeks’ insurance company, who had falsely declared when sign-
notice after 12 years’ service. ing a professional indemnity insurance form that he had
not been involved with any company that had been
An employee, once he has been employed for one wound up, was guilty of gross misconduct and could be
month or more, must give his employer one week’s summarily dismissed.
notice and the period of one week’s notice applies for
the duration of the contract so far as the employee is In practice, a contract of service is often terminated
concerned, no matter how long he has served the by a payment instead of notice and this is allowed by the
employer. It should be noted that, so far as oral notice ERA 1996.
is concerned, it does not begin on the day it is given but
on the following day. This means, for example, that in In these days when there is a great need for skilled
the case of oral notice seven days’ notice means seven personnel, it is tempting for employees to break their
days exclusive of the day on which the notice is given contracts by leaving at short notice to go to other jobs.
(see West v Kneels Ltd (1986) below). There appears to However, in Evening Standard Co Ltd v Henderson
be no particular ruling on written notice and so it may (1987) the employer, Evening Standard, was granted an
be that one could give notice starting from the date injunction to restrain an employee from working for a
of the letter if the letter was served on the employee (or rival during his contractual notice period of 12 months
employer) on that day. However, it would seem prefer- as long as the employer agreed (which he did) to provide
able to commence the notice from the day after service him with remuneration and other contractual benefits
of the letter. until the proper notice period would have run out, or,
alternatively, let him stay at work until the proper notice
period had expired.
West v Kneels Ltd (1986) By agreement
Julie West claimed that her employers had dismissed As in any other contract, the parties to a contract of
her unfairly. An employment tribunal decided that the employment may end the contract by agreement. Thus,
claim failed because she had not been employed for the if employer and employee agree to new terms and con-
necessary qualifying period. This was true if the week’s ditions on, for example, a promotion of the employee,
notice commenced on the day it was given. If it started the old agreement is discharged and a new one takes
the next day she would qualify. Mr Justice Popplewell over.
decided that it accorded with good industrial practice
that in the case of oral notice seven days’ notice meant An employee could agree to be ‘bought off’ by his
seven days exclusive of the day on which the notice was employer under an agreement to discharge the existing
served. This meant that Julie West had in fact been contract of service. In this connection it should be noted
employed for the necessary qualifying period. that discharge of a contract of service by agreement is
not a ‘dismissal’ for the purposes, for example, of an
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Part 4 Business resources
unfair dismissal claim, but should a claim for unfair dis- Ordinary partnership dissolution
missal be brought by an employee who has been ‘bought
off’, the tribunal concerned will want to see evidence of A person who is employed by an ordinary partnership
a genuine and fair agreement by employer and employee which is dissolved is regarded as dismissed on dissolu-
and may allow a claim of unfair dismissal if the dis- tion of the firm. Under the ERA 1996 this is regarded as
charging agreement is one-sided and biased in favour of having occurred because of redundancy.
the employer.
The dismissal is also regarded as wrongful at common
By passage of time law and there may be a claim by the employee for damages
but these will be nominal only if the partnership business
In the case of a fixed-term contract, as where an em- continues and the continuing partners offer new employ-
ployee is engaged for, say, three years, the contract will ment on the old terms (Brace v Calder (1895)).
terminate at the end of the three years, though there
may be provisions for notice within that period. A partnership is dissolved whenever one partner dies
or becomes bankrupt or leaves the firm for any reason,
By frustration e.g. retirement. However, the business usually continues
under a provision in the partnership articles but there is
A contract of service can, as we have already seen, be nevertheless a technical dissolution.
discharged by frustration which could be incapacity,
such as illness. However, other events can bring about Of course, if a firm or sole trader sells the business as
the discharge of a contract of service by frustration, e.g. a going concern, employees are transferred to the new
a term of imprisonment. Thus, in Hare v Murphy Bros employer automatically under the Transfer of Under-
(1974) Hare was a foreman employed by Murphy Bros. takings (Protection of Employment) Regulations 2006.
He was sentenced to 12 months’ imprisonment for
unlawful wounding and could not, obviously, carry out Limited liability partnerships:
his employment. The court held that his contract was administration and liquidation
frustrated.
The rules set out above for the ordinary partnership do
Furthermore, death of either employer or employee not apply to limited liability partnerships under the
will discharge the contract by frustration from the date Limited Liability Partnerships Act 2000 and regulations
of the death so that, for example, the personal represent- made under it. Such a partnership is a separate legal
atives of the employer are not required to continue with person from its members, and the insolvency structures
the contract. However, the estate has a claim for wages applying to it in terms of the appointment of an admin-
or salary due at the date of death. istrator and of a liquidator mirror the corporate legal
rules set out below.
Under the ERA 1996 claims for unfair dismissal aris-
ing before the employer’s death survive and may be Appointment of an administrator –
brought after the death of the employer against his estate. corporate rehabilitation
Furthermore, the death of a human employer is usually
regarded as a ‘dismissal’ for redundancy purposes and The object of administration orders is primarily to allow
the employee may make a claim against the employer’s a company to be put on a profitable basis if possible,
estate. or at least disposed of more profitably than would be
the case if other forms of insolvency proceedings, such
If the employee is re-engaged or the personal repres- as liquidation, were used. On the appointment of an
entatives renew his contract within eight weeks of the administrator, the company’s executive and other direc-
employer’s death, the employee is not regarded as hav- tors are not dismissed but their powers of management
ing been dismissed. Where an offer of renewal or re- are exercisable only if the administrator consents. He
engagement is refused on reasonable grounds by the also has power to dismiss and appoint directors.
employee, then he is entitled to a redundancy payment.
If he unreasonably refuses to renew his contract or accept Since an administrator is made an agent of the com-
a suitable offer of re-engagement he is not entitled to pany by the court under the administration order, em-
such a payment. ployees are not automatically dismissed. In addition,
an administrator who wishes to trade with the company
and for that purpose to retain employees may adopt
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Chapter 16 Employing labour
their contracts of employment. Such adoption is auto- contracts were adopted including liability to pay in lieu
matic. This does not mean that he and his firm will of notice. In order to sustain the administration and
become employers in the true sense. However, if, when receivership procedures which would have otherwise
the administrator finishes his work and leaves the com- collapsed leaving liquidation as the only insolvency pro-
pany, there are outstanding, e.g. any wages or salaries cedure, the government rushed through Parliament the
of retained employees, they must be paid before the Insolvency Act 1994, which confirms that contracts are
administrator is entitled to his fees and expenses. The adopted but restricts the liability of the insolvency prac-
effect of adoption is not, therefore, to make an adminis- titioner to certain ‘qualifying liabilities’. Only these liab-
trator personally liable for wages or salary, but adoption ilities will be payable in priority to other claims such as
may affect their fees and expenses. This provision is the holder of a floating charge and preferential creditors
to correct a possible unfairness which existed under the and the fees and expenses of the insolvency practitioner.
previous law before the coming into force of the present The qualifying liabilities are wages or salaries including
insolvency provisions which are contained in the sickness and holiday pay and contributions to occu-
Insolvency Act 1986 (as amended by the Insolvency Act pational pension schemes. Payments in lieu of notice
2000). In earlier times an administrator would have are not included. The liabilities concerned must have
been able to take the services of an employee of the com- been incurred after the adoption of the contract. Other
pany for a short period of time and then say ‘your con- employment liabilities will remain but will be treated
tract is with the company: the company is insolvent and as unsecured claims against the company and may not
I do not intend to pay you’. Thus the employee might be paid in view of the insolvency unless the insolvency
work without any right to pay. As we have seen under practitioner can trade out of trouble.
the provisions of the current law, if an administrator
allows an employee of the company to contribute his Demise of the administrative receiver
services, he is deemed to have adopted the contract and
the employee must be paid before the insolvency practi- Where a company had borrowed money and given secur-
tioner is entitled to his fees and expenses. ity for the loan by charging its assets under a debenture,
the debenture holders could if, for example, they were
If, of course, an administrator dismisses an employee, not paid interest on the loan, appoint a receiver and
that employee can make a claim for a redundancy payment. manager, later referred to as an administrative receiver.
The most common appointment was by a bank in respect
It is worth noting that the above provisions of the of an overdraft or loan facility to a company.
