In Warburton v. Taff Vale Railway Company[1] an employee who was subject to a disciplinary suspension for two weeks was held entitled to recover his wages, Lord Alverston CJ stating that the employers ‘must contend that the man was not in their service during the period of suspension.’ Similarly in Minnevitch v. Café de Paris (Londres) Limited [2] the defendants engaged the claimant and his band for a period of four weeks to play music of a humorous character in their restaurant. For one week the defendants prevented them from performing because of the illness and death of King George V. Macnaghten J. held that the refusal to allow the performance for two days was reasonable, but not for the remainder of the week and the claimant was entitled to recover his fee for those remaining days. By contrast in Hanley v. Pease & Partners Ltd[3] an employee claimed his wages for a day during which his employer had wrongfully suspended him. Rowlatt J. stated that the employee’s claim “was for unliquidated damages”[4] whilst Lush J. expressly stated that it was unnecessary to consider whether the claim was for wages or damages.[5] More recently, in Bond v CAV Ltd[6] Peter Pain J. held that an employer had acted in breach of contract by refusing to allow employee’s to continue to work under a disputed work practice. An employee who remained ready and willing to work but was prevented by his employer from doing so was entitled to recover his wages. It

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[1] (1902) 18 T.L.R. 420.

[2] [1936] 1 All E.R. 884.

[3] [1915] 1 K.B. 698.

[4] above at p. 706

[5] above at p.  705. Atkin J. did not consider the point.

[6] [1983] I.R.L.R. 360.

On 31/01/13 16:03, Andrew Burrows wrote:

Dear Rob,

I agree with what you say about Lord Sumption’s reasoning. If he were right with his reformulated general contract rule, it would mean that ‘automatic discharge’ would be quite common across contracts (and certainly not confined to contracts of employment).

I think his view may be mistaken in two senses:

(i) it confuses the legal right to terminate with what may be the factual position (ie that on the facts there may be no point in holding the contract open because the repudiating party’s cooperation is factually necessary in order for the innocent party to derive any further benefit from the contract.)

(ii) it reads back into the law on termination the restrictions in White & Carter . But properly understood those restrictions are either (most importantly) restrictions relevant to claiming the contract sum as a debt; or (less importantly) are relevant to when the duty to mitigate arises (for damages) in the event of an anticipatory repudiation.

I think your point that the termination cannot be automatic because otherwise the employer could not withdraw the repudiation (and he plainly can prior to the employee accepting it) is a killing point which, whatever the factual position, makes clear the legal position.   

BUT having said all that I am still puzzled as to why it is that an employee can never hold the contract open, after a wrongful dismissal, and claim his wages as a debt. As I understand it, the majority simply say that they do not need to resolve this puzzle (Lord Wilson at [79]). Yet it is plainly the puzzle that is driving Lord Sumption’s view ie he is saying that the only possible explanation is that the contract of employment is automatically terminated. He looks at some of the other explanations and exposes their weaknesses [at 131]. So in particular he makes clear that an employee, where the contract is on foot, is entitled to wages provided the employee is ready able and willing to do the work even if the employer does not provide any work (and that must be right). Perhaps the answer is that wages can only be earned if (i) the employee is ready willing and able to perform plus (ii) the employer is ready able and willing to accept performance (and where the employer has repudiated, condition (ii) will never be satisfied).

I am copying in Ed (I was discussing this with him the other day) and Andrew who I think is writing a note on Geys???

Best wishes,

Andy  

 

From: Robert Stevens [mailto:robert.stevens@law.ox.ac.uk]
Sent: 30 January 2013 18:00
To: Osuji, Onyeka; lionel.smith@mcgill.ca; obligations@uwo.ca
Subject: RE: Termination for Breach

 

I don't think that is right, so you can't claim your salary just be being ready to work, see Lord Wilson at [79] for the majority

 

"Ever since then the law has been clear that, save when, unusually, a contract 

of employment specifies otherwise, the mere readiness of an employee to resume 

work, following a wrongful dismissal which he has declined to accept, does not 

entitle him to sue for his salary or wages. “He cannot”, as Salmon LJ said in 

Denmark Productions Ltd v Boscobel Productions Ltd [1969] 1 QB 699, 726, “sit 

in the sun...”. The law takes the view that it is better for the employee (as well, of 

course, as for the employer) that his claim for loss of wages or salary should be 

confined to a claim for damages and therefore be subject to his duty to mitigate 

them by taking all reasonable steps to  find other work. This principle is not 

without its critics. In Boyo v Lambeth London Borough Council [1994] ICR 727, 

747 Staughton LJ observed that, unconstrained by authority,  he would not have 

accepted it; and, in his dissenting judgment in Cerberus Software Ltd v Rowley

[2001] ICR 376, Sedley LJ suggested, at p 386, that it was “one of the great 

unresolved questions of employment law”. But, even if the question can be said to 

be unresolved, this court is not invited to resolve it. The facts of this appeal leave 

no room for an attack on the principle. It has added to the making of a contract of 

employment into a special case – but, again, only in terms of remedies. "

 

 

There won't be a breach of contract by an employer who refuses to provide an employee with any work, provided that he continues to pay him, because what the employee wants is the pay not the work (save where, as you say, the employee needs the work for reasons other than getting paid). 

