Breach of contract: Injunction did not infringe principle that employee should not be compelled to work
Published 21 November 2014
We have already sent out a number of alerts this month. Of most significance were our alerts about how holiday pay should be calculated where workers ordinarily receive overtime. The High Court has also heard Unison's second judicial review application recently and looked at whether employment tribunal fees are lawful.
It is a well-established legal principle that a court will not order an employee to continue to work for an employer. This also means a court will not grant an injunction which requires the employee to do something which indirectly forces an employee to return to work: For example, requiring them to be bound by the terms of the contract so that they are unable to work elsewhere. It is therefore unusual for a court to declare that an employment relationship continues, and that an employee is bound by the terms of the contract, in the absence of the employer continuing to pay the employee.
Mr Rodgers was an inter-dealer broker for Sunrise. Under his contract of employment, he was required to give 12 months' notice, and the earliest he could give this notice was September 2014. His contract also contained post-termination restrictions for six months. Taken together, these terms meant the earliest he could bring his employment with Sunrise to an end was September 2015 and the earliest that he could begin work for a competitor was March 2016.
On 5 March 2014, Mr Rodgers accepted a role with one of Sunrise's principle competitors, EOX, which was due to start in January 2015. On 27 March 2014, Mr Rodgers told Sunrise he wanted to leave immediately, left the office and did not return. As he was not attending for work, Sunrise stopped paying him.
Sunrise sought to encourage Mr Rodgers back to work and, when this failed, offered to accept his resignation on six months’ notice (with an end date of 16 October 2014) provided that he returned to work for that period. Mr Rodgers declined and Sunrise sought an injunction to oblige Mr Rodgers to observe the obligations in his employment contract until 16 October 2014, and the obligations in his post termination restrictions until 16 March 2015. The High Court granted the injunctions requested, although it reduced the period covered by the covenants to 4 months. Mr Rodgers appealed to the Court of Appeal on the grounds that the injunction should not have been granted in circumstances where he was not receiving pay. He also argued that the result of the injunction, to prevent him from working for 10 months was too long, given that his post termination restrictions were only 6 months. The Court of Appeal found that:
- It was appropriate to grant the injunction requiring Mr Rodgers to comply with his employment obligations until October 2014. The correct test was whether, in doing so, the pressures on the employee would compel him to return to work. In this case, Mr Rodgers had signed up to a 6 month post termination restriction, and had left in March intending to start his new role in January. It was therefore clear he was relaxed about a period which would be unpaid and felt no compulsion to work.
- The total restriction of 10 months was not unreasonable. The Court took into account that Mr Rodgers had agreed to a six month post termination restriction, and that the fact that a further four months were unpaid was of his own doing, in refusing to attend for work.
What this means for employers
This case highlights that the employer will not always have to pay for the valuable benefit of continuing with an employment contract which the employee has purported to end. However, these cases will always be fact specific. Here the employee had a lengthy fixed term period in his contract, had the ability to support himself financially for an extended period so was under no compulsion to work, and walked out refusing to continue to be bound by the contract. In many cases there will be no such fixed contract period and an employee will usually accept a period of garden leave in order to ensure they are paid for that period of time when they are not working. In this latter scenario it is unlikely an injunction such as this would be granted.