Insolvency Act 1986 relating to adoption of employment
contracts gave insolvency practitioners an incentive to There is no point in dealing with the effect of the
opt out of the liability and statements made in the High appointment of an administrative receiver on contracts
Court in Re Withall and Conquest and Specialised Mold- of employment since under the Insolvency Act 1986
ings Ltd (1987) to the effect that a form of letter sent to these appointments can no longer be made except in
employees during the first 14 days of an administration very specialised areas beyond the scope of this text. Those,
or administrative receivership disclaiming adoption such as banks and other secured creditors, can now only
would work to the extent that during an administration appoint administrators or liquidators.
or receivership remuneration including holiday pay and
contributions to occupational pension schemes would Company liquidation
be paid, as was the practice anyway where the insolvency
practitioner traded on, but no more. The major concern The possibilities are as follows:
of insolvency practitioners was to get rid of the potential
liability to make payments in lieu of notice. If trading 1 A compulsory winding-up. Here the court orders the
fails, an insolvency practitioner is rarely able to give winding-up of the company, usually on the petition of a
employees notice and in the case of senior employees the creditor because it cannot pay his debt. The making of a
notice period may be three months or more and since compulsory winding-up order by the court may have the
such employees are usually on high salaries the potential following effects according to the circumstances of the case:
burden is considerable. However, in Powdrill v Watson
(1994) the Court of Appeal held that the letter was of no ■ Where the company’s business ceases, the winding-up
effect and that after the requisite 14 days employment order will operate as a wrongful dismissal of employees.
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Part 4 Business resources
■ Where the liquidator continues the business, as where wrongful repudiation of the contract of service by the
he allows employees to continue with work in pro- employer.
gress in order to make complete and more saleable
products, he may be regarded as an agent of the com- The common law action has, of course, been largely
pany so that the employment continues. Alternatively, taken over by the statutory provisions relating to unfair
the court may regard the appointment of the liquidator dismissal and a common law claim is only likely to be
as a giving of notice to the employee who then works brought by an employee who has a fixed-term contract
out that notice under the liquidator. It is, however, at a high salary. Thus a company director who has a
the better view that employees may, if they so choose, fixed-term contract for, say, three years at a salary of
regard themselves as dismissed because the company £150,000 per annum might, if wrongfully dismissed,
has ceased to employ them, the new contract being find it more profitable in terms of damages obtainable
with the liquidator. In practice, if the liquidator con- to sue at common law for breach of contract, though
tinues to use the services of the employees and pays the employer may be able to resist the claim where the
them, the Department of Work and Pensions treats employee was guilty, for example, of misconduct, dis-
the redundancy of the employees as occurring at the obedience or immorality.
time of their eventual dismissal by the liquidator.
This may well change since there is now no monetary
2 A voluntary winding-up. This commences on the cap at all where dismissal is because the employee has
resolution of the members and if the company’s busi- blown the whistle on his employer and reports, e.g. a
ness ceases there is a dismissal of employees. If the com- health and safety infringement within the organisation
pany’s business continues, the position would appear to to the Health and Safety Executive or a suspected fraud
be as set out in the second point above. to a City of London regulator, such as the Financial
Services Authority.
Bankruptcy
In other cases where the contract of service is not for
The bankruptcy of an employer, such as a sole trader, a fixed term, there is no claim for damages at common
or indeed of the employee, does not automatically dis- law, provided that the employer gives proper notice or
charge the contract of service, though it will if there is a pays wages instead of notice, though in such a case the
term to that effect in the agreement. Thus, the employ- employee has, at least potentially, a claim for unfair dis-
ment can continue, though in practical terms it may missal which he could pursue. Again, the employer may
be impossible to pay employees’ wages, and in this resist a claim for unfair dismissal on the basis of mis-
case they will be discharged and will be able to make a conduct, disobedience or immorality. We have already
claim for a redundancy payment, as well as one in the given some consideration to these matters in the context
bankruptcy for wages accrued due in regard to which of statutory unfair dismissal.
they have a preferential claim in the bankruptcy.
Under powers given by s 3 of the Employment Tribunals
A trustee in bankruptcy cannot insist that an em- Act 1996, employment tribunals can hear cases of
ployee continue in service because the contract is one of wrongful dismissal, though there is a cap of £25,000 (i.e.
a personal nature. The bankruptcy of an employee will less than the statutory claim for unfair dismissal) on the
not normally affect the contract of service unless there is damages that can be awarded. Claims for higher sums
a term to that effect in the contract. Company directors must be made in the county court or High Court.
provide a special case since the articles of most com-
panies provide for termination of the office on becoming Wrongful dismissal and unfair dismissal:
bankrupt. effect of damages cap
Wrongful and summary dismissal at What is the position where a tribunal hears a case
common law for wrongful dismissal and, while accepting that the
claimant’s loss is greater, makes an award of £25,000
The claim at common law for wrongful dismissal is being governed by its cap? Can the claimant then pro-
based on a general principle of the law of contract, i.e. ceed with a claim in a county court or the High Court
for the balance between the capped award and the actual
loss?
The Court of Appeal dealt with this situation in the
following case.
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Chapter 16 Employing labour
Fraser v HLMAD Ltd (2007) ‘reasonably practicable’ for the complaint to be pre-
sented during that period.
F appealed against an order striking out his claim form ■ Awards for unfair dismissal may be reduced substan-
and dismissing his wrongful dismissal claim in the High tially by a sum representing the fault of the employees
Court against HLMAD Ltd. F’s dismissal was effected by – e.g. late arrival at work. Damages for wrongful dis-
insolvency practitioners of HLMAD Ltd. F claimed unfair missal are not subject to a deduction for contributory
dismissal and wrongful dismissal before a tribunal. In fault.
his claim initiating proceedings in the tribunal he stated ■ The damages for wrongful dismissal in the case, e.g.
that he reserved the right to pursue an action in the High of a highly paid person could still well exceed the
Court for damages for wrongful dismissal in excess of maximum amount of compensation available for unfair
£25,000, the tribunal maximum. F later began an action dismissal – where the compensatory award is cur-
in the High Court for wrongful dismissal but did not with- rently a maximum of £63,000.
draw the tribunal claim. The tribunal went on to rule in
F’s favour on the unfair dismissal and the wrongful dis- When does wrongful dismissal occur?
missal claims, capping the damages on the latter claim
to £25,000, even though it found that F had suffered a The main situations of wrongful dismissal are as follows:
greater loss.
■ where the contract is of indefinite duration but ter-
F’s claim in the High Court was struck out and this minable by notice, the termination of the contract
was upheld by the Court of Appeal. without notice or with shorter notice than that to
which the employee is entitled, and, of course, sum-
The civil procedure rule of merger applied. The effect mary dismissal without any notice at all;
of a judgment for the claimant absorbs any claim that
was the subject of the action into the judgment so that ■ in the case of a fixed-term contract, termination be-
the claimant’s rights are then confined to enforcing the fore the fixed term expires;
judgment. The claim for the excess over £25,000 was
not a separate cause of action, since this could not be split ■ in the case of a contract to carry out a specific task,
into two causes of action: one for damage up to £25,000, termination before the task is completed;
and another for the balance. A claimant who expected to
recover more than £25,000 for wrongful dismissal should ■ where the employer dismisses the employee on dis-
bring that claim in the county court or High Court. The ciplinary grounds but does not follow a procedure
merger of the claim into the judgment of the tribunal laid down in the contract;
was not prevented by the express statement made in the
tribunal claim form that F reserved his right to bring High ■ selection for redundancy in breach of a procedure set
Court proceedings for the excess of £25,000. out in the contract.
The wrongful dismissal claim When dismissal is justified
Some of the main reasons for preferring a wrongful dis- Various forms of misconduct will justify a dismissal. As
missal claim are as follows: we have seen in Connor v Kwik Fit Insurance Services
Ltd (1997), the managing director of an insurance com-
■ An employee who is dismissed may not have com- pany, who had falsely declared when signing a professional
pleted the one year’s service required for an unfair indemnity insurance form that he had not been involved
dismissal claim. This bar does not apply to wrongful with any company that had been wound up, failed in a
dismissal claims. claim for wrongful dismissal. Again, in Blayney v Colne
Liberal Club (1995) a bar steward’s claim for wrongful
■ The time limit – i.e. three months – for bringing claims dismissal failed. He had been summarily dismissed for
of unfair dismissal may have expired. The period for failure to hand over the bar takings to his employer or to
wrongful dismissal, which is a common law claim put them in the safe and hand over the safe keys.
in the county court or High Court, is six years from
dismissal. However, the three-month period applies Rights and remedies on dismissal
to wrongful dismissal claims before an employment
tribunal, unless the tribunal decides that it was not These are as follows.
