Contract and Employment law

1. Contract and Employment law Restraint of trade clauses Qualifying for employment rights

2. Reasons – legitimate interests • Trade secrets and confidential information belonging to the employer; • From an ex-employee working for a competitor - to prevent employees from competing unfairly against the employer; • Information on existing customers and connections - to prevent clients moving with employees; • From an ex-employee enticing away current employees;

3. Example • “After leaving employment with this firm you will not work for a competitor within a ten-mile radius of our office for a period of two years” • Against unfair competition; • The burden of proof is on the employer to prove that it is reasonable; • The burden of proof is on the employee If the employee is arguing that the clause is not in public interest;

4. Are restraint clauses valid? • Reasonableness and in the public interest – the court will consider what the clause is trying to protect in terms of: • 1. time – no longer than the life span of the business; • 2. type of business covered – stop from working in the same field; • 3. area – work in both the UK and on a worldwide basis have been held to be valid • 4. public policy – not against good business practice and the principles of fairness;

5. Severing the clause – the ‘blue-pencil’ test • Sadler v Imperial Life assurance of Canada (1988)- the court laid down three conditions: • The unenforceable part of the clause can be removed without needing to add or change the remaining part; • The remaining terms and conditions copntinue to make sense; • The removal of the words does not change the clause set out to do; • Case law – Marshal v NM Financial Management Ltd (1997), Derivatives Ltd v Morgan (2005)

6. What can the employer do if the employee breaches a valid restraint clause? • Injunctions – court order which prevents the ex-employee from breaching the clause; • Interlocutory injunction – is granted whilst the employer is in the process of taking action against the ex-employee; • Final injunction – after the case has been heard in court;

7. Qualifying for employment rights – continuity of employment • To gain some employment protection rights, an employee needs to have been employed for a particular period of time; • Effective date of termination (EDT)

8. Automatic rights on the first day of the employment • Sex discrimination; • Race discrimination; • Disability discrimination; • Sexual orientation/religion or belief discrimination; • Age discrimination; • Discrimination on trade union issues • The right to equal pay; • The right to 26 weeks’ ordinary maternity leave; • The right to an itemised pay statement; • The right to make a claim for breach of contract; • The right to be paid the national minimum wage;

9. Rights requiring periods of continuous service • One year for unfair dismissal; • One year for an unfair reasons for their dismissal; • Two years for a claim for a redundancy payment; • Six months for unpaid additional maternity leave; • One year for parental leave; • One month for guarantee pay; • One month for written statement of terms and conditions;