Rob

 

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From: Osuji, Onyeka [O.K.Osuji@exeter.ac.uk]
Sent: 30 January 2013 16:48
To: lionel.smith@mcgill.ca; Robert Stevens; obligations@uwo.ca
Subject: RE: Termination for Breach

 

Dear Rob,

 

The majority seemed to merely confirm the view that consideration in employment contracts is different from other 'many contracts'. The employee's consideration is the willingness to work and not the work itself. If the employee is receiving his contractual pay, the employer is not under any obligation to provide the work save in cases of the need for public exposure, commission and maintenance of skills and qualifications (Collier v Sunday Referee Publishing [1940] 2 KB 647). 

 

Onyeka

 

 

 

 

Dr Onyeka Osuji
Senior Lecturer in Law
University of Exeter
School of Law
Email: O.K.Osuji@exeter.ac.uk
Web: http://socialsciences.exeter.ac.uk/law/staff/osuji/

---

From: Lionel Smith, Prof. [lionel.smith@mcgill.ca]
Sent: 29 January 2013 18:42
To: Robert Stevens; obligations@uwo.ca
Subject: Re: Termination for Breach

"Geys was entitled to the [absolutely ridiculously huge] bonus without having to do anything for it. "

Is his job still vacant so far as you know?

 

From: Robert Stevens <robert.stevens@law.ox.ac.uk>
Date: Tuesday, 29 January, 2013 13:36
To: ODG <obligations@uwo.ca>
Subject: Termination for Breach

 

I don't think anyone has mentioned the decision of the Supreme Court in Societe Generale v Geys which concerns when a contract of employment is terminated following summary dismissal, and has some interesting discussion of the general contractual position in the dissent of Lord Sumption.

 

http://www.supremecourt.gov.uk/decided-cases/docs/UKSC_2011_0110_Judgment.pdf

 

Simplified we have a banker who under his contract of employment is entitled to a huge bonus if his employment is terminated before the year's end, but an absolutely ridiculously huge bonus if his employment continues into the next year.

 

His employer called him in at the end of November and told him he was sacked. After a bit of to-ing and fro-ing, his solicitors write back at the start of January to say they affirm the contract of employment, and he would like the absolutely ridiculously huge bonus please.

 

Under the terms of the deal the bank could have terminated his contract by making a (small) payment in lieu of notice, but they did not do this when they purported to summarily dismiss him (whooops!).

 

Under the terms of the deal to earn the absolutely ridiculously huge bonus the banker doesn't actually have to do any work, he just has to be in employment at the relevant time. 

 

A contract cannot according to (English) orthodoxy be unilaterally terminated (save in accordance with its terms) and I was always brought up to understand that a repudiation that is not accepted is a thing writ in water. 

 

So the conclusion of the majority (Lord Hope, Lady Hale, Lord Wilson and Lord Carnwath) that he is entitled to the absolutely ridiculously huge bonus seems right to me (as presently advised). the bank could have dismissed him much more cheaply, but that they did not is a matter between them and their lawyers.

 

Lord Sumption is in many ways the more interesting as he tries to extract, primarily from Lord Reid's speech in White & Carter the following rule (at [116])

 

"the innocent party to a repudiated contract cannot treat it as  subsisting if (i) performance on his part 

requires the co-operation of the repudiating party, and (ii) the contract is incapable of specific performance, with the result that that co-operation cannot be compelled."

 

For myself, I think this is confused and that the cases he cites do not stand for this proposition. 

 

Under many contracts in order to perform your side of the deal you need the counter-party's co-operation. Under my contract of employment in order to earn my salary I need my employer's co-operation in order to be able to work. So I need access to the lecture halls, students allocated to me to supervise etc. If I do not do my work I cannot fulfill the condition precedent to my getting paid my salary. I can only therefore maintain an action for my salary if my employer co-operates in allowing me to work. If they don't, damages is all I'll get.

 

That does not mean that the contract of employment can be automatically terminated by my employer. That it is not may be illustrated by the fact that my employer can withdraw its repudiation of my contract at any time up until my acceptance. If termination was automatic, it could not do so.

 

The peculiarity (?) of Societe Generale v Geys was that Geys was entitled to the bonus without having to do anything for it. If he was employed he got it. So the co-operation rule enunciated by Lord Reid, when properly understood, does not apply.

Rob

--

Andrew Tettenborn Professor of Commercial Law, Swansea University School of Law, University of Swansea Richard Price Building Singleton Park SWANSEA SA2 8PP Phone 01792-602724 / (int) +44-1792-602724 Fax 01792-295855 / (int) +44-1792-295855

Andrew Tettenborn Athro yn y Gyfraith Fasnachol, Prifysgol Abertawe Ysgol y Gyfraith, Prifysgol Abertawe Adeilad Richard Price Parc Singleton ABERTAWE SA2 8PP Ffôn 01792-602724 / (rhyngwladol) +44-1792-602724 Ffacs 01792-295855 / (rhyngwladol) +44-1792-295855

 

Lawyer (n): One versed in circumvention of the law (Ambrose Bierce)

 

 

***