Contractual claims arising on termination, chiefly wrongful dismissal and unpaid bonuses, and the tribunal's limited jurisdiction over them. Addis v Gramophone Co Ltd; Geys v Societe Generale.
Wrongful dismissal; damages are limited to financial loss (notice pay) and do not cover injury to feelings or reputation.
Contract; damages; loss of publicity/reputation.
Contract; implied duty of fidelity; spare-time work; competitor. An employee is free to choose spare-time activities: a job outside working hours is not in itself a breach of the implied duty of fidelity, even for a competitor, provided the activities do not cause significant harm to the employer's interests. Hivac is the exception on its facts. Five skilled manual employees of a highly specialised valve manufacturer worked on Sundays for its sole competitor. The Court of Appeal granted an injunction against the competitor for inducing breach of contract: on those particular facts it could not be consistent with the employees' contracts to do something in their spare time that would potentially inflict great harm on the employer by advancing the interests of its only competitor; the probable future disclosure of confidential information also weighed in favour of relief. Absent such factors an employer wanting to restrict moonlighting needs an express term (contrast Nova Plastics v Froggatt).
Tax/Status; the determination of employment status is a mixed question of fact and law.
1 WLR 698 - Contract; dismissal; disobedience of a lawful order is not always gross misconduct; it depends on the gravity.
1 QB 279 - Wrongful dismissal; gross misconduct; taking money from the till (even if intended to repay) was gross misconduct.
Effective date of termination; dismissal without notice; payment in lieu. The National Industrial Relations Court (Sir John Donaldson) held that where an employee is dismissed without notice with money in lieu, what he receives is in law damages for breach of contract, and during the period to which the payment relates he is not employed. The effective date of termination is therefore the date of the summary dismissal, not the end of the period the payment covers. Where instead an employee given notice does not work but is genuinely on paid leave, the contract continues to the end of that leave. Applied in Adams v GKN Sankey on the construction of a dismissal letter.
Wrongful dismissal; context; conduct must be judged in its full factual context; the Court of Appeal held that a head gardener was wrongfully dismissed where the employer's own provocative and unreasonable conduct contributed to the breakdown; the case confirms that courts look at the overall relationship and the employer's own behaviour, not simply the employee's isolated act.
Wrongful dismissal; damages; damages can include the time it would have taken to complete a contractual disciplinary procedure.
Share options; unfair dismissal; compensatory award; the tribunal may include in the compensatory award the value of a lost chance of share options vesting, even where the employee had no contractual entitlement to the options; the tribunal is not limited to compensating only for contractually-guaranteed rights and may assess the value of benefits, including share options, the employee would likely have received but for the dismissal.
Contract damages; distress and inconvenience. Per Bingham LJ: 'A contract-breaker is not in general liable for any distress, frustration, anxiety, displeasure, vexation, tension or aggravation which his breach of contract may cause to the innocent party.' The exceptions are where the very object of the contract is to provide pleasure, relaxation or peace of mind, and where distress is caused by physical inconvenience resulting from the breach. The correct authority for resisting a claim for injured feelings in an ordinary contract claim — unlike Addis and Johnson v Unisys, it is not confined to the dismissal context, so it applies where there is no dismissal at all.
Contract; damages; damages for mental distress.
Gross misconduct; conduct must fundamentally undermine the trust and confidence in the relationship. Approved in XX v YY as the simplest formulation, because it absorbs the nature of the contract, the severity of the breach and the reason the employee acted as they did.
1 AC 268 - Contract; in exceptional cases, an account of profits (skimming) may be awarded for breach of contract.
2 Ll Rep 236 - Contract; breach; anticipatory breach allows the innocent party to terminate.
Wrongful dismissal; jurisdiction; cause of action estoppel and merger. The claimant pursued unfair and wrongful dismissal in the employment tribunal, expressly reserving the right to sue in the High Court for the balance of his contractual damages above the £25,000 limit on tribunal contract claims, but he did not withdraw the wrongful dismissal claim and the tribunal adjudicated it, awarding the capped £25,000. Held, he could not recover the balance in the High Court. Once a tribunal has given judgment on a claim for wrongful dismissal, whether granting relief or dismissing the claim, the cause of action merges in that judgment and cannot be litigated again anywhere. A purported reservation does not preserve it. The practical consequence for pleaders is that a contractual money claim worth more than the tribunal cap must be kept out of the tribunal altogether rather than pursued there with a reservation.
