Screen capture of an old style of written statement template by Seán J Crossan
In the UK, the beginning of April is always an important period for employment lawyers because the British Government and/or the Westminster Parliament typically introduce new laws which directly impact on people’s terms and conditions of employment.
There is no such thing as one document which contains all the terms of an employment contract – something that my students and members of the public have difficulty understanding at first. It is important to grasp from the outset that there are various sources of the employment contract which include, amongst other things:
The written statement of the main terms and conditions of the contract (as per Section 1 of the Employment Rights Act 1996)
Employee handbooks (e.g. available on employer’s intranet)
Employer’s policies and codes of conduct (e.g. disciplinary codes)
EU Laws, Acts of Parliament and statutory instruments (e.g. Employment Rights Act 1996, Equality Act 2010, TUPE Regulations 2006, Equal Treatment Directives)
Judicial precedent and the common law (e.g. Walker v Northumberland County Council 1 AER 737)
Today new rules come into force about the written statement of the main terms of employment. Previously, only employees were entitled to receive such a document which had to be issued by an employer within 8 weeks of the commencement of employment (as per Section 1 of the Employment Rights Act 1996). Now, an employer must issue a written statement to both employees and workers from or before day 1 of their employment or engagement. This is known as the principal statement and is a short summary of the most important parts of the employment contract.
A link to the UK Government’s website detailing these important changes can be found below:
A second statement – known as the wider statement – must be issued to the employee or worker within 8 weeks of the commencement of the contract of employment or engagement.
Together, both written statements will contain important information about the contract of employment, such as:
The employee’s name
The employer’s name
Date when employment commenced and period of continuous service
The rate of pay and how often the employee is paid
Working hours
Holiday entitlement
Sick pay entitlement
Pensionable service and details of employer’s pension scheme
Notice requirements
Job title or brief JOD description
Whether the job is permanent/temporary/fixed term
The location of the employee’s place of work
The existence of collective agreements and how they affect the contract
Arrangements for working outside the UK (if relevant)
Details of disciplinary and grievance procedures
Furthermore, as a result of today’s changes to the law, the written statement must also address the following matters:
The hours and days of the week that the employee/worker must work for the employer and whether they can be changed and the mechanism for doing so
Entitlement to any paid leave
Entitlement to contractual benefits which have not already been addressed in the written statement
Probationary periods (if relevant)
Training opportunities provided by the employer
The legal status of the written agreement
The written statement is not the contract of employment itself because no single document could possibly encompass all the terms of such an agreement. There is nothing to stop the parties adopting the statement as the contract of employment, but it is important to understand that it can be varied or altered as a result of legislative changes, court decisions and collective agreements.
As of today, entitlement to leave for bereaved parents is being introduced; increases to the National Minimum and Living Wages come into force; and increases to a range of statutory payments are also taking place. With all of this going on, it would be very difficult – if not impossible – for any written statement to express the totality of the employment contract in any meaningful sense.
Failure to issue a written statement
Section 38 of the Employment Act 2002 gives employees the right to pursue an Employment Tribunal claim against an employer for failure to issue a written statement. This type of claim would usually be brought by an employee as part of another claim against the employer e.g. dismissal or discrimination claims. In such an instance, the employee would state on the Tribunal application (the ‘ET1’) that the employer had failed to issue written terms. It is always worthwhile submitting this type of claim as part of the bigger picture of the employee’s grievance because an Employment Tribunal could issue an award worth up to 4 weeks’ wages.
Any employee who is dismissed by the employer for requesting their statutory right to receive a written statement will have the right to pursue a claim for unfair dismissal in terms of the Employment Rights Act 1996.
An example of an extract taken from an ET1 form can be seen below:
Fictional example of an Employment Tribunal claim by Seán J Crossan
Employment status
The right to receive a written statement was, previously, a very important indication of a person’s employment status i.e. whether they had a contract of service in terms of Section 230 of the Employment Rights Act 1996 – as opposed to a contract for services.
In the leading House of Lords’ decision – Carmichael v National Power plc [2000]IRLR 43, two women who were engaged on casual as required contracts as tour guides at the (now demolished) Blyth Power Plant in Northumberland were not entitled to receive written statements of employment because they were engaged under a contract for services. There was no mutuality of obligation between the parties in that National Power was not obliged to offer the women work and the two women, if offered work, were not obliged to accept it. With today’s changes to the Employment Rights Act 1996, the two women in Carmichael would now be entitled to receive a written statement because they were workers.
A link to the ACAS website which provides (free) access to blank templates for employers to generate their own written statement can be found below:
Thanks to @beamomatic9000 for making this photo available freely on @unsplash 🎁
The COVID-19 crisis continues to throw up some interesting legal questions e.g. employment rights, EU freedom of movement rights, frustration of contract etc.
One area which seems somewhat overlooked is in relation to the actions of many retailers – principally supermarkets and grocery stores – which have been restricting sales of particular items. The items in question include soap, hand gel and sanitiser, bleach, anti-septic wipes, paper towels and even toilet rolls.
The COVID-19 situation has led to panic buying of these essential hygiene items and supermarkets have imposed clear limits on their sale.
Can supermarkets and other retailers impose these sorts of restrictions?
This, of course, takes us back to the basic rules governing the formation of a contract. Retailers are especially guilty when applying the term ‘offer’ to the goods which they stock. It is no such thing: goods on the shelves; on display; or in shop windows are invitations to treat. It is the the customer who is being invited to make the offer (see Fisher v Bell [1961]3 ALL ER 731 where the English Court of Appeal ruled that a knife displayed in a shop window was not being offered for sale, it was merely an invitation to treat. Lord Parker, the Chief Justice being particularly emphatic on this point).
In the seminal case of Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401, the judges of the English Court of Appeal helpfully distinguished between an offer and an invitation to treat. The case arose as a result of a provision in the Pharmacy and Poisons Act 1933 which stipulated that the sale of certain medicines must take place in the presence of a registered pharmacist.
Boots Chemists operated a self service system whereby it’s customers were able to place the medicines which they wished to purchase in their shopping baskets. The key question was whether Boots was breaking the law by allowing customers to do this. In other words, was the sale completed when the customer placed the medicines in their baskets? Now, if goods on shelves were to be regarded as ‘offers’, Boots would indeed be breaking the law because customers would be deemed to be ‘accepting’ these ‘offers’ by placing the goods in question in their baskets.
