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The High Court has held in the case of Sunrise Brokers LLP v Rodgers that an employee who had resigned with immediate effect was still an employee and therefore bound by his contractual terms during his notice. The employer was therefore able to refuse payment of the employee’s salary during his notice period when he refused to attend for work.
Facts
October 2011
Mr Rodgers worked for Sunrise Brokers LLP ("Sunrise") as a precious metals broker. He signed a contract of employment in October 2011, which provided that Sunrise could terminate the contract on 3 months' notice, but Mr Rodgers could not terminate the contract until the expiration of an initial fixed period of 3 years, and thereafter with 12 months' notice. Mr Rodgers was also subject to certain restrictive covenants under his 2011 contract of employment, including non-compete covenants as well as non-dealing covenants.
Feb/March 2014
Mr Rodgers met with a rival brokerage and agreed to join them. In breach of his contract of employment, Mr. Rodgers did not inform Sunrise of this at the time. Further, he also supplied (again, in breach of contract) confidential client lists to a third party, as well as taking a screenshot from his work computer showing the figures for the last quarter’s business. Having done that, Mr. Rodgers went to the office of one of the directors of Sunrise on 27 March 2014 and informed him that he was resigning without notice from his position at Sunrise. After this he did not return to work at Sunrise, although Sunrise attempted to persuade him to do so (including the offer to reduce his notice period so that his notice would expire on 16 October 2014).
April 2014
After it became clear that Mr. Rodgers was not prepared to continue working for the business Sunrise stopped paying him his salary and bonus. Sunrise subsequently discovered that Mr. Rodgers was intending to commence employment with their rival. The firm therefore took steps to apply to the High Court to compel Mr. Rodgers to comply with the terms of his contract of employment and to remain at Sunrise as an employee until the reduced period of notice was to expire on 16 October 2014. It also sought to obtain an injunction preventing Mr. Rodgers from working for the rival brokerage thereafter until his restrictive covenants expired on 17 April 2015.
Decision
The High Court made the following orders:
- Mr. Rodgers was still employed by Sunrise and remained so until the date of early termination offered by Sunrise. Sunrise had the right, provided it had good reason to do so (which it was held they did) to keep the contract alive.
- Mr. Rodgers was bound by the obligations in his contract of employment.
- Mr. Rodgers was bound by the post-termination restrictions in the contract from the period of 16 October 2014 until 26 January 2015.The post-termination restrictions Sunrise wanted to enforce were reasonable.
- In a further sting in the tail for Mr. Rogers, the Court also held that as Mr. Rogers had not returned to work following his attempted resignation he was not entitled to any pay during the period he was required to observe the terms of his employment. This was on the basis that he was not ready and willing to work for Sunrise. Had Mr. Rogers agreed to the request to observe his notice period and made himself available for work during that period then Sunrise would, in all probability, have had to have paid Mr. Rogers for this period.
Taylors Commentary
The case illustrates that tactics can be of the utmost importance in protecting an employer’s business interests. Resignations which may be in breach of contract should not be responded to without careful consideration of what is in the best long term interests of the business. Whilst a resignation does not have to be accepted in order for it to be effective, a resignation purported to be in breach of contract requires acceptance before it is effective.
If you need any further advice on this, please contact a member of the Taylors Team on 0844 8000 263.
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Case update: Keeping the Contract Alive