Clark v Fahrenheit 451 Communications Ltd EAT
In the case of Clark the Tribunal had to decide what was reasonable notice where the contract of a director was silent on it's length. Section 86 of the Employment Rights Act 1996 stipulates minimum notice periods depending on length of service. But these are only a minimum and if a contract is silent then case law has established that notice must be reasonable and that can be longer than the statutory minimum. If a contract contains a notice clause that is shorter than the statutory minimum, then the statutory minimum applies regardless of what is written in the contract. Also, parties are free to negotiate longer notice periods than the statutory minimum and include them in the written contract or statement of terms.
For Clark the statutory minimum would be one week's notice. Ironically, although her own contract was silent, Clark was herself responsible for drafting contracts of employment for staff which contained a one month notice clause. Directors were entitled to paid notice but no notice period was specified. Still more irony: when the question of dismissal arose for colleagues, Clark, suggested one month's notice was appropriate but when she was dismissed she told the Tribunal that six month's notice was appropriate for her.
The Tribunal had to interpret the implied term that notice would be of a reasonable length. They settled on one month in view of Clark's considerable business experience and her previous suggestion of one month for others. They construed the contract's silence on a different notice period for directors to mean that the parties intended the one month period referred to elsewhere. Clark's case for six months notice was unreasonable as it was twice as long as her period of employment and given the company's financial difficulties.
Clark appealed. The EAT disagreed with both Clark and the Employment Tribunal. The Employment Tribunal had erred in finding one month's notice reasonable because this was the period Clark had included in the express terms of other contracts although the Tribunal was entitled to see Clark's suggestion to dismiss colleagues on one month's notice as evidence of this. Clark's short period of employment was a reasonable factor to consider but the Tribunal had not struck the right balance between all the factors in this case. The Tribunal had erred in law by not considering Clark's status and seniority and putting too much emphasis on the company's financial difficulties which did not remove its obligations to employees. The EAT therefore decided that three months notice was reasonable in this case.
As with other cases where courts have upheld the contractual claims of senior, highly paid employees and company directors, the trick will be to establish that the same principles apply throughout the pecking order. The law of unfair dismissal was introduced to ameliorate the harshest aspect of contract law as it applies in the employment field. Now company directors are rushing to the courts to ensure their own contracts of employment are enforced to the letter for their own benefit, even where the same directors have been involved in driving down the terms and conditions of their own workforce.