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Part 4 Business resources
Written statement of reasons It should also be noted that under the ERA 1996 an
for dismissal employee may, in the case of his employer’s insolvency,
make a claim on the National Insurance Fund rather
At common law an employer is not required to give his than relying on the preferential payments procedure set
employee any reasons for dismissal. However, the ERA out above. The relevant insolvency practitioner, e.g. a
1996 provides that where an employee is dismissed, with liquidator, will normally calculate what is due and obtain
or without notice, or by failure to renew a contract for a authorisation through BERR. Insofar as any part of this
fixed term, he must be provided by his employer on payment is preferential, the rights and remedies of the
request, within 14 days of that request, with a written employees concerned are transferred to BERR, which
statement giving particulars of the reasons for his dis- becomes preferential in respect of them.
missal. This provision applies only to employees who
have been continuously employed full or part time for The limits of the employee’s claim on the National
a period of one year (ERA 1996, s 92), though there is Insurance Fund are as follows.
no service requirement in pregnancy dismissals. All
women, regardless of service or hours worked, have a ■ arrears of pay for a period not exceeding eight weeks
right to written reasons for dismissal if dismissed while with a maximum of £330 per week;
pregnant or during the statutory maternity leave period
and regardless of whether the woman requests it or not. ■ holiday pay with a limit of six weeks and a financial
The written statement is admissible in evidence in any limit of £330 per week;
proceedings relating to the dismissal and if an employer
refuses to give a written statement the employee may ■ payments instead of notice at a rate not exceeding
complain to an employment tribunal. If the tribunal £330 per week;
upholds the complaint, it may make a declaration as to
what it finds the employer’s reasons were for dismissing ■ payments outstanding in regard to an award by an
the employee and must make an award of two weeks’ employment tribunal of compensation for unfair
pay without limit as to amount to the employee. dismissal;
Employer’s insolvency ■ reimbursement of any fee or premium paid by an
apprentice or articled clerk.
If the employer is bankrupt or dies insolvent, or where
the employer is a company and is in liquidation, the There is no qualifying period before an employee
unpaid wages of an employee have under Sch 6 to the becomes eligible and virtually all people in employment
Insolvency Act 1986 priority as to payment but only to a are entitled and the amount of £330 refers to the
maximum of £800 (taken by insolvency practitioners to employee’s gross wage.
be the gross wage) and limited to services rendered dur-
ing the period of four months before the commence- It should be noted that claims on the National Insur-
ment of the insolvency. Any balance over £800 or four ance Fund were, in the past, not admitted unless the
months ranks as an ordinary debt. Also preferential is relevant insolvency practitioner gave the DTI (now BERR)
accrued holiday remuneration payable to an employee a statement of the amount due, though this could be
on the termination of his employment before or because waived and payments made if there was likely to be an
of the insolvency. unreasonable delay in providing the statement. Chapter
VI of the ERA 1996 now provides that the DTI (now
The Schedule adds to the above preferential debts by BERR) may make payments without a statement if it is
including in the list sums owed in respect of statutory satisfied that adequate evidence of the amounts due has
guarantee payments, payments during statutory time off been made available. Nevertheless, the relevant insol-
for trade union duties, ante-natal care and to look for vency practitioner will normally provide a statement.
work, remuneration on suspension for medical grounds,
or remuneration under a protective award given because Damages for wrongful dismissal
of failure to consult properly on redundancy. Statutory
Sick Pay, Statutory Maternity Pay, parental leave and An award of damages is the most usual remedy for
adoption leave pay are also preferential. wrongful dismissal. The period by reference to which
damages will be calculated is either:
■ in the case of a contract of indefinite duration, the
period between the date of wrongful dismissal and the
earliest date on which the employer could lawfully have
terminated the contract – generally the date required
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Chapter 16 Employing labour
by the period of notice set out in the contract. If no the common law rule set out in BTC v Gourley (1955)
such period is expressed in the contract, the court will the court will deduct from the gross award a notional sum
imply a ‘reasonable’ period or the minimum period to represent income tax. Under the Income Tax (Earn-
laid down in s 86 of the Employment Rights Act 1996, ings and Pensions) Act 2003 the first £30,000 of the net
whichever is the longer; or award is tax-free. If the net award exceeds that sum, the
■ if the employee was employed under a fixed-term balance will be taxed again in the ex-employee’s hands.
contract, the damages period will in general be the Therefore, the court will add a sum to the non-exempt
unexpired remainder of the fixed term, unless the balance to ensure that after payment of tax on the sum
employer could terminate the contract by notice before awarded, the ex-employee is left with an appropriate net
the fixed term expired, in which case the damages sum (see Shove v Downs Surgical plc (1984)).
period will be the period of that notice.
Example
Case law has laid down ‘reasonable’ periods of notice
in the absence of specific provision in the contract. These Fred, a managing director on a gross salary of £120,000
vary from three months for a company director (James a year and with a contract giving him the right to receive
v Kent & Co Ltd (1950)) to one week for a hairdresser’s six months’ notice, is dismissed without notice. His net
assistant (Marulsens v Leon (1919)) – though, according pay is calculated at £80,000 so he is awarded £40,000
to length of service, the ERA 1996 periods, which may be for failure to give him notice. The first £30,000 of this
longer in the latter case, could apply. sum is tax free but £10,000 will be taxed again as
income for the year in which the damages are received,
Heads of damage at his highest rate (currently 40 per cent). If Fred’s tax
liability on the £10,000 is estimated to be £4,000, the
No damages can be recovered for the manner of dis- award will be £44,000, so that, after payment of that tax,
missal – e.g. for hurt feelings – nor for the fact that the Fred ends up with £40,000.
dismissal may make it more difficult to get another job.
The equitable remedy of specific
However, a claim may be made for loss of pension performance and injunction
rights, share option rights and other fringe benefits such
as a company car, but only to the extent that it was made A decree of specific performance is, as we have seen, an
available for private use. order of the court and constitutes an express instruction
to a party to a contract to perform the actual obligations
Mitigation of loss which he undertook under its terms. If the person who
is subject to the order fails to comply with it, he is in
The ex-employee must take reasonable steps to find contempt of court and potentially liable to be fined or
other suitable employment or become self-employed, imprisoned until he complies with the order and thus
otherwise damages will be reduced by the sum that purges his contempt. For all practical purposes the re-
could reasonably have been earned from new employ- medy is not given to enforce performance of a contract
ment or self-employment during the damages period. of service, largely because the court cannot supervise
The court will take into account the nature of any refer- that its order is being carried out. A judge would have to
ence given to the employee and the difficulty a dismissed attend the place of work on a regular basis to see that the
employee may have in finding other suitable work. parties were implementing the contract.
Where there is a contractual provision that allows the An injunction is, as we have seen, an order of the
employer to summarily dismiss the employee on mak- court whereby an individual is required to refrain from
ing a payment in lieu of notice but he fails to pay it, that the further doing of the act complained of. Again, a per-
sum, when claimed, is in the nature of liquidated (or son who is subject to such an order and fails to comply
agreed) damages and is not subject to mitigation. It with it is in contempt of court and the consequences set
is payable, therefore, without deduction even where the out above follow from the contempt. An injunction may
ex-employee goes straight into another job (see Cerberus be used to prevent many wrongful acts, e.g. the torts of
Software Ltd v Rowley (1999)).
Damages are compensatory
If the employee had worked during the damages period,
he would have received net, not gross, pay. Thus, under
563
Part 4 Business resources
trespass and nuisance, but in the context of contract the and his manager though even there the courts are reluct-
remedy has been granted to enforce a negative stipula- ant to make the order (see Warren v Mendy (1989)).
tion in a contract in a situation where it would be unjust
to confine the claimant to damages. An injunction has Employee’s breach of contract
been used as an indirect method of enforcing a contract
for personal services, but a clear negative stipulation is An employer may sue his employees for damages for
required. Reference should be made to Warner Brothers breach of the contract of service by the employee. Such
v Nelson (1936) in Chapter 7 as an illustration of the claims are potentially available, for example, for damage
application of the negative stipulation rule and the to the employer’s property, as where machinery is dam-
developments in it in more recent times . aged by negligent operation, as was the case in Baster
v London and County Printing Works (1899), or for
In this connection it should also be noted that s 236 of refusal to work resulting in damage by lost production,
the Trade Union and Labour Relations (Consolidation) as was the case in National Coal Board v Galley (1958).
