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Are your Contracts of Employment fit for purpose?

The recent Employment Tribunal (Scotland) case of, ‘Kinnear -v- Marley Eternit Ltd t/a Marley Contract Services’, highlights the importance of having well drafted and clear contracts in place within a business.

The Facts
The Claimant, Mr Kinnear was employed in October 2014 by Marley Eternit Ltd t/a Marley Contract Services, the Respondent as an Apprentice Roof Tiler. The contract which the Claimant entered into was for a fixed period of 4 years, and was due to end in November 2018, at which time the Claimant would obtain a Certificate of Completion of a Modern Apprenticeship, in Construction Roofing Operations.

The Respondent advised the Claimant around July 2016 that he was to be made redundant due to a ‘downturn’ in the business’ workload, and the Claimant was given 1 weeks’ notice of his employment terminating. The Claimant chose to appeal the decision to terminate his employment, however, this was rejected.

Following the termination of his employment, the Claimant sought alternative employment, however, due to the fact that he had not completed his apprenticeship, and also as he was over 21 years old his efforts to secure alternative employment were unsuccessful. Without his completed roofing qualification, the Claimant struggled to find work as a roofer.

The Claimant presented a claim for breach of contract in the Employment Tribunal, making a claim for his loss of earnings, for the full duration of his contract.

The Outcome
In this case the claim was not defended by the Respondent, and the Tribunal ruled that the Claimant had been employed on a fixed term basis as an Apprentice, and as such he was entitled to receive the appropriate training, and to be an employee of the Respondent’s until his contract was due to end in late 2018.

The Employment Tribunal accepted that due to the downturn in the economy, and as a result of the Claimant’s age (he was 21 years old and therefore, arguably less attractive to employers who sought to engage apprentices on lower wages, i.e. under 20 years old or even under 18 years old) it would be difficult for the Claimant to obtain new employment.

When assessing the Claimant’s position, the Tribunal noted that he had made efforts to mitigate his losses, they considered his possible future losses and decided to take a broad-brush approach and assessed the Claimant’s chances of obtaining comparably well paid employment, (the minimum wage or higher) at 20%. The Claimant was therefore, awarded damages of £25,000 (the maximum an Employment Tribunal can award for breach of contract).

The Law
By law a contract, including an employment contract is an agreement between two (or more) parties. The parties enter in to the agreement under agreed terms and are agreeing to each act in accordance with the terms agreed. If one party breaches the terms of the contract, and in doing so the other party suffers a loss, or is at a detriment as a result of the breach, that party is entitled to be compensated for any loss sustained as a result.

Guidance for Employers
In order to avoid a situation such as this all businesses should ensure that they have well drafted contracts of employment, whether they are standard contracts of employment, or fixed term contracts of employment.

Arguably, this situation and the award for damages could have been avoided if the Respondent had provided a contract of employment which included relevant break clauses, (a clause giving a party the option to terminate the agreement before its expiry).

We would always recommend that businesses take advice from a qualified Employment Lawyer when considering contracts of employment, as poorly drafted contracts, if scrutinised by an Employment Tribunal could be costly to a business.

If you are considering offering a fixed term contract to an employee, or have any questions relating to contracts of employment, please get in touch with our specialist Employment Lawyers on 0161 478 38000 or hello@peachlaw.co.uk we would be happy to discuss your needs, and/or review any contracts that you may already have in place for a fixed fee.

Are your Contracts of Employment fit for purpose?

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