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Court of Appeal - Employers Can Suspend Employees without pay and prevent them working notice period

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Lawson-West Solicitors - Expert Author

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 February 1, 2010 — employmentlawatlawsonwest

Employees need to check their employment contracts to see if they contain any restrictive covenants preventing them from leaving their current employer for a competitor and/or clauses that give employers the right to suspend employees during notice periods, particularly if employees earn commission which they rely on as income.

In Standard Life Health Care Ltd v Gorman and others, agents were employed on a commission-only basis to sell private medical insurance policies and the employment contracts required three months’ notice for resignations. The agents wanted to leave their employer to work for a competitor and tried to resign with immediate effect. The employer refused this and not only held the agents to their three month notice period but also put the agents on suspension from work. The employer was relying on a clause in the employment contract which allowed suspension of employees if the employer reasonably believed the employees to be in breach of contract. There was an allegation that one of the agents had obtained confidential business information which the employer was entitled to investigate. The employer also applied to court for an injunction to prevent agents selling private medical insurance for anyone else during their notice period. The combination of this injunction and the suspension effectively meant the agents could not earn any money as they were employed on a commission-only basis and could neither earn commission from the jobs they had been suspended from nor earn commission from a competitor.

The Court of Appeal upheld the injunction preventing the agents from working for a competitor and also held that the employer could rely on the suspension clause in the employment contract suspending the employees until the end of their notice period.

Any employee considering resigning needs to consider how much notice they are required to give and whether their employer can use a garden leave or suspension clause in their contracts of employment to prevent them earning part of all of their pay during the notice period.


About the Author

Lawson-West specialise in commercial, business and employment law. Our team of dedicated commercial solicitors can help with buying or selling a business, business law and disputes, landlord and tenant issues and commercial property. Our expert employment team can offer practical advice and guidance on all aspects of employment law including redundancy, compromise agreements and dismissal procedures. Visit www.lawson-west.co.uk for more information.



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Article Published/Sorted/Amended on Scopulus 2010-02-09 13:34:57 in Legal Articles

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