Act 1992 provides that no court shall by way of specific Such claims are rare and impractical because of the fact
performance or an injunction compel an employee to do that the employee will not, in most cases, be able to meet
any work or attend any place for the doing of any work. the claim, and also, perhaps more importantly, because
Thus although, as the Warner Bros case illustrates, an they lead to industrial unrest. In these circumstances we
injunction was potentially available to enforce com- do not pursue the matter further here.
pliance with a contract of employment, the prohibition
in s 236 (above) prevents a court from issuing a decree Actions by employers against their employees are,
of specific performance or an injunction against an of course, not uncommon in the area of contracts in
employee. The section would not affect the use at least of restraint of trade and for breach of the duty of confiden-
an injunction where the contract was for services and tiality. These matters were considered in Chapter 7 to
not employment, as would be the case between a boxer which reference should be made .
Self-test questions/activities
1 How is the relationship of employer and worker 4 Monty signalled to a van driver of Python Ltd to
established? stop and asked him to take him to the Grotty
Towers Hotel. The hotel was some five miles away
2 In connection with the provisions for maternity leave from the route which the driver would usually take in
and statutory maternity pay: the course of his duties, but he nevertheless agreed
(a) What is the maximum leave entitlement? to give Monty a lift to the hotel. When the driver had
(b) What is the amount of maternity pay? deviated a quarter mile from his authorised route, he
(c) For how long must the claimant have been carelessly collided with another vehicle and Monty
continuously employed? was injured.
As company secretary of Python Ltd, you have
3 Des and Eric are both employed by a bus company. received a letter from a firm of solicitors representing
Des is a bus driver and Eric a conductor. Eric has Monty threatening legal action against Python
always nursed an ambition to be a driver and Des Ltd. Your managing director asks you to draft
has, on occasion, let Eric drive a bus around the a memorandum for him on the legal aspects
depot before other employees turned up for work. of the case.
Last week, while Eric was having a drive around the Draft the memorandum.
yard, he struck Des who was riding his motor bike
around the yard at 60 mph. 5 You have recently been appointed the company
Discuss the liability of Eric and the bus company secretary of Foundry Ltd. The following problems
in regard to the injuries suffered by Des. emerge at the first board meeting.
564
Chapter 16 Employing labour
(a) The members of the board are concerned as to and is still not fit to come back to work. The
whether they are taking appropriate steps to manager wants to write to John telling him that
communicate with the employees as to how the he is dismissed.
company is fulfilling its obligations under Health
and Safety legislation. You are asked to write an Prepare a note for your next partnership meeting
explanatory memorandum for the next board as to the legal position if John is dismissed.
meeting as to the legal requirements and
indicate the steps which the company should 7 Alan worked for ten years for Pleasant Ltd. It
be taking. was taken over 18 months ago by Aggressive Ltd
and Alan continued in his job. He has found the
(b) It appears that Foundry Ltd employs 100 women management of Aggressive Ltd to be very difficult
and 50 men in an area where there is a large and domineering. Amongst other things, the
number of immigrant families. The managing management has asked him to work in the stores
director appears to have paid little or no issuing and accounting for equipment issued to
attention to sex, race and equal pay legislation. Aggressive’s employees. Alan feels that he has
The board, which is concerned about this, asks not been trained to do this and has given in
for an explanatory memorandum, again, for the his notice.
next board meeting, summarising the main Advise him as to his rights.
provisions of the relevant legislation and setting
out procedures which the company should 8 The company of which you are secretary makes
adopt to ensure that the law is complied with. components for cars. Business has fallen off lately
and the board has decided that it will have to
6 John is one of the employees of a firm in which you dismiss 120 employees during the next five weeks.
are a partner. He suffers badly from arthritis. He has Write an explanatory memorandum to the board
been employed for ten years. However, he has had a regarding any legal requirements there may be in
number of absences of two to three weeks’ duration terms of:
over the past three years. (a) notification of the redundancies;
John is employed as a shop assistant and the (b) selection of employees for redundancy;
manager of the shop has just informed you that John (c) amounts of compensation that may be involved;
has now been off work for eight weeks with arthritis (d) the consultation requirements.
Specimen examination questions
1 (a) Explain by reference to case law how the John is now claiming against Dan on the basis that
courts make the distinction between a he is liable for the damage resulting from the assault.
contract of service and a contract for
services. What is the importance of this Explain the legal position to Dan.
distinction?
2 Jane has recently taken up employment as an
(b) Fred is employed by Dan’s Garage. John, accounts clerk at Bodge Builders’ warehouse. She is
a customer, fills up with petrol and goes to the only female employee at the premises. Jane has
pay. Because of a mechanical fault there is a complained to Joe the foreman that she is constantly
difference between the value of the sale shown being subjected to remarks by some of the male
by the pump and that shown by the terminal employees comparing her physique and sexual
which Fred is using. Fred insists that the pump attractiveness unfavourably with a large number
is wrong and that the value of the sale is £5 of female pin-ups which the men have posted
more than the pump is showing. There is an conspicuously in various parts of the warehouse
argument and suddenly Fred gives John a that can be seen from Jane’s office.
punch which breaks his nose. Advise the management in terms of liability.
565
Part 4 Business resources he replace the money. The employer has discovered
what has happened and wishes to dismiss Tom and
3 Tom and Harry are shop assistants and short of Harry but does not wish to incur liability.
cash. They decide to borrow from the till. Tom leaves
a note in the till and replaces the money the Advise the employer.
following day. Harry neither leaves a note nor does
Website references
http://www.berr.gov.uk/whatwedo/employment/ http://www.lowpay.gov.uk The Low Pay Commission.
workandfamilies/flexible-working/index.html For
family-friendly developments, see Department for http://www.ico.gov.uk The Information Commissioner’s
Business, Enterprise & Regulatory Reform website. Office is an independent supervisory authority that reports
directly to Parliament.
http://www.berr.gov.uk/whatwedo/employment/
employment-legislation/employment-guidance/ http://www.ico.gov.uk/home/for_organisations/topic_
page19310.html For guidance on payments and awards, specific_guide/employment.aspx For the Employment
see Department for Business, Enterprise & Regulatory Practice Code.
Reform website.
http://www.equalityhumanrights.com On equal pay and
http://www.cipd.co.uk Also useful in the above area, the equality in employment generally, the Commission for
Chartered Institute of Personnel and Development. Equality and Human Rights.
http://www.direct.gov.uk/en/Employment/Employees/
Pay/index.htm On the National Minimum Wage, the BERR
interactive website on NMW.
Visit www.mylawchamber.co.uk/riches CASE
to access selected answers to self-test questions in the
book to check how much you understand in this chapter. POWERED BY
Use Case Navigator to read in full some of the key cases
referenced in this chapter:
Johnson v Unisys Ltd. [2001] 2 All ER 801.
Post Office v Foley; HSBA Bank v Madden [2000] 1 All ER (D) 550.