If, on the other hand, the sale was concluded elsewhere i.e. at the cash register where there was always a registered pharmacist on duty, Boots would be fully complying with the Act.
The Court of Appeal concluded that it was the customer who made the offer by presenting the goods at the cash register. The sales assistant (properly supervised by the pharmacist) could conclude matters i.e. accept the offer by ringing the sale up on the cash register. Furthermore, it was always open to the assistant to refuse the customer’s offer. Goods on shelves were, therefore, merely an invitation to treat.
In more normal times, a customer’s offer would and should be refused by retailers because they are an underage person who is attempting to purchase e.g. alcohol, cigarettes or video games or DVDs which are age specific.
So, in this way, retailers are generally within their rights to impose strict limits on the numbers of certain items that customers wish to purchase. The customer can offer to buy 20 bottles of hand gel or sanitiser, but the store will have the right to refuse.
Presently, retailers are putting these sorts of restrictions into place in order to protect and promote public health by giving as many customers, as possible, reasonable access to basic hygiene products. If we co-opt the language of the Equality Act 2010, retailers are putting restrictions in place because these are a proportionate means of achieving a legitimate aim. So, hopefully, such restrictions – if fairly implemented and monitored – will not be subject to a legal challenge on grounds of discrimination.
I never thought that the subject of impossibility and frustration in relation to contract would become such a popular topic of everyday conversation; but it has.
The phrase “force majeure” has also been making more of an appearance than is commonly the case.
Why?
The continuing fallout from Coronavirus or COVID-19 has led to all sorts of sporting and cultural events being cancelled or postponed. We are also about to enter the holiday season with the Spring Break and Easter Weekend just over the horizon. Many people will have booked getaways to foreign climes and events have now completely overtaken such plans.
Critically, thousands of people will have paid something up front for football season tickets and holidays and they will be anxious to know where they stand legally.
Hearts owner Ann Budge says she would consider legal action should her club be relegated from the Scottish Premiership with eight games left:
There are two ways of dealing with an unexpected situation which affects contractual performance: being reactive or being farsighted.
At the moment, the scale of COVID-19 has completely taken Governments, societies, business, cultural, sporting organisations and individuals completely by surprise. So, in a sense, we are being forced to react to changing circumstances and rely upon established legal contractual principles which govern the termination of agreements i.e. frustration, impossibility and illegality. More about these matters shortly.
As lawyers, could we have pre-empted or foreseen that events (I’m speaking in the general sense here) might render contractual performance highly unlikely or well nigh impossible? Well, yes the concept of Force Majeure clauses is recognised in contract law – although the linguists amongst us may recognise that it’s not a native species of English or Scots law.
“words ‘force majeure’ are not words which we generally find in an English contract. They are taken from the Code Napoleon and they were inserted by this Romanian gentleman or by his advisers, who were no doubt familiar with their use on the Continent.”
In the English case of Matsoukis v Priestman [1915]1 KB 681 Bailhace J, sitting in English High Court was of the view that force majeure clauses could cover events such as industrial action, but certainly not bad weather or football or funerals:
“these are the usual incidents interrupting work, and the defendants, in making their contract, no doubt took them into account”.
Yet, in the later English High Court decision LebeaupinvRichard Crispin[1920]2 KB 714, force majeure clause was given a much broader meaning to include events such as war, bad weather, industrial action and, interestingly, epidemics. That said McCardie J was at pains to point out:
“A force majeure clause should be construed in each case with a close attention to the words which precede or follow it, and with a due regard to the nature and general terms of the contract. The effect of the clause may vary with each instrument.”
Essentially, such clauses are inserted into contracts to deal with the consequences of events outwith the control of the parties which may render performance of the contract impossible.
Ross Campbell of Brodies Solicitors who has pointed out that the rules of last year’s Rugby World Cup tournament in Japan contained a force majeure clause addressing the cancellation of matches due to extreme weather. The clause was not utilised and, therefore, not challenged, but it’s an interesting example of how parties to an agreement might attempt to address situations which can have serious consequences for contractual performance.
A link to Ross Campbell’s article can be found below:
The very phrase force majeure conjuresup images of an unstoppable force that sweeps away the accepted rules or conventions – almost akin to the idea of damnum fatale or an act of God.
So whether, will the courts permit the application of a force majeure clause will turn on the wording of the clause.
Could anyone have predicted the situation that we are now in with COVID-19 and drafted an appropriate clause to address these unprecedented times? It’s extremely doubtful. I’m not pretending to be Nostradamus (or for our Scottish readers, the Brahan Seer or Thomas the Rhymer) when I predict that many lawyers and their clients will actively be looking at the usefulness of force majeure clauses.
Triggering a force majeure clause
For those parties wishing to rely upon force majeure clauses, drafting the term may be crucially important. It might be highly advisable to have a list of events or circumstances which trigger operation of the clause; and then have a catch-all provision or belt and braces term to cover things you might not have explicitly specified (as per McCardie J’s remarks in Lebeaupin v Richard Crispin [1920]. Be aware, however, that extremely wide catch-all provisions may be disallowed because they are not within the normal meaning of the term (see Tandrin Aviation Holdings Ltd v Aero Toy Store LLC [2010] EWHC 40 (Comm)).
Frustration, impossibility and illegality
Let’s now turn to situations where individuals have to react to unexpected events without having the benefit of a force majeure clause in the agreement.
Since the formation of a contract, circumstances affecting the agreement may have changed dramatically (i.e. the pandemic). The contract may now be impossible to perform or the contract may have been rendered illegal by changes in the law.
Physical destruction of the subject-matter of the contract can also frustrate contracts.
Perhaps one of the best known examples of frustration can be seen in the case below:
Taylor v Caldwell (1863) the Surrey Gardens and Music Hall was hired by the pursuers from the defenders for the purpose of holding four grand concerts and fêtes. Before the first concert on 17 June 1862 could took place, the hall was completely destroyed by fire. Neither party was responsible for this incident. The pursuers, however, brought an action for damages against the defenders for wasted advertising costs.
