Windsor is a recruitment company specialising in the supply of agency workers for the healthcare sector. In 2003 and 2004, two senior employees of Windsor left and set up a rival business, taking significant numbers of other employees with them. This led to the loss of much of Windsor's client and candidate information and, subsequently, a reduction in its business.
As a consequence, Windsor's directors asked all staff to sign new contracts containing detailed restrictive covenants. The employees were asked to sign these within 30 minutes of first being given them, in a busy working environment, without any proper opportunity to read and understand them.
Those who refused to do so were called in by the operational director and dismissed. They were offered new employment on the same basis as their old terms, but conditional on them accepting the new restrictive covenants. None were given formal warning that the sanction for non-compliance was dismissal, or that the meeting was a disciplinary or dismissal hearing. The dismissed employees brought unfair dismissal claims.
The tribunal first considered whether there was a fair reason in law for the dismissals under the category of 'some other substantial reason' (SOSR). It found that tighter restrictive covenants were necessary if Windsor was to prevent the poaching.
However, the covenants were found to be unreasonably wide and, therefore, unenforceable. Consequently, the tribunal held that there was not SOSR to justify these dismissals, and indicated that, in any event, it would have found the dismissals to have been procedurally unfair due to the lack of consultation.
At the Employment Appeal Tribunal (EAT) the decision was affirmed, but on different grounds. The EAT held that the dismissals could have been made on the ground of SOSR. If an employer can show that the reason for dismissal (refusing to sign the new contracts) could amount to SOSR (to prevent the poaching and protect the business), then there will be a potentially fair reason for dismissal, unless the employer acts capriciously, or uses it as an excuse to dismiss.
On further appeal, the Court of Appeal agreed with the EAT.
The reason for dismissal was that the employees had refused to accept covenants proposed by the employer for the protection of its legitimate interests, which could, in law, form grounds for dismissal. Therefore, a potentially fair SOSR was available to Windsor. T