Christopher Chorley (CC), James Chorley (JC) and David Forshaw (DF) were employed by Archcraft Ltd. The father of JC and CC (who was also the father-in-law of DF and a former director of Archcraft) was setting up a competing business intending to poach Archcraft’s customers and staff. CC, JC and DF all gave Archcraft good reason to believe they would join the competitor. Each of them was given a new contract of employment to sign containing a clause purporting to impose a 12-month nationwide prohibition on competing with Archcraft. They were dismissed when they refused to sign.
Rejecting the employees’ unfair dismissal claims, the tribunal found that each was dismissed for refusing to commit to Archcraft by signing the new contracts.
The tribunal held that this refusal constituted “some other substantial reason” for dismissal under section 98(1)(b) of the Employment Rights Act 1996.
The employees appealed and the Employment Appeal Tribunal (EAT) overturned the original decision. It found that Archcraft had attempted to subject the employees to a restraint that was obviously too wide.
That being the case, refusing to sign the new contract could not amount to a potentially fair reason for dismissal. The EAT held that the employees had been unfairly dismissed, and sent the case back to a different tribunal to decide on the remedy.
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