Fairchild v Glenhaven Funeral Services Ltd and others; [2002] 3
All ER 305
Barber v Somerset County Council [2004] 2 All ER 385
566
Index
Index
accidents, reporting 513 bank loans 384
accounts 88 –90, 135, 171 bankruptcies 58, 61, 87, 88, 101–11, 311, 560
disclosure of loans to and material interests of directors bankruptcy restriction orders (BRO) 109–10
182 –3 bankruptcy restriction undertakings (BRU) 110
committee of creditors 105
accountants 48, 91, 344–6, 355, 376 discharge 109–11
Act of Parliament, making of 19–20 family home 105–6, 107
administration 192–8, 558–9 fast-track voluntary arrangements (IVAs) 103
administrator, appointment of 194–5, 558–9 income payments 104
administrative law 4 membership of company 171
advertising 282, 326, 392, 406, 407, 415 of partners 129
pensions 105
comparative advertising 440–1 petition, the 101–2
discriminatory advertising 525, 527, 532 preferential payments 108, 109
Advisory, Conciliation and Arbitration Service (ACAS) 66, protection of employees 108–9
scheme of arrangement 102, 103–4
477, 539, 541, 549, 555, 556 set-off 106
code of practice for sexual orientation regulations barristers 46–7, 117
bills 19–20, 38
compliance 532–3 bills of exchange 228
age discrimination 520–1, 524, 525–7, 531 bills of sale legislation 80
blackmail 449
specific exceptions 526 breach of condition 282, 303, 304, 317, 318, 319–20, 324
agency 138, 222, 268, 271–2, 312 –3 breach of contract 63, 121, 126, 157, 160–1, 209, 221, 222,
duties 272 224, 226, 227, 228, 229, 231, 233, 253–9, 293, 545, 560
factors 313 actors 484
termination 272 confidentiality 490–1, 564
allowable deductions from pay 467, 479–80 consumers 407
alternative dispute resolution (ADR) 57, 64–6 credit agreements 394, 397–8
animals 75 constructive dismissal 488
annual general meetings (AGMs) 90, 172, 174 dismissal for disclosure of fraud 492
annual percentage rate (APR) 388–9 employment contracts 461, 490, 564
annual returns 175–6, 188 in delivery by instalments 316–17
antenatal care 471–2, 478 inducement of breach of contract 351
appeals 54 – 6, 58, 61, 62, 63 – 4 long notice periods 484
planning permission 94 non-acceptance 319
arbitration 65, 280, 409, 415, 417 in respect of repairs 318
arson 377 salesmen 484
articles of association 151, 158–61 breach of duty 335–8, 396, 442, 484, 487, 505–6
assets breach of statutory duty 342, 355, 503, 508
distribution of 191–2 breach of promise 222, 326
ring-fencing 196 breach of term 282–3
Attorney General, references by the 55–6 breach of warranty 283, 320, 324, 414
auction sales 321 breach of warranty of authority 272
auditors 88, 89, 136, 165, 171, 174 –5, 344 – 6, 376 British Standards Institute (BSI) 407
Auld, Sir Robin 50, 53 bullying at work 508, 511, 532, 534, 551
bad debts, provision for 345
bailment 268
balance sheet 88–9
bank holidays 516
567
Index constitution 151–2
continuity 88
burden of proof 534–5 finance 79–80, 161–7
business names 78, 97–9, 117–18, 152– 6 formation 149–50
incorporation 75, 78, 148, 150
registration of Internet names 155–6 insolvency 188–9, 454
sanctions for non-compliance 155 legal personality 76–7, 117
business property 9, 121, 124–5, 138, 191, 421–49 limited companies 147–8
licences 424–5 membership 170–2
securities 424 private 148
byelaws 20 public limited companies 74–5, 148
publicity 88–9, 93
capital allowances 92, 93 registered office 156
capital gains tax 93 registration 74, 78, 149–50, 152–3
cartels 244, 249 single member company 148–9
certainty of terms 279–81 taxation 93
charge cards 387 unlimited companies 148
charges Companies Court 61
company secretary 178–9, 188
fixed and floating charges 80–1, 138, 191, 193–4 compensation 169, 170, 230–1
mortgages 81 and breach of statutory duty 342
registration 136, 166–7 for breach of credit agreements 398
charging orders 101 ‘compensation culture’ 336
Charter of Fundamental Rights of the EU 40–1 compensation orders 415
charities 98 data protection 447, 448
child protection 530 discrimination 524, 534, 538–9
children see minors employment claims 462, 469, 472, 474, 475, 476, 477,
choses 85–6
Citizen’s Advice Bureaux 49, 407 478, 483, 535, 546–51, 560–3
civil courts 56–62 employment particulars 462
appeals 58 injury to feelings 539, 551
civil law 4–6 less favourable treatment 466
civil litigation reform 56–7 retirement 527
Civil Procedure Rules 117, 432–3 transfer of employment 458, 459
classification of business organisations 73–5 union membership 485–6
collateral contract 326–7 see also damages
collective agreements 226, 458, 460, 461, 517, 524, 556 competition policy 244–9, 405
comfort letters 226 breach 247, 408
commercial practices Chapter I prohibition 245–6, 247
banned 361–2 Chapter II prohibition 246, 247
strict liability 362 composition agreement 219
unfair 359–62 computer misuse 449
Commission (of European Union) 28 conciliation 66, 415, 417, 549
Commission for Equality and Human Rights 39, 48 conditional fees 49
committal 53–4 conditional sale 267, 381, 398
Committee of the Regions 30 confidentiality 442–3, 447, 475, 490–1, 564
common law 6–8 consideration 215–21, 228, 260, 324
rules of interpretation 21–2 constitutional law 3–4
commonhold 427–9 constructive dismissal 461, 468, 474, 488, 509, 536, 538,
Community Legal Services 49
fund 63 541, 544
Community Trade Mark 440, 442 consumer credit 58, 85
companies 74 –5, 147–98 Consumer Focus 406
agents 76, 77 consumer protection 359–68, 401–17
capital 79 –80, 158
charitable 90, 157 average consumer 359
community interest companies (CICs) 79
568
Index
civil remedies 407 voidable contracts 205, 230, 234, 237, 239, 313
codes of practice 409–10 see also contract of employment; sale of goods, contracts
consumer protection institutions 403–7
cooling-off period 403 for the; contracts for the supply of goods and services
criminal liability 407–8 contract of employment 195, 229, 250–1, 268, 285, 452,
definitions of terms 359
enforcement of consumer rights 415–17 455 –502
enforcement orders 408–9 adoption by administrator 558–9
food safety 365–7, 405 discrimination 519
local government role 405 directors 467
product safety 362–5 disciplinary procedures 461, 462, 546
standard terms and conditions 410 fraud and illegality 455–6
super-complaints 408 grievance procedures 461, 546
unfair trade practices 408 insolvency 458, 459
Consumer Protection Advisory Committee 405–6 relevant transfer 457–8
consumer rights, additional 320–1, 323 terms of employment 460–1, 490–1, 524, 541, 545
Consumers’ Association 406–7 variation 458, 459
continuity of business 87–8 ‘zero hours’ contracts 456, 465
costs (in legal actions) 57, 64 contracts for the supply of goods and services 302–27
contract 58, 60, 203–61 consideration 324
acceptance by conduct 213 implied terms 321–7
agency 222, 268, 271–2 time for performance 324
agreement, discharge by 250–1 transfer of property in goods 322–3
assignment of contractual rights 222 copying 437–8
breach see breach of contract copyright 431, 434–8
collateral contract 222 computers and the Internet 437, 438
communication of acceptance 213–15 protecting articles 433–4
company secretary 188, 271 corporate manslaughter 512–13
conclusion by electronic means 214–15 corporate names 98–9,
consideration 215–21, 228, 260 see also business names
defences, set-off or counterclaims 224–5 corporate personality, rule of 76–7
discharge of contracts 249–54 corporation tax 93
frustration 251–3, 548–9, 558 corporations sole 76, 77–8
illegality 240–4 Council of European Union 28
indemnity clauses 293–4 county courts 24, 58
intention 225–7 Court of Appeal 23–4, 55–6, 61
mental capacity 75, 224, 231, 261 Court of Auditors 30
minors 229 –31, 261 Court of First Instance 29–30
misrepresentation 225, 287 Court of Human Rights 24, 38
mistake 231–5, 260, 261 Court of Justice of the European Community 62
postal rules 214–15, 224 Court of Protection 61
pre-incorporation contracts 150–1 courts 24, 50–62