Held: By the English High Court that it was clearly impossible for the contract to be performed because it relied on the continuing existence of the venue. The pursuers claim for damages was dismissed on the grounds that the purpose of the contract had been frustrated.
In another case, Vitol SA v Esso Australia 1988The Times 1 February 1988, a contract for the sale of petroleum was discharged on the grounds of frustration when both the ship and its cargo of petroleum were completely destroyed in a missile attack in the Persian Gulf during the Iran-Iraq War (1980-1988). The sellers had attempted to sue the buyers for the price of the goods, but this claim was dismissed.
The ‘coronation’ cases
Two famous cases which are particularly instructive are the ‘Coronation Cases’ because they concern the consequences of changing circumstances. Both cases arose due to the illness of King Edward VII. The new King was unable to participate or attend a variety of events to celebrate his accession to the British throne following the death of his mother, Queen Victoria.
The English Court of Appeal took different approaches in each of the cases:
Krell v Henry [1903] 2 KB 740 the pursuer was the owner of a flat in the central London district of Pall Mall. The pursuer’s flat was on the route of the proposed coronation procession of the new King, Edward VII, which was scheduled to take place on 26 and 27 June 1902. The pursuer had advertised his flat for rent during the daytime on 26 and 27 June for the purpose of viewing the procession. The defender, who was anxious to view the procession, responded to the advertisement and entered into an agreement to hire the flat on the days specified. An announcement was made on 24 June stating that the procession was to be cancelled owing to the King’s illness. The defender refused to pay the balance of the rent for the flat by reason that events had frustrated performance of the contract. The pursuer brought an action against the defender for payment of the balance of the rent.
Held: by the English Court of Appeal that the cancellation of the event frustrated the contract and discharged the parties from their obligations under it. The clinching argument in the defender’s favour was that both parties clearly entered into the contract with the same intention.
The reason behind the hire of the flat was, therefore, a material term of the contract. Had the defender failed to communicate his motivation for hiring the flat, then the contract would have remained capable of enforcement by the pursuer.
Lord Justice Vaughn-Williams was of the opinion that frustration of contract was not limited to either the destruction or non-existence of the subject matter of the contract. It was also important to identify the substance or the purpose of the agreement. In other words, did the parties share the same intentions?
The illness of King Edward resulted in a second legal action. This time, however, the English Court of Appeal took a completely different approach to the issue of frustration of contract.
Herne Bay Steamboat Co v Hutton [1903] 2 KB 683 the pursuers had entered into a contract to hire a steamship to the defender for two days. The Royal Navy was assembling at Spithead to take part in a naval review to celebrate King Edward’s coronation.
The King was to review the fleet personally. The defender wished to transport paying guests from Herne Bay to Spithead to see the naval review. Due to the King’s illness, an official announcement was made cancelling the review. It would still have been perfectly possible for the defender to take his passengers on a cruise to see the assembled fleet. The defender, however, refused to use the vessel claiming that the contract had been frustrated. The pursuers brought an action against the defender for the balance of the fee of £250 (a considerable sum in those times) owed by the defender who was refusing to pay for the hire of the boat.
Held: the contract was not discharged by reason of frustration. The main purpose of the contract could still be achieved i.e. to take paying guests for a cruise around the fleet.
Why the difference in approach?
In Krell v Henry [1903], Lord Justice Vaughn-Williams was of the opinion that frustration of contract was not limited to either the destruction or non-existence of the subject matter of the contract.
The difference in Herne Bay Steamboat Co v Hutton [1903] was that the contract was the main purpose of the contract could still be achieved i.e. to take paying guests for a cruise around the fleet – despite the fact that King Edward VII would not be personally reviewing the fleet due to his unexpected illness.
This difference in approach taken by the Court of Appeal in both cases is sometimes difficult to understand. In Krell v Henry, both parties had clearly intended that the purpose of the contract was to view the coronation procession (which was postponed). Reinforcing this fact, was the fact that the defender was only entitled to use the flat during the daytime.
In Herne Bay Steamboat Co v Hutton, the purpose of the defender in hiring the steamship was to see the naval review, but this was not the purpose of the owners who were not the slightest bit interested why the vessel had been hired.
Lord Justice Vaughn-Williams compared the situation in Herne Bay Steamboat Co to someone who hires a carriage to go and see the Epsom Derby, but the outbreak of some unforeseen epidemic means that the races are cancelled. This makes no difference to the owner of the carriage who will still expect to be paid for the hire of his vehicle.
It will, however, be important to identify the substance or the purpose of the agreement. The cancellation of an event can frustrate the performance of a contract where that event is an absolutely material term of the agreement.
The limits of frustration …
Frustration can only be used to have the contract discharged in situations where neither party is to blame. When one party is to blame for the failure to perform his obligations under the agreement, this represents a breach of contract and the innocent party can raise the appropriate action.
Tsakiroglou v Noblee Thorl GmbH [1961] 2 ALL ER 179 the sellers had agreed to transport Sudanese ground nuts from Port Sudan in the Red Sea to Hamburg in Germany. The ship was to take the fastest route to Europe through the Suez Canal. This proved to be impossible because the Canal was closed as a result of military hostilities following the Anglo-French-Israeli invasion of Egypt causing the Suez Crisis in late 1956. The sellers would have to ship the goods around the alternative route of the Cape of Good Hope in South Africa. This meant that the distance the ship had to travel from Port Sudan to Hamburg was greatly increased and this would also mean a dramatic increase in the costs of carriage in respect of the goods.
Held: by the House of Lords that a party will still have a duty to perform a contract even if this means that performance is more difficult or expensive than was originally intended by the parties. The closure of the Suez Canal did not mean that the sellers’ duties were discharged by reason of frustration of contract.
Contracts for personal services
Such a contract is discharged by the death of the person who was to perform it. The incapacity of a person who is to perform a contract may discharge it. However, temporary incapacity is not enough unless it affects the performance of the contract in a really serious way. If an employee is killed or permanently incapacitated, it will be very difficult to argue that the employment contract should be allowed to continue. Employees who have had a lengthy prison sentence imposed on them by a criminal court may find it very difficult to argue against the employer’s proposition that the contract of employment has been terminated by reason of frustration.
