Don't Gamble With "Garden Leave"
Mr Tucker worked for William Hill Index (part of the William Hill Organisation). His contract required him to give 6 months' notice but he decided to leave for "a more challenging and lucrative job offer" made by City Index, a competitor and the company which pioneered spread betting. He said he would only give 1 month's notice and William Hill attempted to put him on "garden leave" during the notice period.
Requiring the employee to stay at home can be costly (the employer must continue to pay all salary and other contractual benefits) but has obvious benefits. Many employers use a garden leave as an effective non-competition covenant (particularly where there are no restrictive covenants or there is a question mark over the enforceability of such covenants as do exist). The question that the Court of Appeal had to consider in William Hill Organisation Limited -v- Tucker [1998] IRLR 313 however was whether the employer had any contractual right to insist upon Mr Tucker staying at home.
There was no express garden leave clause in Mr Tucker's contract and when the employers applied for an injunction restraining him from joining City Index (or otherwise acting in a way that was inconsistent with his position as an employee of William Hill) during his notice period, Mr Tucker argued that he had a right to be provided with work.
Both the High Court and Court of Appeal refused to grant injunctive relief. The Court of Appeal determined that the employers were under an obligation to permit Mr Tucker to continue with his work. The post was specific and unique and his duties as a senior "spread betting" dealer required frequent exercise of his skills. Moreover the contract expressly imposed an obligation on him to work those hours necessary to carry out his duties in a full and professional manner and it would be inconsistent to allow him to draw full remuneration without doing any available work, even if that is what the employer wanted to do.
The case fails to offer clear guidelines on when (if at all) the employer's obligation can be limited to the payment of remuneration (ie. without an obligation to permit the employee to do the work). In other words, at one extreme, will an express garden leave clause always be enforceable? At the other extreme can garden leave ever be imposed without any express contractual provision (eg. where an employee is not in a highly specialised field and cannot say he would be prejudiced by being forced out of work for a few months)? Our view on these contentious points is that whilst carefully drafted express garden leave clauses will nearly always work, it is most unlikely that employers will be unable to enforce a period of garden leave without one (whatever the employee's job).
Even where there is such a clause, however, care needs to be taken in how it is exercised. In Coinseed Ltd -v- Hutchings IDS Brief 612 the High Court determined that placing an employee on garden leave did not necessarily prevent the employee from joining a competitor during the notice period nor even from claiming pay from both old and new employers at the same time. This was on the basis that the only obligation which the old employer had imposed during the garden leave period ("don't come to work for us") was not inconsistent with the employee starting work elsewhere. The employer should have made it clear to the employee that garden leave also entailed not working for anyone else.
STOP PRESS
"Frenchmen Wanted for Chinese Restaurant"
A recent survey of 841 UK companies showed that only 18% of surveyed employers tried to balance interview panels to take account of ethnic minorities and only 30% tried to balance for gender. Whether or not the "equality agenda" is being sidelined it is unsurprising that considerable attention is being given by the CRE and EOC to redress this perceived imbalance. Changes to both the race and sex discrimination, drafted more than two decades ago are likely.
Proposals are being made to extend the scope of the 1976 Race Relations Act to small Partnerships ( currently excluded from the Act) because of complaints of blocked promotion. The CRE are also supporting changes that will expand job opportunities for some of those currently excluded on the grounds that discrimination is acceptable if needed for "authenticity". This exemption is likely to be withdrawn benefiting workers such as actors and potential employees in curry houses and Chinese restaurants.
At the same time the EOC continues to call for a "super law" to update and extend the scope of current sex equality legislation. They feel that there is overwhelming support for a new single statute which protects sex equality as a basic human right.
For further information please contact Susan Nickson, e-mail: Click Contact Link , Trinity Court, 16 John Dalton Street, Manchester M60 8HS, UK, Tel: +44 161 830 5000
This article was first published as the June 1998 Hammond Suddards Employment Bulletin
The information and opinions contained in this article are provided by Hammond Suddards. They should not be applied to any particular set of facts without appropriate legal or other professional advice.