‘red hand rule’ 288 see also specific courts (e.g. Court of Appeal)
rights of third parties 223 –5, 271–2, 288 –9, 293, 325, 499 credit 267, 311, 380–99
simple contracts 205 advertising 392
speciality contracts (deeds) 204–5 agreements 380–1, 389–91, 392–9
standard form contract 273–6 canvassing 392
time limits 260–1 Consumer Credit Directive 399
types of business contract 266–76 cooling-off period 393
uncertainty 220 defaulting on agreement 397–8
unenforceable contracts 205 extortionate terms 395–7
variation and rescission 224 licensing of businesses 391, 409
void contracts 205, 234, 241–4, 313, 370 and liens 319
post-contract information 394
quotations 392
569
Index debentures 136, 166–7, 559
debt, limitations on claim for 261
credit (continued) debt recovery 99–102, 191, 258–9
repossession of the goods 398–9 deception 369, 373, 439
‘revolving’ or ‘running account’ credit 387, 388, 394 deeds 83, 84, 120, 204–5, 215, 227
termination of agreement 397, 398 defamation 441
terminology 388–9 defective goods 337–42
types of credit 381–8
unions 387, 390 damage 341
defences 341–2
credit cards 384, 387, 394–5 defective services 342–3
credit reference agencies 394 Department for Business, Enterprise & Regulatory Reform
credit sale 267, 381, 384–6
Criminal Cases Review Commission 56 (BERR) 404, 454
Criminal Courts Review 50–3 Department for Environment, Food and Rural Affairs
Criminal Defence Service 49
criminal law 4, 5 (DEFRA) 404
criminal offences 4–6 Department for Culture, Media and Sport 404
Department of Health 404
appeals 54–6 Department of Trade and Industry (DTI) 404
classification of 50 designs
criminal records 529, 530, 532
Crown Courts 54–5, 61 registration of 433
appeals 55 rights 433–4
Crown Prosecution Service 4 devolution 16, 18, 43, 62
Director of Public Prosecutions 4
damages 5, 6, 39, 238, 239, 254 – 8, 282 – 4 directors 178–88
breach of condition 317, 320, 324 appointment 179
breach of confidentiality 442–3 as employees 453–4
breach of privacy 443 claims for damages against 176
breach of regulations 506, 514 conduct of directors 177
bullying 534 contracts with 183
copyright cases 435 disclosure of interests 182–4, 187
contributory negligence 500 disqualification 179, 184–5, 249
covenants 426 employment contracts 179, 181
debt recovery 258–9 indemnification of directors 187
defamation 350 liability 82, 87, 179, 187
delivery by instalments 316–17 liquidation 191
economic or financial loss 338–9 national minimum wage 467
failure of consideration 260 removal 184
fatal accidents 502 remuneration 179–81
health and safety inspectors 512 statutory duties 185–7
injuries at work 500–1, 508 directors’ report 89, 505
in tort 354 disability discrimination 518, 519, 524, 525, 527–8, 530,
non-acceptance of goods 318–19
non-employees 505–6 531, 535–9, 548
stress and overwork 508 discharge of contracts 249–54
vicarious liability 494, 495 disciplinary procedures 461, 462, 546
victimisation 531 discrimination 454, 455, 474, 488, 518–39
see also compensation
advertisements 525
data protection 371–2, 443–9 code of practice 539
manual information 444, 446, 447 contract of employment 519
offences 448–9 direct discrimination 522, 530
principles 445–6 employment outside Great Britain 521
references 488, 489 indirect discrimination 523, 530
rights of data subjects 444, 447–8, 491 judicial review 524
terminology 444–5 lawful discrimination 519–21
ME 537
570
partnerships 117, 519 Index
positive discrimination 521
recruitment and selection 519–30, 532, 533 contract workers 455, 526
remedies 524–5 control test 452–3
special cases 521 detriment 465, 466
dismissal 462, 476, 485, 490, 509, 513, 515, 526–7, 532, employer’s responsibilities 91–2
equality 456, 480–4
535, 537, 540 – 8 fatal accidents 502, 512
automatically unfair 548 fixed-term contracts 465, 483, 542, 558, 560, 561, 562,
death of employer 558
discriminatory dismissal 551 563
employee’s contributory fault 546, 549, 550, 561 flexible working 476–7
rights and remedies 561–4 frustration of contract 251–3, 548–9, 558
union-related 545, 548, 550 holidays and holiday pay 469
wrongful 560–1 human rights 489–90
see also constructive dismissal; unfair dismissal illegal working 528–9
dispute resolution, alternative 57 immigrants 528–9
dividends 79, 80, 93, 162, 171, 192 independent contractors 454
double jeopardy 55 lay-off 477–8
drink and drugs in the workplace 510 minors 229, 466, 483, 487, 503, 518, 526, 528
duress 239 non-employees’ rights 454–5
duty of care 324, 332 –5, 336, 337– 8, 343 – 6, 486, 487–8, organisation test 454
partnerships 459
501, 502, 530 part-timers 465
paternity 473–4, 548, 555
early neutral evaluation 65 pregnancy and maternity 456, 465, 470, 471–4, 478,
easements 423–4
EC law 18 –19, 24 –36 503, 548, 555, 562
references 454–5, 486–8, 489
Consumer Credit Directive 399 rehabilitation 487, 529
consumer protection 403–4, 413, 415 remedies 454, 466
copyright 435, 436, 437–8 rights 454
decisions 33 surveillance 488–90
designs 434 suspension 471, 503, 545
directives 32–3, 502, 513 termination 457–8, 540–64
disability discrimination 536 time off for dependants 475–6
English law, impact on 34–5 unpaid leave 474–6, 486
equal pay 483–4, 525 vicarious liability 331, 453, 485, 493–500
health and safety 502 voluntary assumption of risk 499–500, 501–2
procedures 34 written particulars 456–64, 469
regulations 32 employment agencies 519, 528
sources of 30–4 Employment Appeal Tribunal (EAT) 454, 460, 462, 468,
trade marks 438, 440
working time 514 469, 479–82, 488, 492, 509, 510, 514–15, 520–2,
EC Ombudsman 30 534–5, 537, 538, 539, 541, 544, 547, 552–5
e-commerce 214, 228 Employment Bill 2007–2008 471
Economic and Social Committee (ESC) 30 entrenchment 158–9
electronic communications 228–9 environment 95
employee’s duties 490–2, 503, 507 equal pay 480–4
employee’s indemnity 484–5 Equality and Human Rights Commission (EHRC) 539
employers’ duties 466 –90, 500 –1, 502, 504 – 6 equity 6–8, 58, 61, 84, 219–21
disability legislation 537 mistake in equity 235
employment 452–564 estoppel 204, 271, 312
adoption leave 474, 555 European Convention on Human Rights 36–9, 62, 478
confidentiality 442–3, 475, 490–1 European Court of Human Rights 62, 489
continuous employment 456–7, 459–60, 465 European Court of Justice 23, 27, 29–30, 536
European Parliament 28–9
exchange or barter 267
571
Index genuine occupational requirement (GOR) 520, 533
good faith 442, 443, 475
exemption and exclusion clauses 273, 284, 286–99 goodwill 131, 154
doctrine of fundamental breach 290 government departments 14–15
incorporation 286–8 grievance procedures 461, 546
interpretation 289–90 guarantee companies 147–8, 152
negligence 293 guarantee, contract of 228
previous course of dealings 288 guarantee payments 477–8
‘reasonableness test’ 291–5 guarantees 81–2, 240, 294, 424
statutory control 290–8
unfair contract terms 290–8, 327, 403 independent legal advice 82
vicarious liability 499 manufacturer’s guarantees and warranties 326–7
reform and guarantees 327
expert determination 65
express terms 242, 286 hackers 449, 492
Hansard, as an aid to statutory interpretation 22
facilities at work (regulations) 504 harassment 530, 531–2, 533, 535, 541
factors 313 health and safety 502–18
fair dealing 436, 437, 438
false attribution 436–7 breach of regulations 503
family matters 58, 60, 61 codes of practice 510, 513
fast-track claims 57, 58 consumer products 362–5
financing businesses 79–82, 161–7 corporate manslaughter 512–13
financial services, contracts for 272–3 dismissal of representatives 548
Financial Services Authority 375–6 display screen equipment 504–5
fire precautions 513–14 employee’s duties 503, 507
first aid 513 employer’s duties 500–1, 502, 505–7
fixtures and fittings 421–2 enforcement of regulations 364, 365, 366
floating charges 80, 138, 192–4, 196, 198 equipment 506–7
food food 365–7
harmful emissions 506