Evidence; without prejudice; admitted liability. A letter offering to pay less than the sum claimed on a debt was not protected by the without prejudice rule, although it bore the label. The House of Lords held that the rule has no application to communications designed only to discuss repayment of an admitted liability rather than to negotiate and compromise a disputed one: the debtor was asking for a concession, not giving one, and there was no dispute about how much was owing. The rule is engaged by a genuine attempt to resolve a dispute, whatever the label, and a label alone protects nothing.
Contract; repudiatory breach; restates the test as whether, looking at all the circumstances objectively from the perspective of a reasonable person in the position of the innocent party, the contract-breaker has clearly shown an intention to abandon and altogether refuse to perform. All the circumstances count insofar as they bear on that objective assessment: motive is irrelevant if relied on solely to show subjective intention, but relevant where it reflects something the innocent party knew, or a reasonable person would have known, and which throws light on how the act would be viewed. Applied in the employment context in Tullett Prebon and XX v YY.
Contract; damages; damages for breach of a contractual disciplinary procedure are limited (Johnson exclusion zone).
Termination of contract; elective theory; a wrongful repudiation of a contract of employment does not terminate the contract unless and until the other party elects to accept the repudiation.
Constructive dismissal; trust and confidence; the EAT rejected the submission that Tullett Prebon had changed the law so as to require a tribunal to make a specific finding on the employer's subjective intention. The Court of Appeal there was emphasising that only objective intention is relevant, ascertained by looking at all the circumstances. Woods and Malik remain intact: breach of the implied term requires no intention to repudiate.
Contract; implied terms; enhanced redundancy payments by custom and practice. The Court of Appeal (Underhill LJ, Moore-Bick and Rimer LJJ agreeing) dismissed the employer's appeal and upheld the EAT's remittal. The question is one of ordinary contractual principle: whether, by making a benefit available over a period, in all the surrounding circumstances, the employer has evinced to the employees an intention that they should enjoy it as of right, judged by what the employees should reasonably have understood [34]-[36]. The list of factors from Albion Automotive Ltd v Walker is not unhelpful but is not the last word and must not be applied as a definitive checklist [31]. The tribunal's finding that payments had not been made without exception could not stand against unchallenged evidence that they had been made on every redundancy exercise from 1993 to 2006 [41], [56].
Contractual interpretation; textualism vs contextualism; the Supreme Court clarified that interpretation is a unitary exercise involving both the language of the contract and the factual context.
Contract; 'fire and rehire'; implied terms; injunctions. Employees had been promised Retained Pay as a 'permanent' feature of their terms for relocating. The Court of Appeal (Bean LJ, Newey and Lewis LJJ agreeing) allowed Tesco's appeal against Ellenbogen J's declaration and injunction. Neither 'permanent' nor the pre-contractual phrase 'guaranteed for life' showed a mutual intention that the contracts would continue for life or that Tesco's right to terminate on notice was limited [36]-[37]. Even had liability been made out, an injunction restraining dismissal was inappropriate, its terms not being plain enough for the employer to know what it could and could not do [55]-[56]. The Supreme Court reversed the decision in [2024] UKSC 28, holding that a term is implied in fact that Tesco's right to dismiss on notice cannot be exercised for the purpose of removing or diminishing Retained Pay, and restoring the injunction [57]-[58], [137].
Implied Terms; duty of care; no implied duty to protect employees from criminal conviction in foreign jurisdictions while performing duties.
Contracts; discretion; implied term that flexibility clauses must be exercised honestly and rationally (Braganza duty).
Breach of contract; conditions precedent vs subsequent; implied notice. The EAT held that an offer letter containing all key employment terms (salary, start date, hours, benefits) expressed as 'subject to' references, right-to-work check and probation created a binding contract subject to conditions subsequent, not conditions precedent preventing formation. The probation condition could only logically operate within an existing employment relationship. Reasonable notice is assessed at the date of contract formation, the employer's standard terms, produced only during litigation, could not be incorporated retroactively. Three months' implied notice was reasonable for a senior role involving international relocation.
Wrongful dismissal; gross misconduct; duress. An assistant head teacher sent a sexual message to someone she understood to be a child while under coercive control, and did not report it for 18 months. The tribunal held that because repudiatory breach is assessed objectively, her motive could not affect the answer. HHJ Tayler held this was an error of law: applying Eminence and Neary, the tribunal must consider all the circumstances of the breach insofar as they bear on the objective assessment, including the pressure the employee was under. Duress may weigh heavily on the sending of the message and much less on the failure to report it. Remitted to the same tribunal.
Breach of contract; probationary period; an express contractual right to extend a probationary period must be actively exercised. By allowing the probationary period to pass without dismissing the employee or expressly exercising the right to extend it, the employer lost the right to dismiss on one week's notice and the employee became entitled to three months' notice under her contract.