Some words of warning: the courts may be unwilling to use frustration as a means of terminating an employment contract if other ways of achieving this result are available. This could occur in situations where it is possible for the employer to dismiss the employee entirely fairly by reason of a lack of capability (e.g. on grounds of ill health) as per the Employment Relations Act 1996.
Notable cases on frustration in connection with employment contracts include the following:
Davis Contractors Ltd v Fareham UDC [1956] AC 696
Marshall v Harland & Wolff [1972]IRLR90
G F Sharp & Co Ltd v McMillan [1998]IRLR 632
The purpose of the contract becomes impossible to perform
As we have seen, a situation involving the physical destruction of the subject-matter of the contract will discharge the parties from performance of their duties by reason of frustration. However, frustration can also occur in situations where physical destruction of the subject-matter of the contract may not be the issue.
Jackson v Union Marine Insurance Co (1874) LR 10 CP 125 the pursuer owned a ship which had been chartered to go with all possible speed from Liverpool to Newport for the purpose of loading a cargo bound for San Francisco. The pursuer had insurance with the defenders to protect himself in the event that the charter might be prevented from being carried out. The vessel was stranded whilst on its way to Newport. It was not refloated for over a month and could not be properly repaired for some time. The charterers hired another ship and the pursuer turned to the insurers. They suggested that the pursuer should sue the charterer for breach.
Held: the fact that the ship was stranded effectively frustrated the agreement’s commercial purpose and, therefore, the charterers were free to go elsewhere. The pursuer had no remedy against the charterers and was in turn entitled to seek compensation under the insurance policy.
Illegality
We are seeing the introduction of emergency powers legislation across the World in response to COVID-19 and this will undoubtedly have a huge impact on a range of contractual obligations. Many European Union countries have reintroduced border controls and curbs on free movement of persons which would normally be a clear breach of European Treaties (e.g. the Treaty on the Functioning of the European Union; the Treaty on European Union; and the Schengen Agreement), but these are not normal times. These drastic measures can all be justified on grounds of public security and public health – legitimate derogations or grounds for withdrawal from key EU legal principles. Travel and tourism will obviously be disproportionately affected by these restrictions.
Contracts can become illegal because Parliament introduces legislation to this effect. After the murder of schoolchildren and a teacher at Dunblane Primary School in 1996 by Thomas Hamilton, the British government made it illegal to own particular models of firearms. Therefore, anyone who entered a contract to purchase firearms shortly before the legislation was introduced could not force the supplier to perform the contract. If the buyer insisted on performance of the contract by the seller, the seller would be complying with his contractual duty, but he would also be breaking the law as the contract would be illegal.
Events can also make further or future performance of contracts illegal e.g. the outbreak of war. Two House of Lords’ decisions are excellent authority for this proposition –
Stevenson & Sons Ltd v AG für Cartonnagen Industrie (1918) AC 239 an English company, Stevenson, was in partnership with a German company acting as a sole agent to sell the German company’s goods. By continuing to carry on business with an enemy during wartime (the First World War had broken out), Stevenson would be committing a criminal act and there was no alternative but to have the partnership dissolved (see also Cantiere San Rocco SA v Clyde Shipbuilding & Engineering Co Ltd (1923) SC (HL) 105 where, again, the First World War had a similar effect on a contract between a Scottish company and an Austrian buyer of a ship).
Conclusion
The Coronavirus or COVID-19 is not merely a health issue – it has also become something of a legal minefield for society. This is where knowledge of the circumstances of termination of contractual obligations and performance is vital. The doctrine of frustration, impossibility and supervening illegality are highly relevant to this debate.
Doubtless, the use of force majeure clauses will become more common – especially, if as predicted, we are going to be experiencing further waves of disruption due to this pandemic.
When I discuss prescription with students for the first time, I usually can’t resist making the (admittedly) lame observation that it has nothing to do with going to see your General Practitioner for a medical appointment. Though, these last few days, I have been talking a lot about the Coronavirus or COVID-19 and the legal implications of this outbreak for sickness absence from work and eligibility for sick pay.
No, prescription has nothing to do with medicine and is a concept that all lawyers should be familiar with – indeed live in terror of perhaps?
I well remember one developer of legal software informing me that his case management system for personal injury claims had a feature which regularly provided a countdown towards the last possible date when a prospective claim must be submitted to the appropriate court with jurisdiction to hear the matter (so no excuses then?).
Lawyers who fall foul of prescription may well be opening a can of worms for themselves because the clients will almost certainly attempt to sue them for professional negligence.
If the principle of prescription is being deployed by the opposing side in a legal action, you (and your client’s case) may be in serious trouble.
In what way?
Essentially, you have not submitted the claim or complied with court procedures (e.g. deadlines for submission of documents/evidence) within the required time allowance.
In terms of the Prescription and Limitation (Scotland) Act 1973, most delictual (tort) claims must be brought within five years of damage to property. In terms of contractual actions, a pursuer or a claimant who is contemplating legal proceedings in Scotland will usually have 5 years from the effective date of the breach to submit a claim (the quinquennium).
On the other hand, personal injury claims must usually be lodged within three years of the date of the incident which caused injury (the triennium).
In England, the prescription period for contractual claims is 6 years and for most other claims the period is 3 years.
Time limits for submission of claims will be strictly adhered to – unless the Scottish courts deem it just and equitable to extend them.
Sometimes, certain claims – principally Employment Tribunal claims – must be submitted by the claimant in a very short space of time. Normally, for most employment claims (including discrimination claims), the claimant must submit an ET1 application to the Employment Tribunal within 3 months minus 1 day of the act that she is complaining about. If the dismissal from employment took place on 5 March, a claim for unfair dismissal must be submitted by 4 June – at the very latest – otherwise it will be time barred. Admittedly, for equal pay claims, longer time limits apply i.e. 6 months minus 1 day from the discriminatory act complained about.
Prescription is an extremely powerful weapon that can be used by an opposing lawyer to knock out another person’s claim. If prescription is relevant, then the merits of the case will simply not be discussed. The claim is time-barred and that is usually that (see the UK Supreme Court’s decisions in David T Morrison & Co Limited v ICL Plastics [2014]UKSC 48 and Gordon v Campbell Riddell Breeze Paterson LLP (Scotland) [2017] UKSC 75).
Out of time!
In two fairly recent cases before the Outer House of the Court of Session, the issue of prescription was successfully argued by the defenders’ legal teams.