false description 366, 367 inspectors 511–13
Food Standards Agency 367, 405 investigations and enquiries 510
quality 366 manual handling 505
safety 365 –7, 368, 404 minors 518
fraud 233 –5, 237– 8, 261, 352, 371– 6, 492 night workers 518
appropriation of goods 369 policy statement 462
arson 377 protective equipment 505
computer fraud 371–2 regulations 500–5
limitation of actions 355 risk assessment 502, 503
market abuse 375–6 substances 506–7
minors 231 whistleblowing 492
money-laundering 376 work equipment 505
partnerships 121 written undertakings 507
Sarbanes-Oxley Act and UK fraud control 376 see also Working Time Regulations
stock exchange frauds 373–5 Heydon’s Case, rule in 21
vicarious liability 497 High Court 24, 55, 60–1, 62
freedom of information 449 appeals 55, 58
freeholds 427 hire 268, 269–70, 294, 323
frustration 251–3, 548–9, 558 consumer hire agreements 390
fundamental breach, doctrine of 290 health and safety 507
hire-purchase (HP) 267, 279–80, 314, 315, 321, 381, 384,
gambling contracts 244
‘garden leave’ 242, 491 398 –9
gender recognition 523–4 health and safety 507
General Council of the Bar 46, 47 holidays and holiday pay 469, 515, 533
‘genuine occupational qualification’ (GOQ) 519, 525
572
Home Office, the 404 interest 79, 84 Index
House of Lords 15 –17, 23, 24, 56, 61–2 on debts 99–100 573
in partnerships 125
and bills 19–20
Human Rights Act 1998 19, 38–9, 44 Internet domain names 441
Internet sales 321
illegality 240–4, 354 invitation to treat 206–9
immigrants 528–9
improvement and prohibition notices 511 judges 54–5, 58, 60, 61, 62
income tax 452, 455–6 in fraud cases 373
indemnity 122, 125 in small claims cases 417
‘inertia selling’ 213
information and advice or business, bodies offering Judicial Committee of the Privy Council 62
judicial review 55, 60, 61
48 –9 juries 54, 58, 60
Information Commissioner 446–7, 448, 449, 489
injunctions 259, 563–4 in defamation cases 350
in fraud cases 373
comparative advertising 441 juristic persons 76–7
confidentiality 491
covenants 426 land law 48, 222, 227, 259, 272, 347–10, 369
defamation 350 access 425–6
disclosure of trade secrets 490–1 chattels 422
discriminatory advertising 525 easements 423–4
infidelity 442 indemnity insurance 424
infringement of intellectual property 432–3, 436, 440, legal estates 426–9
occupiers of land, rights and duties 429–31
442 recovery of, actions for land 58
nuisance 348 registration 424
passing-off 441–2 restrictive covenants 236, 426
protecting easements 423 rights of way 425
restraint of trade 491, 557
tortious conduct 354 Lands Tribunal 426
trespass 429 law centres 49
unfair terms 297 law making 12–40, 43–4
working hours 515
Inland Revenue 61 law reform 13–14
insolvency 99, 102–3, 107–8, 185, 196 precedent 22–3
administrators 166 see also EC law
company 188–9, 190 law reform agencies 14
company voluntary arrangements (CVA) 196–8 Law Society 46, 407
contracts of employment 458 leaseholds 427, 428
corporate 108, 196 leases 422, 427, 428
employees’ rights 454, 459, 555, 562 leasing 268, 285, 507
human rights issues 104 legal aid 49
interim order 102–3 legal executives 48
limited liability partnerships 136–7, 558–9 Legal Services Board 47
partnerships 114, 121, 125, 132–3 Legal Services Commission 49
property in goods 311 legislation 15–22
protection against for package holidays 415 delegated 20
stoppage in transit 319 letters of intent 226
tour operators 413 liability
see also bankruptcies; liquidation accountants and auditors 344–6
insurance contracts 273 administrator’s liability 559
insurance, employer’s liability 494–5, 496, 500 civil 8, 507
insurance, onus on occupier to check validity of and company name 155
contractual 8–9
contractor’s 431 credit agreements 394–7
Index limited partnerships 133–4
liquidated damages clauses 284
liability (continued) liquidation 189–92, 193, 194, 311, 558–60
credit and charge cards 387, 394–5
criminal 9, 367–8, 407–8 distribution of funds 191–2
criminal liability in business 358–77 petitioners 190
defective goods 337–8, 341 see also winding up
defective equipment 500–1 liquidators 166, 190, 191
defective services 342–3 listing 168–9
directors’ 157, 506 loan capital 162, 165–7
discrimination 531, 533–4 loans
double liability 225 consumer credit 384, 387, 388
due diligence as a defence 362, 363–4, 366 directors 181–3
employer’s liability for injuries to employees 500–2 ‘lock-out’ agreements 212, 227–8
exemption clauses 286–96, 298–9 Lord Chancellor 7, 14, 15
health and safety 507–8
in the pre-incorporation stage 150–1 magistrates 24, 53, 54, 55
indemnity clauses 293–4 jurisdiction 53–4
injurious falsehood 441
insider information 374–5 magistrates’ courts 53–4, 60
joint liability 534 maladministration 66
lawyers 344 maternity allowance 474
limited partnerships 133–4 med-arb 66
limited liability partnerships 134–5, 136–7 mediation 65–6
manufacturer’s liability in contract 324–7 medical examinations 529–30
mental capacity 231 meetings 172–4, 187–8
misleading particulars 169 memorandum of association 149, 152, 158
occupiers of land 429–31 merchantable quality 304, 305
package holidays 415 merger control 245, 247–8
personal acts 495 minority interests 176–8
‘product liability’ 339–40 minors 75, 117, 170–1, 205, 229–31, 259, 355, 392, 430,
psychiatric illness 333–5
public limited companies 148, 158 466, 483, 487, 503, 518, 526, 528, 553
references 487 misconduct 543–4, 545, 546, 552, 557, 560, 561
retailers 309, 325 misrepresentation 127, 235–9, 281–2, 287, 294
sole trader 86
strict liability 9, 325, 331, 340, 341, 348–10, 362, 368, credit agreements 394
500, 508 –9 fraudulent 237–8
supply of services 324, 367 innocent 239
tortious 9, 58, 60, 331, 352–4 negligent 238–9
unfair dismissal 542 package holidays 413
unlimited companies 148, 157–8 mistake of fact 260
vicarious liability 331, 453, 485, 493–500, 508 mistake of law 260
winding up 165 mixed goods 311
see also partnerships: liability; directors: liability; moral rights 436–7
mortgages 83–6, 272, 388, 390, 396, 422, 424
licensed conveyancers 48 multi-track claims 57, 58
licensing 60
limitation of legal actions 260–1 National Consumer Federation (NCF) 407
limited liability partnerships (LLPs) 74, 78, 80, 81, 86–8, national insurance 91, 92, 93, 452, 455–6, 467, 470, 472,
90, 117, 134 –7, 558 –9 474, 562
accounts 135 national minimum wage (NMW) 466–9, 471, 526, 548
incorporation 134 natural persons 75
membership agreement 137 necessity 271, 354
publicity 88 negligence 6, 86–7, 222, 238, 289, 355, 505
contributory negligence 339, 342, 345, 352–4, 500–1
574
Index
defective goods 337–9 employees 459
defective services 342–3, 355 expulsion of partner 126
defences 337 holding out (or estoppel) 115–17
injuries at work 500–2, 503, 507–8 implied management powers 125–6
and legal professionals 47 insolvent partnership 132–3
in limited liability partnerships 135 legal personality 138
occupiers of land 429 liability 73–4, 82, 86, 112, 113–14, 115–17, 121–3, 130,
negligent statements 343
in partnerships 121, 122 132, 138
in psychiatric illness cases 333–5 limited partnerships 74, 78, 86
references 486–8 mental capacity 117
vicarious liability 453, 485, 496, 497, 499–500 minors 117
see also torts: negligence misappropriation 121
neutral fact finding 66 national minimum wage 467
Nominet UK 155–6 profit sharing 112–13, 114, 116, 125
Norman legal system 6 property 124–5, 138
novation 122 publicity 88
raising finance 79
objects clause 156–7 reform proposals 137–8
offences by bodies corporate 512–13 retirement 122–3
offer 205–11 salaries 125
taxation 92–3, 117
acceptance 209, 211–15 winding up 74
counter-offer 209, 212 passing-off 439, 441–2
invitation to treat 206–9 patents 58, 431, 432–3
revocation 209–11 Patents Court 61
termination 209–11 pay 466–7
Office for Legal Complaints 47 equality 480–4, 525
Office of Fair Trading 244, 246–8, 265, 277, 297, 298, 327, itemised pay statements 479
