An employee has been offered a new position on the basis that he starts the new role before his formal notice period ends. His employer has now threatened to sue him for breach of contract. Esther Smith, partner at Thomas Eggar, and Martin Brewer, partner and employment law specialist at Mills & Reeve, advise on what to do.
My friend initially gave verbal notice in July. His employer (large multinational) talked him into staying with the promise that things would change and, in particular, the requirement to travel would be much reduced.
In practice nothing changed and he put his intention to leave into writing in early September. He lined up alternative employment and received an offer of employment on the basis that he started two weeks before the agreed leaving date (which was already reduced from the contractual notice period). He tried on a number of occasions to discuss this with his superior – who ignored these requests and completely avoided the situation until the week before his newly requested leaving date.
His manager is now threatening to pursue my friend for damages in breach of contract and the new employer for inducing the breach. His manager has also denied him access to corporate/group HR. Can you clarify the following questions:
1) The contract of employment states that notice in writing is required – how would the verbal notice be viewed if this matter is taken in front of a court of law? And would his manager’s avoidance of the situation be taken into account?
2) If the old employer does pursue a claim for damages – would their denial of my friend’s access to HR count against them?
3) The new employer has been made aware of the situation now following these threats. They have suggested that my friend gets himself signed off with work-related stress arising from this situation – if he does this and is found to be working for the new employer during this period, what could his old employer do?
4) What typically could the old employer claim in damages?
5) Do you have any statistics on how often employers sue for this type of breach and how often are they successful?
Esther Smith, partner, Thomas Eggar
In answer to each of your questions:
1. If the contract states that notice must be in writing, technically your friend is in breach of contract for not giving his notice in writing. However, if the evidence clearly shows that the employer was aware of his verbal resignation and action was taken upon it the breach is not likely to give rise to any damages. The manager’s avoidance would only be relevant as a matter of evidence in determining whether or not notice was effectively given.
2. Probably not, although it is difficult to give a definitive view based on the information given. At the end of the day, the court will be assessing whether the employee acted in breach, and if it finds that he did, whether there was loss suffered. The denial of access to HR does not appear to change the fact that your friend has acted in breach.
3. In theory the old employer could take disciplinary action, and dismiss for gross misconduct as this would be a fundamental breach. Whilst he may be leaving anyway, he would end up with a gross misconduct on his record which may be an issue in the future for references. They could also seek recovery of any sick pay paid to him.
4. The employer can only seek damages for losses flowing from the employee’s breach, which is why it is very unusual for an employer to bring a claim where the employee has failed to give their full notice period. Even if there are some losses demonstrable, they will be off set by the salary and benefits not paid to the employee for the period of notice they have failed to give.
5. I don’t have any statistics, but in reality, it is very rare for employers to bring such claims unless they really can show some considerable losses, and they are confident that the employee has the financial means to pay those damages.
Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information please visit Thomas Eggar
* * *
Martin Brewer, partner and employment law specialist, Mills & Reeve
In answer to your questions:
1. Written notice is required so verbal ‘notice’ is not notice as such, unless accepted by the employer, in which case it could be argued that the contract was implicitly amended.
2. The employer would have to show that they actually suffered damage as a result of a breach of contract, which in cases like this is rare. I don’t see what access to HR has to do with a breach of contract issue so no, it’s not going to count.
3. This is not a sensible course of action. It is a fraud to pretend to be off sick and receive sick pay; it would also be another breach of contract!
4. Typically, the employer can claim any loss that flows from the breach. It’s impossible to say what that might be but it could cover things like fees for agency workers needed to cover the work, recruitment fees if these are incurred because of the breach, loss of work if that flows from the breach, and so on.
5. No I am afraid I don’t, but it is rare.
Martin Brewer is a partner at Mills & Reeve. Martin can be contacted at: [email protected]
* * *