In the first case – Brian Alexander Gracie v Edinburgh City Council [2019] CSOH 6 – an incident which had allegedly taken place in 1965 was time barred (unsurprisingly) on the grounds of prescription. More bizarrely, Mr Gracie, the pursuer himself admitted that he had little recollection of the incident and there was scant evidence to support his assertions in any event. Gracie was alleging that, while at school in the 1960s, the teaching staff had failed in their duty of care to him by permitting him to run out from the playground on to the road where he was hit by a car. Needless to say, his claim for a staggering £650,000 in damages was swiftly dispatched by the council’s lawyers.
A link to the decision of the Outer House in the above case can be found below:
In the second case – Midlothian Council v David Anderson Keith and others [2019] CSOH 29 – the council had built a housing development on land at Gorebridge which later turned out to be be dangerous because of gas leaks seeping from old coal mines at the site. The site was later demolished and rebuilt because of the risk to human health.
It had instructed a survey prior to the build and the engineering firm which carried this out had assessed the risk from gas to be very low. Due to this assessment, gas defences (e.g. a gas membrane) were not included in the build. In 2013, levels of gas harmful to humans were detected at a site property.
The council wished to sue the firm for allegedly providing negligent advice under their contract. The claim was dismissed by reason of prescription i.e. the contractual obligations between the two parties had become extinct. It’s worth noting that the engineers never accepted liability – the clinching argument of prescription made debate about liability completely irrelevant.
The disagreement between the two sides centred around the point at which the five year prescription period began. The engineering firm argued that it began when the development was completed (June 2009); the council responded by arguing that the critical date was when the high levels of gas were detected at the site (7 September 2013).
Lord Doherty clearly relied upon the UK Supreme Court decision in Gordon v Campbell Riddell Breeze Paterson LLP (Scotland) [2017] UKSC 75. The key date from which the 5 year prescription period should run was the date of completion of the housing development. His Lordship was firmly of the view that the key event was the date when the council placed reliance on the engineering firm’s assessment that it was safe to build on the site. This reliance could be pinpointed to a period between December 2007 and June 2009 i.e. when the development was commenced and completed. The action against the engineers (who never admitted liability) was commenced on 4 September 2018 – nearly 9 years after the development had been completed. The council’s claim was, therefore, dismissed.
A link to the decision of the Outer House in the above case can be found below:
There is, however, a provision in Section 19A of the Prescription and Limitation (Scotland) Act 1973 which does permit a judge to override the normal rules about prescription. Claims which would normally be time barred may be permitted to proceed to a hearing under Section 19A if the judge believes that it is equitable to do so.
Such an approach was taken in the case of A v Glasgow City Council [2018] CSOH 116 which arose out of the events of the Glasgow Lorry Incident in December 2014. Relatives of the victims of this tragedy were permitted to proceed with their legal actions despite the relevant time limits having passed because it would not have been in the interests of justice to time bar the claims on a technicality.
A link to Lord Doherty’s Opinion in A v Glasgow City Council [2018] CSOH 116 can be found below:
Removal of the 3 year limitation period – historical child abuse claims
Sometimes Parliament will permit claims to proceed to court – even if they would normally be time barred or fall foul of prescription. This will be achieved by passing legislation and one recent example is the Limitation (Childhood Abuse)(Scotland) Bill.
Clearly, Parliament’s purpose in waiving the normal rules of prescription which are normally strictly adhered to by the Scottish courts is that it is just and equitable to do so. Put simply, the legislation is about righting an historic injustice.
On 14 March 2016, the Scottish Government published a draft Limitation (Childhood Abuse)(Scotland) Bill which was in response to the Consultation on the Removal of the 3 Year Limitation Period from Civil Actions for Damages for Personal Injury for In Care Survivors of Historical Child Abuse.
The draft Bill proposed to remove the triennium or 3 year time limit for cases of historical child abuse that allegedly took place after 26 September 1964.
This Bill was eventually passed by the Scottish Parliament becoming the Limitation (Childhood Abuse)(Scotland) Act 2017. It represents an exception to the normal rules regulating the limitation period for the submission to Scottish civil courts in relation to personal injury claims of this nature.
Conclusion
Time and tide wait for no one; delay is fatal; or tempus fugit (i.e.time flies) can all be applied to legal actions. If you don’t use it (i.e. your right to take court action), you lose it. This is quite sensible: it means that there is a natural cut off for legal actions and, consequently, the courts will not be swamped (well any more than they already are).
Another sensible viewpoint is that litigation should take place fairly quickly so that the evidence of litigants is fresh in the memory (the case of Brian Alexander Gracie v Edinburgh City Council [2019] CSOH 6 is an excellent illustration of this (see above).
Parties bringing claims to Scottish civil courts must be aware of the following:
The Triennium or 3 year period in which a claim for personal injury must be submitted; and/or
The Quinquennium or 5 year period in which contractual claims or delictual claims for property damage must be submitted.
Admittedly, Section 19A of the Prescription and the Limitation (Scotland) Act 1973 does allow Scottish judges to override the principle of prescription if it is just and equitable to do so.
Speaking of just and equitable grounds, the Scottish Parliament passed the Limitation (Childhood Abuse)(Scotland) Act 2017. This legislation represents an exception to the normal rules regulating the limitation period for the submission to Scottish civil courts of personal injury claims which involve historic child sex abuse allegations.
As a general rule of thumb, however, prescription remains the terror of the legal profession: get the client’s claim submitted on time or face a professional negligence claim.
Governor Gavin Newsom of the US State of California declared a state wide emergency on Wednesday 4 March 2020 in order to counter the spread of the virus.
Please see a link below to an article in the Los Angeles’ Times concerning Governor Newsom’s announcement:
How are the recent developments in California linked to events in the UK?
It should be recalled that Governor Newsom signed into law Assembly Bill 5 of 2019 in January of this year. You don’t remember this? Well, Assembly Bill 5 is better known as the Californian Gig Economy law which, in effect, gives thousands of workers employment status. Significantly, this means that many of these affected individuals will now benefit from greater levels of employment protection – including entitlement to sick pay.
