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The Mutuality and Enforceability of the Employment Contract: Sunrise Brokers LLP v Rodgers

Document Cited authorities 20 Cited in Related
Vincent
Pages280-284
Date01 May 2015
AuthorDavid Cabrelli
Published date01 May 2015
DOI10.3366/elr.2015.0282
<p><italic>Sunrise Brokers LLP v Rodgers</italic> <xref ref-type="fn" rid="fn1"><sup>1</sup> </xref><fn id="fn1"><label>1</label> <p><a href="https://vlex.co.uk/vid/sunrise-brokers-llp-v-792949001">[2014] EWCA Civ 1373</a>, [2015] IRLR 57.</p> </fn> is one of those rare cases where the English courts reached a decision having the inadvertent effect of aligning the law of England with that of Scotland. In fact, this was the ultimate product, without any recourse to Scottish authorities. It is also a decision of the Court of Appeal that addresses two significant issues impacting on the common law of the contract of employment. First, the implications of the reciprocity embedded within the wage-work bargain struck between the employer and the employee come to the fore in the judgments of the Court of Appeal. This mutuality/reciprocity was particularly significant in the context of the (in)ability of the employee to draw his pay where he was in repudiatory breach of contract. Furthermore, the vexed issue of the remedies available to an employer where an employee has purported to resign, but does so in repudiatory breach of contract, was addressed. As such, this note describes how the English courts have crafted a rule that produces the functional equivalent of the mutuality of obligations doctrine in Scots law, before turning to a discussion of the insights to be drawn from the case regarding the employer's ability directly or indirectly to enforce the contract of employment.</p> THE FACTS AND THE DECISION

Where a contract of employment contains a clause enjoining an employer to provide an employee with a period of notice of termination, it is trite law that the employer's failure to serve the requisite notice period will give rise to a claim for wrongful dismissal for the employee.2

Addis v The Gramophone Company [1909] AC 488.

The obverse is also true: for example, where an employee “resigns” without first providing the requisite period of notice to the employer, the “resignation” will be wrongful, amounting to a repudiatory breach of contract. Such were the facts in Sunrise Brokers. Here, Mr Rodgers, a derivatives broker in the City of London, joined his employers in 2009 and entered into a new contract of employment in 2011. The written employment contract entitled him to the payment of a salary of £60,000 and a discretionary bonus, but imposed a twelve-month notice period, a “garden leave” clause,3

This expression describes the situation where the employer instructs the employee not to attend work during his/her notice period, whilst continuing to pay the employee his/her wages or salary.

 and a six-month post-termination non-solicitation and non-competition covenant. On 27 March 2014 he told his employers that he was leaving their employment. His employers instructed him to return to work, but he walked out. He never returned to the employer's workplace despite repeated requests from his employers and their agents to do so. Notwithstanding that the employee sought to compel the employers to invoke the garden leave clause in his contract of employment, the employers refused to do so. They ceased payment of his salary and sought injunctive relief restraining him from working for their competitors. The Court of Appeal decided that the employers were entitled to refuse to pay the employee whilst the contract continued and that they were entitled to the injunction for a period of ten months THE “MUTUALITY OF BREACH” DOCTRINE, ENGLISH “FUNCTIONAL EQUIVALENTS” AND ENFORCEMENT

In such a factual context, the “elective” theory of termination of contracts enters centre stage.4

See White and Carter (Councils) Ltd v McGregor [1962] AC 413.

With regard to the common law of the contract of employment, the “elective” theory was adopted in full by the Supreme Court in Société Générale (London Branch) v Geys.5

[2012] UKSC 63, [2013] 1 AC 523. This decision extended the logic applied by the House of Lords in Rigby v Ferodo Ltd [1987] IRLR...

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