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this freedom to work or carry out a trade or business must go no further than is necessary to protect an organisation’s legitimate business interests. Where they do, they could be deemed void. A two-stage test is applied in deciding whether a clause breaches the restraint of trade doctrine, as follows: ● is the clause, in fact, a restraint of trade? ● if it is, is it reasonable with regard to the parties and the public interest? In this case, the claimant worked for the defendant for almost seven years prior to his resignation. Over that time, he received a substantial amount in discretionary annual bonuses. In the last year of his employment, this bonus was to the value of £187,500. Shortly after receiving the bonus, the claimant resigned his position to go and work for a competitor of the respondent. Under his contract of employment, the discretionary bonus was conditional on the employee staying in employment for three months following the payment of the bonus and notice to terminate the contract not being served or given during that three-month period. In accordance with the above terms, or ‘claw-back provisions’, the respondent requested repayment of the bonus. The claimant refused to do this, and so the respondent served a statutory demand for the full amount of the bonus plus over £12,000 in legal fees. In response to the statutory demand, the claimant applied to the Insolvency and Companies Court (ICC), which has the power to set aside a statutory demand if the debt is disputed ‘on grounds which appear to the court to be substantial’. Central to his argument for why this should happen was that the claw-back provisions were an unreasonable restraint of trade, and / or alternatively, they were penalty clauses which are unenforceable. The ICC dismissed the application, holding that the claw-back provisions couldn’t be a restraint of trade as defined in law as they didn’t stop the claimant from working elsewhere. Although there might be circumstances, the judge went on, where the consequences of a claw-back clause are so severe that they would be out of proportion to the benefit received by the respondent, this wasn’t the case here. The argument that the claw-back provisions were penalty clauses was also rejected. This was appealed by
that an employee of the respondent was involved in trust-related financial irregularities. The respondent dismissed the complaints and disapplied her right to appeal. The claimant subsequently brought a claim before the ET, arguing she had suffered a detriment when her right to appeal had been disapplied, and that this was because of the allegations regarding the financial irregularities she had made. She argued that, although she wasn’t a worker under the Employment Rights Act, the protections for whistleblowers should be extended to applicants by reason of Articles 10 and 14 of the European Convention on Human Rights (ECHR). The ET had to first establish if it had jurisdiction to hear this case, which hung on whether or not the claimant held the appropriate status to be eligible to bring an ET claim. To answer this, the ET applied the four- stage test in Gilham v Ministry of Justice [2019]. To answer the second stage of that test, an ‘analogous’ situation must be identified. Here, the claimant was arguing that internal applicants could be used for comparative purposes, and that by denying the right of appeal, she had been treated less favourably than an internal applicant would have been. The ET rejected this. In the case of an internal applicant, there’s an existing relationship between them and the employer which doesn’t exist in the same way as between the employer and an external applicant, and as such the situations cannot be analogous. This reasoning led to the conclusion that she wasn’t eligible to bring a whistleblowing claim. The ET held that Parliament had clearly intended to exclude job applicants from having whistleblower protection. It also held that the ECHR wasn’t engaged here, as ‘job applicant’ wasn’t a recognised status for the purposes of Article 14. In any event, the ET held that even if that were not the case, the actions of the respondent would have been proportionate in the circumstances. This was appealed. Dismissing the appeal, the EAT confirmed the ET’s decision that the claimant wasn’t treated less favourably to others in an analogous situation, as her status as an external job applicant didn’t fall within the prescribed statuses in Article 14. To hold otherwise, the EAT said, would only be possible after ‘legislative deliberation’ on the wording of the existing law. n
the claimant and the case went before the High Court. “The Employment Appeal Tribunal, in the case of Sullivan v Isle of Wight Council, had to consider whether or not a job applicant can bring a whistleblowing claim” Looking at the facts of the case, the High Court drew a distinction between a disincentive to resign and a restraint of trade and held that a clause which disincentivises an employee from leaving employment does not in itself make that clause a restraint of trade. In this case, the bonus scheme could cause an employee to remain in employment longer than they would have liked to avoid the claw-back, but it didn’t actually stop them leaving or working elsewhere. It just made that option less palatable. Looking at the claw-back provisions alongside other clauses within the contract (including a three-month notice period and a 13-week post-termination restriction on working for a competitor), the court rejected the argument that all together these acted as a sufficiently strong disincentive to resign that the effect was to act as a restraint of trade. In any event, the claimant hadn’t challenged these provisions. Whistleblowing protection doesn’t extend to job applicants The EAT, in the case of Sullivan v Isle of Wight Council, had to consider whether or not a job applicant can bring a whistleblowing claim. The claimant had two job interviews with the respondent but wasn’t accepted for either role. The claimant then filed a police report which alleged that during the interviews, the respondent’s employees had verbally harassed her. She later complained directly to the respondent about the way the interviews had been conducted, prompting an internal investigation. She also made a complaint to her MP about the interviews and alleged
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Issue 100 | May 2024 Issue 100 | May 2024
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