Now, think about this: had the COVID-19 outbreak occurred last year, many Californian workers would have had absolutely no entitlement to receive sick pay if such individuals were forced to self-isolate or take time off because they had been infected. No doubt many of these workers turned employees will be breathing a huge sigh of relief that they are now covered by Assembly Bill 5.
Turning our attention to the UK, the British Government has taken a less generous approach to the issue of entitlement to sick pay. True, employees and other workers who already benefit from entitlement to statutory sick pay (SSP) should now be able to claim this from day 1 of sickness absence. It should be emphasised that this is a temporary measure justified on emergency grounds.
Previously, statutory sick pay was payable only from day 4 of the employee’s absence until Prime Minister Johnson’s announcement in the House of Commons on Tuesday 3 March 2020.
Jeremy Corbyn, Leader of the opposition Labour Party, immediately asked the PM if zero hours workers and self-employed individuals would have this benefit extended to them. The PM’s response to Mr Corbyn’s question will have disappointed many of these individuals. No entitlement to statutory sick pay for them. The problem for these individuals is that they do not meet the eligibility threshold where they earn £118 per week (the Lower Earnings Limit).
There is also the small fact that employment status (which is linked to entitlement to sick pay) is defined by the Employment Rights Act 1996. Section 230 of the Act defines an employee as an individual who has a contract of service. Many employment rights flow from this status and this means that many individuals who are engaged on a contract for services will simply not be eligible to claim statutory sick pay.
A link to an article in The Mirror newspaper about the exchanges in the House of Commons between PM Johnson and Mr Corbyn about SSP entitlement can be found below:
… and yet, the UK Government’s thinking on this issue may be quickly evolving. On the BBC’s Question Time television programme broadcast on Thursday 5 March 2020, Matt Hancock MP, the UK Health Secretary said that people on zero hours contracts and self-employed persons should not be financially penalised for doing the right thing i.e. self-isolating themselves or being honest about having the virus.
It will be interesting to see how the story develops and what changes to UK employment law may follow as a result.
Coronavirus (COVID-19) isn’t just a potential threat to your health; it could also mean that your earnings take a hit.
How so?
If you have to take time off from work (i.e. self-isolate yourself) because you have (or might have) been infected by the virus, will you be entitled to receive sick pay from the organisation that you are working for?
It depends very much on your employment status …
… if you are a zero hours worker or genuinely a self-employed person, the answer is an emphatic no.
If you are deemed to be an employee (an individual who works under a contract of service) within the meaning of Section 230 of the Employment Rights Act 1996, you may be fortunate in that you have an entitlement to receive either contractual sick pay or statutory sick pay.
Contractual sick pay
If a contractual sick pay scheme applies to your employment, you might receive, at its fullest extent, 6 months full pay and then 6 months at half pay. This generous arrangement, of course, will not apply from day 1 of the employment and employees will have to build up their continuous service in order to be eligible for the maximum level of contractual sick pay. It is probably the case that an employee with just over a year’s service would receive 1 month at full pay for sickness absence and then 1 month at half pay.
An example of entitlement to contractual sick pay arrangements taken from the Collective Agreement (the National Working Practices Agreement) between Scottish Further Education lecturers and their employers can be seen below:
Statutory sick pay
What about statutory sick pay or SSP? This is relevant in situations where employees are not entitled to receive contractual sick pay.
It’s also worth pointing out that contractual sick pay is often much more generous than SSP and, even then, not all employees will be entitled to receive this benefit because they fall outside the eligibility criteria. The current weekly rate of sickness pay (in March 2020) is £98.25 and could be paid by employers for a maximum of 28 weeks.
Ordinarily, it becomes payable only from 4th day of sickness absence, but as of Wednesday 4th March 2020, the UK Government has announced that employees who self-isolate themselves because of suspected Coronavirus infection, will be paid SSP from day 1 of their sickness absence.
This is a temporary measure which will apply only for the duration of the current COVID-19 emergency, but people who are off sick with a medical condition other than the virus will also be entitled to benefit from these changes.
See links below to articles on the BBC website about sickness pay entitlement and COVID-19:
The change in Government policy will not be extended to the self-employed; and to zero hours workers (who will not be able to meet the threshold conditions for eligibility). Frances O’Grady, the General Secretary of the UK’s Trades Union Congress (TUC) has stated that as many as 2 million workers may not be eligible for SSP under the current system.
There has been some concern expressed that individuals in these categories may continue to go to work – if they have the virus or suspect as much – because they will not receive SSP during their absence.
Eligibility criteria for SSP
In 2019-20, in order to qualify for SSP you must be an employee earning at least £118 per week or £512 per month (before tax). This is known as the Lower Earnings Limit.
In April 2020, SSP will rise to £95.85 per week, but individuals’ earnings must fall within any of the following bands in order to qualify:
£120 per week
£520 per month
£6,240 per year
Again, this will mean that many zero hours contract workers will simply fail to qualify for SSP payments.
More problems …
There is also another complication concerning eligibility for sickness pay which the COVID-19 outbreak has raised:
Let’s assume that you do qualify for either contractual sick pay or SSP, but you have decided to take the precautionary measure of self-isolation so as not to expose your colleagues to potential risk.
It may be that you have recently returned from a destination such as China or Italy where the virus has been particularly prevalent and you decide to play it safe by not going into work. You contact your HR Department or employer to inform them of your decision; you are thanked for being extremely considerate and responsible; and then you are told that you are not entitled to receive sick pay because you haven’t actually been diagnosed with the virus.
Matt Hancock MP, UK Government Minister for Health, thinks that current legislation does cover such situations and individuals who take precautionary measures, as outlined above, should benefit from sick pay provisions.
With all due respect to Mr Hancock, what he thinks and what current legislation or a contract of employment states might be entirely different realities. That said, Mr Hancock does have the support of the highly regarded Advisory Conciliation and Arbitration Service (ACAS) which is recommending that employers pay self-isolating employees who have taken such a precautionary measure (see link below).
Clearly, COVID-19 is presenting a number of challenges to traditional practices or orthodoxies in the field of employment law. This is a serious issue given that recent estimates are predicting that up to 20% of the UK workforce could be in danger of contracting the virus and, consequently, they will be absent from work.
In some respects, the UK Government has been caught napping on the issue of extending employment protection e.g. entitlement to sick pay to people who do not have a contract of service and the COVID-19 outbreak has really exposed this shortcoming.
