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Free «Contract and employment law» Essay Sample

Contract and Employment


Roscius Component Ltd is involved in production of advanced carbon fibre materials, mainly used in the aerospace industry. The process of materials production are the company's secret, only known to the organization staff involved in the materials development and production. The company's aim is to stay ahead of competition by ensuring its innovations are safeguarded.  

Roscius recently introduced a fresh clause in its contract of employment with expectation that each staff member will sign these commitments forbidding them from working in similar capacities in other companies involved in the same trade after leaving the company. The contract will prevent the employees from working in companies involved in the design or manufucture of aerospace products for a period of one year. Hence the former employees will be not be expected to engage in the stated occupation anywhere in the world for a period of one year.

However, the new terms have been faced with handles since some twelve members have refused to sign acceptance of the new terms. Morwena is among the design and production team members that have rebelled against these terms. On top of refusing to sign the new terms, Morwena has tendered a resignation letter, with one month notice. This is in spite of his employment terms requiring that he gives a three months notice to the employer. The former employee intends to work for a competitor with stake in UK carbon fibre production for aircrafts. The employee has further disregarded Roscius instruction that she remains on garden leave for three months, commencing with employment at the Skyjet immediately.



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Advice to Roscius

The company intends to find out whether the staff members opposed to the new regulations can be fairly dismissed. The company also needs to be advised on whether the proposed clause is valid in law. Concerning the employee by the name Morwena, Roscius needs advice on whether an injunction refraining the former staff member from joining Skyjet until the lapse of the three months period completely lapses.

The advice to the company is based on various cases.  The introduction of clause requiring that the company employees sign an additional is valid in law depends on the bases on which the contract was made. If the clause is introduced at the time that employees are required to sign new contracts, it can then be considered to be regally biding. If the terms of the contract were unilateral, then the employee entitlement can be erased overnight.

In the case of Taylor Vs the Secretary of State of Scottland, the industrial tribunal upheld that the introduced changes to the terms of prison employees had been notified by circulars. The same judgment was upheld by the Employment Appeal Tribunal.  The new term should be as a result of negotiated variation of the employment terms. The company can base the change of terms of employment to the changing business condition characterized by competition. The company can exercise managerial prerogative which allows or gives company powers   o f unilateral decisions. The company is obliged to make strategic measures and ensure that the business takes tactical direction.  The decision to modify employment policy is legally biding since the employer has the right to reside or modify the employment policy.

The Roscius Company should serve a reasonable notice to the employees on the intention to modify the employment policy. The company has to prove that the new conditions were not maliciously introduced to victimize any of the employees. The introduction of the new clause is legally biding since the purpose is pursuance of genuine business. The employers had duty to act fairly. The employer holds managerial power to modify an employment policy that is in force.

However, in other States like Michigan, the employer can only modify contract an offer of variation is issued, assented to and considerations made.

The UK Legislation provides for Statutory Redundancy Payments. The law provides basic award for unfair dismissal. The company should consider the employees who have provided continuous service. The employer can calculate the employees' continuous service from the time of employment to the time of termination. The company should be aware that every employee has right not to be unfairly dismissed. The company can evaluate the conduct of each employees and form basis for fair dismissal.

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Roscius should provide a statement whose contents should be reason for the employees' dismissal. The company should provide the employees reasons for dismissal. The statement should be within a period of fourteen days. Sighting the case of Gilherm Vs County Council, where the court of appeal held that the reasons of dismissal had been clearly spelt out (Lewis et el, 2004: 153)

To avoid claims of unfair dismissal, the Roscius Company should furnish the employees with statement explaining fully the reasons for dismissal. The ERA section 92 obliges the employer to state the basis on which an employee was dismissed. The company should ensure that the reason for dismissal cannot be challenged.

