Breaking up is hard to do

Is there any such thing as a simple termination any more? Even the most
straightforward resignation or dismissal can be fraught with implications.
David Morgan and Stephen Brown work through some typical situations

Scenario 1

Ian is a star fund manager for a financial services institution. The company
has had Ian sign a tightly drafted service agreement containing restrictive
covenants prohibiting him from soliciting clients post-termination and notice
provisions of three months either way. The company also has the right to place
Ian on "garden leave" at any time after notice has been served. Ian
is headhunted by a competitor and hands in his notice. The financial press
speculates he will poach a major client which he developed.

DM comments
Restrictive covenants are notoriously difficult to enforce in court. They
should be drafted in such a way as to protect only the legitimate business
interests of the employer. There is a risk, when pursuing an employee in
interdict or injunction proceedings that the court will hold the covenants to
be unenforceable, thereby giving the employee free rein.

The first step is always to remind the departing employee in writing of his
contractual obligations and to seek an undertaking that he will abide by the
restrictions without need for litigation. Inevitably, this is not always
forthcoming. In the above scenario, the company has no non-competition clause
to rely upon. The innovation would be to rely upon the garden leave clause to
protect its client base and to ensure Ian is unable to damage its interests by
joining the competitor early. Having accepted his resignation, the company
should send him home for the remainder of his contractual notice.

If Ian attempted to leave earlier than the expiry of his notice period, he
would be in breach of contract and it would be open to the company to seek an
interdict or injunction immediately from the courts to hold him to his notice
period. For this remedy to be successful, however, there should be an express
provision in the contract enabling the company to place the employee on garden
leave.

While garden leave provisions are a useful alternative to restrictive
covenants, a number of points should be borne in mind in light of the recent
decision of Symbian v Christensen, High Court, 8 May 2000]. Worryingly, that
case held that putting an employee on garden leave in accordance with an
express contractual provision irretrievably undermined the employment
relationship and meant the employer could not thereafter rely upon the implied
duty of trust and confidence, good faith and fidelity. The court held that all
that would remain would be the bare bones of a contract of employment and the
employer could not effectively prohibit an employee from working for a competitor
or poaching clients during the "garden leave" period since the
implied duty of trust and confidence had disappeared.

While this decision is questionable, employers seeking to rely on garden
leave clauses should nonetheless be sure to include an express contractual
provision that employees do not work for others throughout the duration of the
contract of employment. Also the constituent parts of the implied duty of trust
and confidence should be expressly referred to in the contract or staff handbook.

Scenario 2

John works as a production supervisor in an automotive plant. Sue is a
clerical assistant in the company’s print room. John has taken an interest in
Sue although the feelings are not mutual. Both employees have a company mobile
phone which is primarily for business use, though a reasonable amount of
personal use is permitted. John begins to send Sue text messages both during
and after working hours asking for a date. When Sue tries to let John down
gently his text messages become derogatory, threatening and obscene. Sue raises
a grievance with the HR department and produces her company mobile telephone
which has stored on it the offending messages. The company considers dismissing
John.

DM comments
The serious nature of the allegations involving offensive comments of a
sexual nature will merit disciplinary action being taken against John,
including dismissal.

Would it be reasonable to base the decision to dismiss John on the grounds
of private communications?

In a recent Scottish case, MacLeod v Boyce, 31 October 2000, a court found
an individual guilty of contravening section 43 of the Telecommunications Act
1984 which makes it a criminal offence to send grossly offensive, indecent or
obscene messages by way of a public telecommunications system. The individual
had sent a number of obscene text messages on a mobile phone. In another recent
case a court found an accused in criminal proceedings guilty of the public
disorder offence of breach of the peace, where harassing text messages had been
sent over a mobile phone. The company could, then, be dealing with a potential
criminal offence committed within the workplace by John. This in itself should
justify summary dismissal on the grounds of gross misconduct.

While the Human Rights Act 1998 incorporates into UK law the right to
respect for private life and correspondence, John would not have a direct right
of action in terms of the Act as the company is not a public authority. An
employment tribunal is, however, a public authority and, when assessing the reasonableness
of John’s dismissal in an unfair dismissal case, human rights principles may
come in. The tribunal would have to carry out a balancing exercise, with John’s
rights on the one hand and the company’s business needs on the other.

To ensure compliance with human rights and data protection principles, the
company should have a clearly defined policy on the acceptable use of company
property, including mobile telephones. Abuse of the equipment should also be
referred to as an instance of gross misconduct in disciplinary procedures.
Employees should be required to consent in writing to the monitoring from time
to time of their mobile text messages to ensure that there are no breaches of
the acceptable use policy.

Scenario 3

Jill has worked for a bank for a few years. Recently, she has been absent on
average one day a month. This is beginning to annoy her manager as it puts
additional strain on the rest of the team. The manager suspects Jill is taking
unauthorised holiday because she gives inconsistent reasons for her absence –
sometimes illness and sometimes childcare responsibilities. The manager wishes
to dismiss Jill because of her attendance record.

SB comments
Before dismissing the bank should make reasonable efforts to establish the
reason for Jill’s absences. It must warn her that continued absence will result
in dismissal and give her an opportunity to improve attendance.

Some short-term childcare-related absences are permitted under the Parental
Leave Regulations. All employees are allowed unpaid time off to look after
dependants when they fall ill or to deal with an unexpected incident involving
a child during school hours. The amount of time off allowed is limited to what
is reasonable in the circumstances. The right only applies if the employee
tells the employer of the reason for the absence as soon as possible. However,
the employee does not need to provide any proof of why she needed to take time
off. Therefore, as long as the time taken off for childcare is reasonable, to
dismiss Jill could be automatically unfair.

The first step is to interview Jill and ask her permission to see her
medical records or undergo an examination by the company doctor. If she refuses
the company can make a decision based on the evidence before it. If there
appears to be no sound or major medical reason for these frequent absences,
then Jill can be warned the absences are causing a strain on the rest of the
workforce and if they continue she will be dismissed. It must give her a review
period to see if her attendance improves.

If, however, there is a more important medical reason for the absences, the
employer must establish whether it falls within the Disability Discrimination
Act. If the illness has a substantial and long-term adverse effect (therefore
is likely to last for 12 months or more) on Jill’s day-to-day activities, the
illness might well be classed as a disability.

In that case, the bank must not dismiss unless for a sound and justifiable
reason and it must also consider whether by making reasonable adjustments to
Jill’s working practices her job might be made easier. This might include
shorter hours or time off for treatment.

David Morgan and Stephen Brown are partners at McGrigor Donald

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