As Jonathan Rennie of law firm, TLT, had noted (as recently as this week) the UK Government has failed to implement any of the recommendations of the Taylor Review which favoured extended employment protection to workers who did not have a contract of service. It is somewhat ironic that the virus outbreak has forced the Government to break cover and extend some employment protection rights.
A link to an article on the BBC website about the predicted impact of COVID-19 on the UK workforce can be found below:
The above photograph conveys everything that is pleasant about staying in a nice hotel or boutique guesthouse.
Sadly, this was not the case for one couple, Mr and Mrs Jenkinson, who had booked into accommodation (the Broadway Hotel) in the English seaside resort of Blackpool in 2014. The couple were so disappointed by the lack of basic hygiene standards and facilities that they were motivated to leave a review on Tripadvisor – a very bad review, in fact, which did the establishment absolutely no favours.
How did the hotel respond?
Not in the way that you would think the management should have responded i.e. by issuing the couple with a grovelling apology and, possibly, a refund?
No, the couple were checking their credit card statement some days after their review had been posted and noticed that £100 had been charged to their account by the Broadway Hotel. Surely, this must have been some oversight or mistake? Following further enquiries by the couple, they discovered that the hotel had levied the charge because they had the nerve to leave a bad review on Tripadvisor about the very poor standards they had experienced while staying there.
When the couple objected to this, the establishment told them to check the small print in its booking documents – which Mrs Jenkinson had admittedly signed. True enough, buried somewhere in the small print was a statement to the effect:
“Despite the fact that repeat customers and couples love our hotel, your friends and family may not. … For every bad review left on any website, the group organiser will be charged a maximum £100 per review.“
Now, the Broadway Hotel was by no means luxury accommodation (the Jenkinsons had paid £36 for an overnight stay), but even budget hotels must meet basic standards such as adequate hygiene. The hotel failed miserably to meet these standards. More and more often, we do rely on the experiences of other people to guide us in our choices as consumers and the Jenkinsons were posting a fair comment review on Tripadvisor. The ability of businesses and traders to prevent consumers doing this would clearly be a retrograde development.
At the time, the story went viral and Mr and Mrs Jenkinson were invited on to the BBC Television’s Breakfast show to talk about their experiences. Needless to say, the hotel got more than it bargained for with the adverse media publicity and Blackpool Council’s Trading Standards Department taking a keen interest in its business practices.
A link to the story on the BBC website about the Jenkinsons’ experiences at the Broadway Hotel, Blackpool in 2014 can be found below:
At the time of the story breaking, I fortuitously happened to be teaching Unfair Terms in Contract Law to two of my classes. I had never seen a clause like this before and informed my students that it was very unlikely to be capable of enforcement by the hotel given its blatant unfairness – let alone the implications for freedom of speech in the UK.
I’ve long wanted to write about the Jenkinsons’ experience and I was reminded of their story some weeks ago when teaching a group of students about unfair terms in contracts.
Normally, when I discuss this area of the law, I make students aware that businesses used to be extremely trigger happy when using all sorts of unfair terms in contracts in order to avoid their responsibilities to customers.
Prior to the introduction of the Unfair Contract Terms Act 1977 (about more later), businesses and other organisations could exclude or limit their liability for causing death and personal injury so long as adequate noticeof the existence of the term was brought to the attention of the other party to the contract.
So, for example, if a garage owner wished to exclude his liability to a customer who put a vehicle in for repairs or a service, he could simply alert the customer to the existence of an exclusion or limitation clause in the contract. The customer leaves the car to have the brakes fixed; picks the car up later; the mechanic has been negligent and not carried out the work properly; the customer later suffers a terrible accident because the brakes haven’t been fixed. Hey presto, no need to worry because the garage owner could point to his standard terms of business which contained an exclusion clause. In effect, the exclusion clause was a get out of jail card.
Another tactic often deployed was where the business could argue that the customer had constructive notice of the existence of the unfair term e.g. the customer should have read the documents presented to him or her. Mrs Jenkinson had signed the booking documents presented to her by the Broadway Hotel. She later admitted that she did not read the terms because she did not have her spectacles with her.
On occasion, the courts might intervene and side with a party objecting to the enforcement of an unfair term under a number of judicial doctrines:
the repugnancy rule
fundamental breach
the contra proferentum rule
Despite judicial intervention, the odds were still stacked against parties who wished to challenge the inherent unfairness and abusive nature of attempts by traders and businesses to exclude or limit their liability.
Sensibly, the UK Parliament decided to tackle what was becoming the Wild West of contractual terms and passed the Unfair Contract Terms Act 1977 which made such attempts to evade liability automatically void.
Generally speaking, the Act made it much harder (but not impossible) for businesses to impose other unfair terms on consumers. Businesses, on the other hand, were still, advised to read the small print of any agreements that they were contemplating entering, although courts would be more sympathetic if a larger business tried to use its unequal bargaining power to impose unfair terms on a smaller business.
The European Union also passed legislation (European Council Directive 93/13 on Unfair Terms in Consumer Contracts and, for a while, the Unfair Terms in Consumer Contracts Regulations of 1994 and 1999 respectively were in force. These were later repealed and replaced by the Consumer Rights Act 2015, although the terms of the Directive live on in this legislation (remember: EU Law is hardwired into UK national laws).
Along the way, the Enterprise Act 2002 and the Consumer Protection from Unfair Trading Regulations 2008 severely restricted the ability of businesses and traders to impose very unfavourable terms on consumers.
The net effect of all of this legislation was that consumers were really protected against the imposition of unfair terms by traders and businesses. Consumers were often deemed to be the weaker party in a relationship with traders and businesses and, therefore, needed to be protected.
Returning to the Jenkinsons’ experience at the a Broadway Hotel, it is worth emphasising that the couple were being provided with accommodation services as consumers and, therefore, would have been entitled to the benefit of existing UK consumer protection laws on the statute books in 2014.
Had this incident occurred in 2020, the Jenkinsons would, of course, have been able to challenge the legality of the penalty clause primarily in terms of the Consumer Protection from Unfair Trading Regulations 2008 and the Consumer Rights Act 2015.
Conclusion
Happily, we have come a long way in consumer law where businesses could previously impose all sorts of unfair, not to say downright abusive, terms on customers.
