Contractual Provisions, Garden Leave - Case Study Example

Employment and Contract Assignment Question of Law: In the absence of “Garden Leave” in the employment contact, when Clarissa sent on garden leave due to her professional negligence at work: 1. Whether she can successfully pursue claim of unfair dismissal compensation against Cascade? 2. Whether she can lawfully accept Flare’s offer of employment? GARDEN LEAVE: “Garden leave” refers to a situation which bounds an employee to stay during his/her period of notice at home. However during this period, the employee receives his/her salary and all other benefits but is forbidden from starting his/her employment with new company until the “staying at home” or the “gardening” period expires. This practice is carried by many employers towards their certain employees with a certain status. Employers often keep a track of their confidential information and their relations with the customers. However, during this period the employee is refrained from cultivating any relationship with the customers as well as employers make sure that the employee does not gain access to any confidential information. This restricts the employee’s access to any sort of confidential information1. It is important to understand that “Gardening Leave “period takes place where the upper level management wants to keep the position of the company protected against any threatening agreement that could damage the company’s reputation. This can be further explained from a simple example when an employee gets a job with the company’s competitor and gives his employers a notice for leaving them. In such a scenario, the employer makes sure that the employee will not pass any confidential information to the competitor that would enable them to gain the competitive edge over the employers. However, during this period the employee still remains under the terms of his Contract of Employment as he is still being paid by his employer. Therefore, it depends on the wish of his employers if they want their employee to return to his work, grants him the access to the work related information or perform his usual duties as required by his employer2. Case Laws: Evening Standard Co Ltd. v Henderson [1987] ICR 588 William-Hill Organisation Ltd. V. Tucker [1998] IRLR 313 CA Standard health Care Ltd v Gorman [2010] IRLR 233 CA Symbian Ltd v Christensen [2001] IRLR CA SG&R Valuation Service Co LLC v Boudrais [2008] IRLR 770 Majority of the employers assumed that they have the authority to enforce “gardening leave” in any situation like this even if the clause of “gardening leave” is not mentioned in the Contract of Employment. This assumption may risk the employers’ reputation both ethically and legally. The threat of this supposition was also highlighted in the case of “William Hill Organization Ltd -v- Tucker 1998” in which the Court of Appeal denied to permit any order where the Contract of Employment lacks any garden leave clause and any other clause that entitles the employer to refrain any of his employee from work. At the same time the Court of Appeal declined the case that there is a general implied responsibility to grant work under the contract of employment, the Court agreed that in some conditions, where the employee’s responsibilities are specific and the skills required to fulfill those responsibilities are needed regularly, the employer’s commitment under the contract of employment might, in addition to payment of the fixed compensation, puts an additional contractual obligation to offer work3. In another case of Symbian Ltd –v- Christensen 2001, the Court of Appeal supported the assessment in Tucker’s case and declared that a garden leave clause will only be imposed to the point if it is practical in nature. In Clark v Nomura International plc 2000 case, the employee was discharged on three months’ notice on garden leave. The employee’s removal from the office itself was not unlawful, but during the garden leave notice the employee was subjected for his annual bonus during those dates. However the employee was not granted his annual bonus by his company even though his employers were benefited by his work during the notice period. The court held the employers under violating the contract and awarded the calculated bonus to the employee4. Contractual Provisions Employer should highlight the clause in the employment contract that an employer is under no compulsion to offer work to an employee under the garden leave period. This added clause should be applied throughout the employment duration to avoid any issues when the termination notice is received5. On the other hand, from an employer’s point of view, it is more suitable for the employment contract to have an added yet separate garden leave clause which should contain the following conditions that can be applied during the period of garden leave: a provision that the employer is relieved from any obligation to provide the employee with work; a right to exclude the employee from the work place; a prohibition on contact with customers and/or clients; a prohibition on the employee from undertaking any other employment during the garden leave period; an indication of how the loss of any entitlement to bonus or right to earn commission will be compensated for to avoid any potential claims of constructive dismissal. Due to the absence of any of the above mentioned clauses; the employees cannot be refrained from the services or their responsibilities while at the same time they are under employment. In the last, at the time of employee termination, if both the parties i.e., the employer and the employee exchange letters with each other, then it is obvious that the employer will need to specifically highlight that the terms defined under garden leave notice will be considered. However, as happened in the case of Hutchings -v- Coinseed Limited 1998, the exchange of letters between the two parties could affect the terms of garden leave clauses with the outcome specifically in