Mr Tucker worked for William Hill Index (part of the William Hill Organisation). His contract required him to give 6 months' notice but he decided to leave for "a more challenging and lucrative job offer" made by City Index, a competitor and the company which pioneered spread betting. He said he would only give 1 month's notice and William Hill attempted to put him on "garden leave" during the notice period.
Requiring the employee to stay at home can be costly (the employer must continue to pay all salary and other contractual benefits) but has obvious benefits. Many employers use a garden leave as an effective non-competition covenant (particularly where there are no restrictive covenants or there is a question mark over the enforceability of such covenants as do exist). The question that the Court of Appeal had to consider in William Hill Organisation Limited -v- Tucker [1998] IRLR 313 however was whether the employer had any contractual right to insist upon Mr Tucker staying at home.
There was no express garden leave clause in Mr Tucker's contract and when the employers applied for an injunction restraining him from joining City Index (or otherwise acting in a way that was inconsistent with his position as an employee of William Hill) during his notice period, Mr Tucker argued that he had a right to be provided with work.
Both the High Court and Court of Appeal refused to grant injunctive relief. The Court of Appeal determined that the employers were under an obligation to permit Mr Tucker to continue with his work. The post was specific and unique and his duties as a senior "spread betting" dealer required frequent exercise of his skills. Moreover the contract expressly imposed an obligation on him to work those hours necessary to carry out his duties in a full and professional manner and it would be inconsistent to allow him to draw full remuneration without doing any available work, even if that is what the employer wanted to do.
The case fails to offer clear guidelines on when (if at all) the employer's obligation can be limited to the payment of remuneration (ie. without an obligation to permit the employee to do the work). In other words, at one extreme, will an express garden leave clause always be enforceable? At the other extreme can garden leave ever be imposed without any express contractual provision (eg. where an employee is not in a highly specialised field and cannot say he would be prejudiced by being forced out of work for a few months)? Our view on these contentious points is that whilst carefully drafted express garden leave clauses will nearly always work, it is most unlikely that employers will be unable to enforce a period of garden leave without one (whatever the employee's job).
Even where there is such a clause, however, care needs to be taken in how it is exercised. In Coinseed Ltd -v- Hutchings IDS Brief 612 the High Court determined that placing an employee on garden leave did not necessarily prevent the employee from joining a competitor during the notice period nor even from claiming pay from both old and new employers at the same time. This was on the basis that the only obligation which the old employer had imposed during the garden leave period ("don't come to work for us") was not inconsistent with the employee starting work elsewhere. The employer should have made it clear to the employee that garden leave also entailed not working for anyone else.
STOP PRESS
"Frenchmen Wanted for Chinese Restaurant"
A recent survey of 841 UK companies showed that only 18% of surveyed employers tried to balance interview panels to take account of ethnic minorities and only 30% tried to balance for gender. Whether or not the "equality agenda" is being sidelined it is unsurprising that considerable attention is being given by the CRE and EOC to redress this perceived imbalance. Changes to both the race and sex discrimination, drafted more than two decades ago are likely.
Proposals are being made to extend the scope of the 1976 Race Relations Act to small Partnerships ( currently excluded from the Act) because of complaints of blocked promotion. The CRE are also supporting changes that will expand job opportunities for some of those currently excluded on the grounds that discrimination is acceptable if needed for "authenticity". This exemption is likely to be withdrawn benefiting workers such as actors and potential employees in curry houses and Chinese restaurants.
At the same time the EOC continues to call for a "super law" to update and extend the scope of current sex equality legislation. They feel that there is overwhelming support for a new single statute which protects sex equality as a basic human right.
For further information please contact Susan Nickson, e-mail: Click Contact Link , Trinity Court, 16 John Dalton Street, Manchester M60 8HS, UK, Tel: +44 161 830 5000
This article was first published as the June 1998 Hammond Suddards Employment Bulletin
The information and opinions contained in this article are provided by Hammond Suddards. They should not be applied to any particular set of facts without appropriate legal or other professional advice.