rolled up rate 516
391, 392, 394, 395, 398, 404 –5, 408, 409, 410 service-related pay 527
consumer protection regulations 362 see also holidays and holiday pay; sick pay
Official Receiver 103–4, 105 penalty clauses 254–5
Official Solicitor, the 78 pensions 459, 465, 484, 527, 536
ombudsmen 66, 67, 391, 407 performance 249–50
Orders in Council 20 personal property and chattels 85–6, 422–3
outsiders 160 planning permission 93–5
overdraft 384, 388, 394 pre-action protocols 57
precedent 22–3, 24
package holidays 367, 410, 413–5 pre-emption rights 167–8
complaints 415 preferences 107–8, 191, 192, 193, 196
liability 415 preliminary rulings 29
misleading information 413 pressure groups, law reform and 15
protection against insolvency 415 price 280
price variation clauses 284
parliamentary sovereignty 18 privacy 443, 491
partnerships 73 – 4, 78, 80, 111–33 private law 4
privity of contract 216, 221–5, 288–9, 325, 426, 499
agreements 73, 112, 113, 115, 119, 120, 122, 123–31, exceptions 222–3
139 – 43 probate 58
product safety 362–5
authority of partners 119–21 profit and loss account 89
continuity 87–8 profits 424
discrimination 526
dismissal 558
dissolution 128–33, 558
duties 127–8, 138
575
Index
promissory estoppel 219–21 Romalpa clauses 311
proof, burden of 336–7, 338 Royal Charter, companies incorporated by 75
property 9, 267, Royal Commissions 14–15
Rylands v Fletcher rule 348–10
arson 377
in goods 309 –12, 322–3 sale of goods, contracts for the 257, 260, 266–7, 285, 291,
intellectual property 431–43 294, 302–21
licenses 424–5
in liquidation of a company 191, 197–8 acceptance 317–20
personal property, definition 421 consumer rights, additional 320–1
real property, definition 421 co-ownership 311
securities 424 definition 303
theft of 368, 369–70 delivery 315–17
see also business property description 304, 402
proportionality 26 fitness for a particular purpose 307–8
prospectuses 169, 170 implied terms 303, 307, 309, 321
public interest disclosure 492 liens 319
public law 3–4 market overt, rule of 315
public notaries 48 nemo dat rule 312, 313, 315, 381
Public Trustees 77–8 non-delivery 320
owner, sale by a person who is not the 312–14
quantum meruit 250, 252, 259 – 60, 288 payment 318
quasi-contract 250, 259–60 performance of the contract 315–18
Queen’s Counsel 46 quality 305–8
reasonable person qualification 305, 306, 307, 308
racial discrimination 520, 521, 522, 523, 524, 525, 531 rejection 316, 317, 318, 319–20
‘reasonableness test’ 291–5, 323, 343, 347, 486, 542–3 remedies 318–21, 323
rectification 235 right of disposal 311
redemption, right of 84 right of resale 319
redundancy 251, 456, 458, 460, 465, 469, 478, 493, 513, samples 308–9
specific goods 309–10
527, 539, 542, 544 –5, 551– 6, 558 – 60 stoppage in transit 319
apprenticeships 552 suitability 304–5
consultation 554–6 title 303, 313–15
unfair selection 546 –7, 548, 550, 561 transfer of property 309–12
registered designs 431 transfer of risk 311–12
regulators 66 unascertained goods 310–11
religion or belief discrimination 523, 524, 531, 533 Scottish Parliament 16
remedies 7, 235, 254 – 60, 283 security 80
equitable remedies 258–9 self-employment 90, 91, 452, 453, 454–5, 467
infringement of intellectual property 432–3, 436, 440, 442 discrimination 526
restitution 231, 259–60 health and safety 502, 505–6, 513, 514
sale and supply of goods remedies 318–21, 323 illegal employment 528
in tort 354 unfair dismissal 540
unfair terms 297 service marks 431
rescission 170, 224, 235, 239, 321 service-related benefits 527
reserved legal activity 47 sex discrimination 519–20, 521, 522, 523, 524, 525, 530,
res extincta 232
res ipsa loquitur 336 –7, 338 531, 534–5
restraint of trade 77, 84, 85, 241–3, 244, 442, 490–1, 564 sexual orientation discrimination 520, 524, 531,
restraint orders 376
restrictive covenants 236, 426 532–3
retirement 122 –3, 526 –7, 535 shareholders 74, 80, 87, 89, 90, 156, 159–65, 168, 170,
rights of way 425–6
172–3, 175, 176–7, 178, 546
as employees 454–5
576
contract 214 Index
rights 171
shares 80, 86, 88, 147, 148, 170, 228 warranties 283
elective resolution 167 see also contract of employment: terms of employment
issue of shares 167–8 theft 367–72, 449, 544, 545
ordinary (equity) shares 162 actus reus 367–70
placings 168 authorised appropriation 368–9
preference shares 162 dishonesty 370–1, 373
purchase of own shares 162–5 mens rea 370–1
redeemable shares 162 ‘thin skull’ rule 335
rights issue 168 third-party debt claim (formerly garnishee orders)
share capital 78, 149, 161–5
stock exchange fraud 373–5 100 –1
treasury shares 163 tips 467
voting rights 162, 163 tortious liability 9, 58, 60, 121, 330–2
see also shareholders torts
sick pay 465, 469–71
sickness absence 537 causation 331–2
small claims 57, 58, 60, 416 –17 conversion 233, 234, 313, 347, 498
smoking in the workplace 509–9 deceit 237, 343
sole traders 73, 78, 79, 80, 97–111 defamation 350–1, 355
business names 97–9 defective goods and services 337–43
continuity 87 defences 352–4
dissolution 99 economic torts 351–2
liability of 86 the law of tort 330–355
publicity 88 libel 331
taxation 90–1 limitation of actions 355
solicitors 45–7 negligence 332–9
‘solus’ agreement 242 nuisance 347–8, 355, 505, 564
specific performance 235, 258–9, 320, 563–4 passing–off 439, 441–2
statement of guarantee 149–50 proof of damage 331
Statements of Development Principles (SDPs) 94 trespass 331, 347, 425, 426, 429, 430, 431, 496, 564
statutory declaration of solvency 164–5 trade descriptions 402
statutory interpretation 20–2 trade marks 431, 433, 437, 438–41
stress 508, 511 trade secrets 241–2, 442–3, 490–1
‘subject to contract’ agreements 212 trade unions 49, 226, 454, 456, 459, 461, 466, 485–6, 545,
subsidiarity 26
Sunday trading 492–3, 494, 548 546, 547, 548
supply of goods and services 321–7, 367, 402 consultation over collective redundancies 554, 556
Supreme Court 15, 16, 56, 62 discrimination 526, 528
employment protection 485–6
taxation 90–2 health and safety consultation 513
tenders 207–8 independent advice 549
terminology, changes to 57 learning representatives 478
terms of contracts 279–99 recognition 485
rights 485
certainty 279–81 time off for union duties 478
conditions 282 working time agreements 517
express 283–4 trader’s puff 281
implied 284 – 6, 291, 294 –5, 298, 325 transactions defrauding creditors 108
puffs, representations and terms 281–2 transfer of undertakings 457–9, 483, 547, 548, 558
reform 298–9 compensation 458, 459
unfair terms 290–8 consultation 458–9
transsexuals 523–4
trespass 331, 347, 425, 426, 429, 430, 431, 496, 564
tribunals 50, 61, 62–4
Consumer Credit Appeals Tribunal 391
577
Index unsecured creditors 166
unsolicited goods and services 213
tribunals (continued)
employment 91, 458 –9, 461, 462, 465 – 6, 468–9, Value Added Tax (VAT) 78
471–2, 475 –3, 485 – 6, 488, 492, 518, 520, 522, valuers and surveyors 346–7
524 – 6, 530, 532 – 4, 536 – 8, 540 – 4, 546 –50, 552–6, victimisation 469, 476, 492–3, 526, 530–1, 538, 545
558, 560 –2
Lands Tribunal 426 warrants of execution 100
see also Employment Appeals Tribunal whistleblowing 376, 455, 491–2, 548, 549, 560
winding-up 58, 87, 131–3, 165, 192, 559–60
trusts 222, 427
commonholds 427, 429
ultra vires rule 156, 498 –9 effect of the moratorium 197
unlisted securities 170 guarantee companies 148
undervalue, transactions at an 107–8, 109–10, 192 order 190
undue influence 240 voluntary190 –1
unfair contract terms 290–8, 327, 403, 417 see also liquidation
unfair dismissal 251, 456, 458–61, 465–6, 468–9, 471–2, work and materials, contracts for 267
working environment regulations 503–4
474– 6, 485, 490, 492–3, 510, 518, 522, 539–56, Working Time Regulations 469, 514–18, 548
557– 8, 560 –1
retirement 526 youth courts 54
Sunday working 493
unfair prejudice 177–8
‘unfairness test’ 396–7
578
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