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