The company can dismiss the employees on the bases of disobedience. The company should base the reason for fair dismissal of employees on the basis of the legality of the order requiring them to sign the new contract. The dismissal can be judged as unfair, if it motivated by gender discrimination race or political affiliation. The law therefore provides for dismissal on ground where an employee acts in a manner that contravenes the condition of his contract. The other condition that creates for provision of dismissal is when an employee willfully engages into disobedience of the employer.  The company should ensure that the mandatory period of notice and the due payments are made. The lieu of notice should be in accordance to the duration of payment that is weekly monthly or fortnight. The same applies to daily and hourly contracts, with a corresponding lieu of notice. If the employees have worked for more than two years, then the employer should give an appropriate notice, independent of when the wages are paid. The company should also notify the relevant authorities and bodies involved in employees' welfare (Daveport et el, 2004:378).

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Care should therefore be taken to ensure that the dismissal does also contravene the relevant statutory or the contractual provisions safeguarding the employees lay-offs. The company should consider the terms of employment for the workers, considering where the employees were working on full time or part time.

The company should also consider various case studies that may guide the decision to terminate employment. The Roscius Company should also be guided by the case of Hollister Vs the National Farmers Union where the court of appeal upheld that the dismissal of Mr. Hollister when he refused to accept the terms that had been set for reorganization formed a basis for dismissal.

The enforcement of the introduced requirement may however prove unenforceable. The Roscius Company may face the handle of putting in place a provision banning competition.  The Company should consider whether it may be required to modify the terms of contract requiring the employees from joining the competitors for a year after leaving the company. According to case of Thosrsten Nodenfelt Vs Hiram Stephens Maxims, some restrictions may be considered as unreasonable or at times unenforceable. The company should also consider that the contract serves the interest of all parties.

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The employees have an obligation to safeguard the interest of the company. The employees also have an obligation of safeguarding employers' trade secrets and chemical formulas. The employee has duty of remaining confidential. This implies to employee who is constantly exposed to information that the company considers sensitive or confidential. The Roscius Company will therefore within the course of contract introduce a clause prohibiting the revelation of information.

The Roscius Company can also make reference to the case between Faccenda Chicken Ltd Vs Fowler and Herbert Morris Ltd Vs Saxelby. In the cases, the court upheld that some process in materials production disclosed by employees or former employees can harm business. If an employee threaten discloser of information, that may form grounds for dismissal (Pollock et el, 1986: 312)

The employee is therefore under obligation to keep confidentiality. This is extended to the information and know-how obtained in the course of work with the given company. The confidential information should not be used to aid a competitor or for self gain.  In the case of Hivac Ltd Vs Parl Royal Scientific Instruments Ltd, the ruling of Sir Thomson Bingham M.R. in court of Appeal was that "obligations are included in the implied term which imposes a duty of good faith or fidelity on employee" The Roscius Company's should therefore that the information gained by the employee amounts to a company's information that should be kept secret and not a means of refraining competition. This will ensure that information incidental to commercial exploitation is not disclosed (Christou, 2005: 597).

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The company should safeguard against employment tribunals that addresses the cases of unfair dismissal. The company can therefore dismiss the employees and pay their dues on ground that they have declined to fulfill the requirement of signing new contracts.

The fundamental rights of employment safeguard against unfair dismissal. The employees are also entitled to a redundancy payment. The employees are also entitled to minimum notice period. The company is therefore obliged to deduct income tax, including the national insurance contribution as per the employees' income.

The company ought to ensure both the rights and responsibilities of the employees are upheld. The company should therefore go by the contract of employment. On refraining an employee after the termination of employment, the Lord Justice Neil observed that the courts will be more cautious. The company should be aware that there are mutual obligation between and its former employees (Bell, 2006:18). 

The employer must show there is affair reason for dismissing the employees. The company should therefore negotiate redundancy payment. The company may be liable for collective redundancy. The company can seek to negotiate resettlement bearing in mind that the employees who refuses to sign variation may claim unfair dismissal.

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The company should know whether the contract is terminable at will. The company can make the employee extend contract on the basis that he should complete the previous contract having refused to sign the substitute contract. The other case is where the supreme court of California held that an employer can unilaterally make change. The company can hold the Morwena, who has gone ahead and signed a contract by ensuring that they abide by the original contract term where he was required to give a three month notice. The company can prove that the changes would defeat the unilateral contract rights that the employee was working under. The company has basis in that the amendment are a disclaimer and not a substitute contract (Perritt, 2006:185).


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