that case, which enabled Ms. Hutchings to take work and be paid against her services in case if she is working for a competitor and the same time, she can receive her notice payment from her present employers6. Problem occurs when garden leave is differentiated against paying someone in place of notice of termination. On the other hand, when an employee is put under notice the employment contract exists as long as the employee is paid in place of the issued notice. However, an employee who is paid in lieu of notice is being paid till the employment contract is completed. It is normally valid till the notice period and it terminates the Contract on the very day when an employee is told that their services are no longer needed and are paid instead of issuing a notice. This helps in the quick termination of the employee as soon as they are paid. On the other hand, by putting someone under garden leave refers that a person or an employee is liable to continue his services even after the notice has been issued to them. Paying someone in lieu of notice is paying them up to the completion of the Contract normally for the notice period and that effectively terminates the Contract on the day that someone is told that they are no longer required to be an employee and are paid in lieu of notice and they are required to fulfill their duties according to their employment contract7. There are number of cases where an employee is put under the garden leave notice for a little longer period especially if the leave notice is of more than three months. In few cases, an employee’s skills put them under obligation to make the most of their skills and benefit his employer. Under such circumstances, the employees are required to render their services or their skills will become obsolete. Garden leave not mentioned in the employment contract It is important for an employer to understand that any attempt to place an employee on garden leave period during the leave notice may violate the employment contract. Incase if an employee wishes to extend his share of responsibilities through a court then, in this scenario, court will observe that whether the employer is under any obligation to provide work to the employee. There are few categories of employment where following the responsibility to grant work can be implied without any hesitation. These include; 1. Certain roles interaction with the public is important. 2. Any specific project that needs full responsibility of an employee 3. Certain specific positions. 4. Employees with specific skills that are highly needed to practice to carry out responsibilities. 5. Employees on commission structures. However, if any of the responsibility fails in the above mentioned categories then in such case the Court will consider the structure of the employment contract and the clauses mentioned in it. This would enable to determine if there is any opportunity to extend the responsibilities of an employee under any of the circumstances. Conclusion Before implementing such clauses, employers should make sure that these clauses are properly highlighted in the Contract of Employment and that the employer holds enough rights to exercise these clauses in his organization. However, in case if the employer has failed to provide a clear well drafted clauses in Contract of Employment, empowers the employees to seek for any legal advice as their basic right. It is important for an employee to understand that under no circumstances his employer can refrain from work even if he is on garden leave period. It is not necessary that gardening leave should adheres to a contractual clause. In other words it’s the employer that is asking Clarissa not to attend the office which means she has the choice to accept the offer. However, Clarissa is bound to return to her existing employer whenever she is needed. She cannot say “No” to her employers. On the other hand, as it remains a standard clause therefore there is a possibility that her employers may have no intention of needing her services. And if she is called back than her employer is under obligation to give her time and space to make her deals with the other companies. If she finds another job where her new employer is forcing her to start earlier than the end of her notice period, then there are two possibilities to occur: 1- It would be appropriate for her to give notice during her garden leave period while keeping her redundancy pay. Since she has served during her time period after notice therefore she is under no obligation by her existing employer. However, chances are there that she may lose her payments and she may be bound to work. 2- Secondly, she can start with her new job. But before that she should speak to her new employer to avoid any future risks. Employer’s consent is important. Although, it seems fairly clear that none of the two employers can complain her for the two jobs however, she can face an issue dealing with the timings with both of them especially if they want her at the same time. On the other hand, if she is asked to come back by her existing employer then she has no other choice to follow the wish or else she may be found violating the contract which would risk her redundancy pay. However, this problem can be solved by communicating the issue with the new employer who can give her an odd day off to work for her existing employer. It is highly important for Clarissa to communicate her issue with her boss. This would help her to see if the term to return back to work is just a standard clause or if there is any possibility that it would really happen. She should prepare herself for anything that may happen but communicating with the new employer would help her to resolve the issue. Bibliography: ‘Garden Leave,’< http://www.iambeingfired.co.uk/gardenleave.html> accessed online on 8th January, 2012. Laytons Solicitors, ‘UK employment Law’., accessed online on 8th January 2012, Maurice Lawyers, ‘We Fight For Fair,’ accessed online on 8th January 2012. Read More