Potential Increased Costs for Jersey Employers when Dismissing Senior Employees

Alwitry v The State’s Employment Board

• Mr. Alwitry (the Claimant) was a consultant ophthalmologist. He interviewed for a role at the Jersey hospital and was the successful candidate.

• He was issued a contract of employment which he duly signed.

• He tendered his resignation in his previous role to take this new role in Jersey.

• Crucially his contract incorporated collectively negotiated terms which expressly limited the employer’s right to terminate his employment to where it had cause to do so. This meant that his employment could only be terminated for misconduct or performance.

• After signing his contract of employment the Claimant started contacting his new employers to try to make changes to his working arrangements. The key thrust of his changes were to his working times which the Claimant said was to the benefit of patient safety but which also had the effect of allowing him to travel back to the UK to see his family.

• After numerous communications relating to amending his working times, his new employer the State’s Employment Board (the SEB) decided to terminate his employment a week before he was to commence employment in Jersey.

The SEB had obtained legal advice prior to withdrawing the job offer. The advice they received from the Law Offices detailed the risks and costs associated with withdrawing the job offer. The advice provided that the Claimant’s maximum legal remedy would be limited to his salary over the 3 months’ notice period in his contract and any costs associated with his move to Jersey.

The Claimant sought to challenge the decision for breaching his contract of employment and claimed substantial damages coming to just under £8 million.

The Claimant’s contract of employment required the SEB to prove the Claimant’s conduct was such that it justified the termination of his contract of employment.

SEB tried to establish it had cause under three headings:-
1. a breach of mutual trust and confidence;

2. the Claimant repudiating his contract of employment; and

3. termination based on having a substantial reason for doing so.

Breach of mutual trust and confidence
This is the concept that neither the employee or employer will do anything “which would damage or destroy the relationship of trust and confidence which should exist” between employer and employee.

The SEB argued that the Claimant’s behaviour justified dismissal. The Claimant’s interaction with his future colleagues and senior hospital management had fundamentally undermined their trust and confidence in him. The court was not convinced by this as it did not feel the relationship had broken down to the extent the Claimant would be unable to work with his superiors or colleagues on a day to day basis once in role.

Did the Employee repudiate his contract of employment
The SEB also proposed that the Claimant’s conduct and behaviour was so serious that they could treat his contract of employment as cancelled. Upon looking at the relationship of the parties the court viewed the relationship as still feasible. The court were also of the view the employer thought the relationship was still viable as:-

1. the SEB had written to Claimant to offer further time to accept the job plan;

2. email correspondence confirmed that the SEB were only considering terminating his contract of employment. A clear decision to terminate had not yet been made; and

3. circumstantial evidence showed that the Claimant’s induction programme was in the process of being set up. This showed there was still a clear intention that the SEB expected the employee would commence employment.

On analysis, the Claimant’s behaviour could not be seen as an express refusal or in fact any kind of refusal to perform the contract. The court was persuaded the Claimant was going to comply with the contract as:-
1. he had resigned from his previous role;

2. his son had passed entrance exam at a local school in Jersey;

3. he had booked flights to Jersey in accordance with his start date; and

4. the Claimant was negotiating working patterns which were dealt with under the contract of employment, therefore he was clearly planning on complying with the contract.

Termination for cause
The employer tried to rely on “some other substantial reason” to terminate the employee’s contract. Namely a fundamental breakdown in the working relationship of the parties. After considering this argument the court was not convinced it was applicable. Based on the employee’s contract of employment, if the SEB had concerns about the Claimant’s conduct and behaviour (there being no concerns about his competence to perform his role) it had to resolve these by application of its disciplinary and appeal procedure. It was not open to the hospital to sidestep these by stating the dismissal was for “some other substantial reason”. There being no fundamental breakdown in relationship with colleagues therefore “some other substantial reason” did not exist.

Conclusion on Termination of employment contract
Therefore, the court to hold the dismissal was invalid and therefore a breach of contract.

Calculation of Damages
The courts of Jersey have looked to English law to assess damages in relation to breach of an employment contract. The standard position is that damages for dismissal in breach of contract are limited to the amount the employee would have earned had he been given proper notice as provided for in the contract i.e. in the Claimant’s case, 3 months. In this case, the court decided to depart from this position. The court opted to allow the Claimant to claim uncapped damages for the loss of his employment rather than limit his claim to his notice period. As the SEB did not have cause to terminate the Claimant’s contract of employment it would not be appropriate to limit damages to his notice period.

It is worth noting it is unusual for a contract of employment to prescribe an employer’s right to terminate as narrowly as in this case.
The island is now keenly awaiting the courts announcement as to what level of damages it will award.

What to consider going forward
• Potential increased costs for Jersey employers when dismissing a senior employee;

• Is there a risk that contractual right to dismissal has been accidentally shackled;

• Following this decision the financial consequences may not be capped under the unfair dismissal regime;

• The case is a reminder that along with discrimination and victimisation considerations, an employer’s contractual obligations to new recruits can be triggered once a contract has been signed and is unconditional but before the employee’s start date.

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