23 Oct 2014

Court of Appeal upholds enforcement of unpaid notice period

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Friday 24 October 2014

In Sunrise Brokers LLP v Rodgers, the Court of Appeal has upheld a judge's decision to hold an employee to his notice period in spite of his employer's refusal to pay.

Mr Rodgers was employed by Sunrise Brokers LLP and resigned in order to join a competitor. He sought to leave employment immediately without working his notice period and refused to attend the office after the date of his resignation. In response, SB ceased paying his salary but insisted that he remained employed and continued to be bound by the terms of his employment contract. The employer did not exercise its discretion to place Mr Rodgers on garden leave.

In the High Court, the judge granted an injunction to prevent Mr Rodgers from working for a competitor and holding him to his contractual notice period, even in the absence of payment from his employer. The Court of Appeal has now upheld the first instance decision.

The Court of Appeal did not consider that the employer's refusal to pay salary during the notice period constituted an acceptance of Mr Rodgers' breach or that it was in itself a breach of contract by SB – it simply reflected Mr Rodgers' ongoing unwillingness to work. The Court also rejected Mr Rodgers' assertion that in granting this injunction it was compelling Mr Rodgers to work for SB – the injunction prevented him from working for a competitor but did not force him to carry out work for SB.

This decision is reassuring for employers who are reluctant to continue to pay an employee who has reneged on his contractual obligations.

However, the decision should be treated with a level of caution – this case does not provide employers with a means of refusing to pay an employee on garden leave. In different circumstances, a Court may find that failure to pay salary constitutes an acceptance of an employee's breach, bringing the contract to an end. Non-payment of salary in such circumstances remains a high risk strategy.

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