Must an Employee work the Notice Period?

10 November 2014

Solicitors advise on an employer's rights when an employee resigns without giving due notice

Most contracts of employment contain provisions which stipulate the notice an employee must give to the employer, should he or she wish to terminate the employment contract.However, employers can be “left in the lurch” when an employee resigns without giving due notice and this can cause considerable practical and financial difficulties.In a recent decision, the Court of Appeal in England and Wales ruled that a departing employee is not entitled to treat the contract at an end and the employer can take an injunction to force the employee to remain in employment for the duration of the notice period.

In this case the employer – Sunrise Brokers LLP (an inter-dealer broker) employed Michael William Rodgers as a derivatives broker and in 2011 he signed a new contract of employment for three years terminable by giving twelve months’ written notice.The contract also contained clauses relating to garden leave and post-employment restriction clauses.On 5th March 2014, whilst still employed he signed an employment agreement with a major competitor of his employer to commence employment in New York in January 2015. On 27th March he went to one of the directors, Mr Finegold, and told him that he "was leaving Sunrise and wanted to leave now". He was told to go back to work until the director with primary responsibility for his area of work, Mr Gibbs, was available. However, he did not do so; he left the office and did not return. He was not remunerated from this date due to his failure to report to work.

It was the position of the employer that it did not accept the “purported resignation” and it advised him that “You have not given notice to terminate in accordance with your contract and hence you remain employed, not in a period of notice, and fully bound by the terms of your employment contract. As you are not in a period of notice, your request to be placed on garden leave is misconceived."

At the hearing of this matter the employee contented that the employer did not really want him to return to work and that the insistence that he do so was entirely tactical. The Judge found that the employer had indeed initially wanted him back because he was a valued employee and they hoped that they could get him to change his mind about leaving. However, he also found that that changed when they were told that he was going to the specific competitor and that thereafter they would have wished to keep him as far away as possible from their clients and their information.

The employer issued court proceedings seeking a declaration that Mr Rodgers remained an employee and would do so until 16 October, together with injunctions enforcing his obligations as to solicitation and working for a competitor both up to that date and thereafter to 16 April 2015. Mr Rodgers was to be restrained in the meantime from working for any competitor or soliciting the employers' clients or employees.The Judge's decision was that the contract had not been terminated and that Mr Rodgers was accordingly prohibited from accepting employment with the competitor until 16 October 2014. In addition the employer was entitled to injunctive relief to enforce the post-termination covenants, but only until 27 January 2015 rather than for the full period of six months.

The decision was appealed but the appeal was dismissed.The Court of Appeal ruled that the employer was entitled to elect whether or not to accept the employee's repudiation, or to keep the contract alive. Since it chose to keep it alive, the employee remained an employee for the remaining period of his contract.Since an employee's right to remuneration depended on his being willing to work, the employee was not entitled to terminate the contract because of failure to pay.

Maxine Orr is a Partner in Worthingtons Commercial Solicitors in Belfast, specialising in employment law.

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