We are now in a position, where UK consumers will be protected by legislative safeguards which should ensure that these types of terms will not be permitted to stand i.e. they will be automatically void or simply unenforceable. The penalty clause which the Jenkinsons experienced would doubtless have fallen foul of consumer protection legislation had the issue got anywhere near a court room. Nonetheless, it was an interesting example of the inventiveness of businesses regarding the creation of new types of unfair terms in contracts.
It remains the case, however, that in business to business contracts (or in private transactions), it will be highly advisable for parties to remain wary about the potential unfairness of contractual terms. Only the most outrageous and downright abusive terms (such as excluding or limiting liability for death or personal injury) will be automatically void – no matter how much notice of their existence has been given by the party seeking to rely on them. If a business is seeking to have a clause declared void or unenforceable, the debate to be had in terms of the Unfair Contract Terms Act 1977 will often centre around the perceived reasonableness (or otherwise) of the clause.
A contract will seldom be formed as a result of actual violence but threats of violence are more probable. Violence or the threat of violence must be of such a nature that they are enough to overwhelm a mind of ordinary firmness. Colloquially, one might say that there should be no literal gun placed to the head of another person in order to get them to enter a contract. Force and fear will have the effect of making the putative contract void. Threats to take legitimate legal action against someone do not fall into the category of force and fear.
I was reminded of this area of contract law today when reading a report of the activities of the Sicilian Mafia which is responsible for a €10 million agricultural fraud involving European Union subsidies. The Mafia has become particularly adept at creaming off these subsidies over many decades.
One of the features of the most recent fraud to be exposed is the time honoured Mafia practices of extortion and intimidation: law abiding Sicilian landowners are pressurised to sell their land to criminal enterprises which then go on to ‘milk’ the seemingly bottomless pit of EU subsidies. In the parlance of The Godfather, these law abiding citizens are made an offer they can’t refuse and, in the absence of effective law enforcement combined with the traditional weakness of the Italian State, what else are they supposed to do? It would take an extremely brave person (perhaps foolhardy) to stand up to such threats.
A link to the story about the activities of the Sicilian Mafia as reported in The Independent can be found below:
When introducing students to the law of contract, one of the first Scottish cases that I discuss with them is several hundred years old – Earl of Orkney v Vinfra (1606) Mor 16481.
It tends to stick in their minds – possibly – because of its particularly lurid details. I often say to the students that the story reads like something from either The Godfather Trilogy or The Sopranos TV series.
Andrew Vinfra was summoned to the Earl’s castle. He was presented with a deed (a formal document) by the Earl, the feudal overlord of the Islands, and he was ordered to sign it. The document was an agreement that Vinfra was to pay the Earl the sum of 2,000 Merks. Vinfra had no intention of agreeing to this proposition, whereupon the Earl started to curse and swear at him. The Earl then bluntly declared to Vinfra that he would drive his whinger (dagger or dirk) into Vinfra’s skull. The terrified Vinfra’s resolve completely crumbled at this point and he signed the document. He was wise to do so: the Earl had a notorious reputation for thuggery and violence. Murder was well within his capabilities.
Later, when at a safe distance from the Earl, Vinfra took steps to have the contract declared void on the grounds that he had signed the document because the Earl had used force and fear. The Earl attempted to pass off the incident as high jinks, but Vinfra was able to prove that his fear of being murdered was genuine. The court declared that the agreement was void: it had not been entered into voluntarily by Vinfra. It could not be enforced by the Earl against Vinfra. It was treated as if it had never existed.
The students, of course, love the drama of Vinfra’s ordeal and they naively scoff that this situation wouldn’t happen today …
My riposte to that attitude is to remind them that there are places not too far from Scotland where organised crime is a feature of daily life. The latest report of events from Sicily tends to bear this out.
Further reading about the Italian Mafia organisations and its ‘business’ activities can be found below:
Mafia Business: The Mafia Ethic and the Spirit of Capitalism by Pino Arlacchi (1986: Verso Books)
Cosa Nostra: A History of the Sicilian Mafia by John Dickie (Hodder: 2007)
Mafia Republic: Italy’s Criminal Curse. Cosa Nostra, ‘Ndrangheta and Camorra from 1946 to the Present by John Dickie (Sceptre: 2014)
The Sicilian Mafia: the Business of Private Protection by Diego Gambetta (Harvard University Press: 1996)
Gomorrah: Italy’s Other Mafia by Roberto Saviano (Picador Classic: 2012)
Today seems to be something of a red letter day for the Blog with regard to the issue of protected philosophical beliefs in terms of the Equality Act 2010.
We have already heard the news that Jordi Casamitjana has won the part of his Employment Tribunal claim that his ethical veganism is a philosophical belief in terms of Sections 4 and 10 of the 2010 Act (see Casamitjana v League Against Cruel Sports [2020]).
It was some interest that another news item popped up today concerning allegations that Amazon stands accused of threatening to dismiss those of its employees who become involved in climate protests. I would hazard a guess that Amazon is making a statement of intent that it may dismiss employees who perhaps break the law when they are involved in climate protests such as those organised by Extinction Rebellion and other similarly minded groups.
Criminal acts by employees committed outside the workplace could be regarded as gross misconduct in terms of Section 98 of the Employment Rights Act 1996. In other words, such behaviour by employees could result in the employer suffering reputational damage and, consequently, any dismissal for misconduct could be potentially fair. That said, employers should always carry out the proper disciplinary procedures when contemplating dismissal as the ultimate sanction for employee misbehaviour.
The real gripe – according to Amazon Employees for Climate Justice – is that the tech company allegedly objects to employees speaking critically about its failure to be more environmentally responsible.
Yet, there are potential dangers here for Amazon in the UK. In Grainger plc v Nicholson (2010) IRLR 4, the Employment Appeal Tribunal established that an employee’s belief in climate change could constitute discrimination on the grounds of a philosophical belief.
So, we could have situation where Amazon employees who are taking part in quite peaceful and lawful climate change protests end up being dismissed. This would open up the possibility that employees of Amazon UK might have the right to bring claims for direct discrimination (Section 13: Equality Act 2010) in respect of their philosophical beliefs (Sections 4 and 10 of the Act).
In the USA, there could be even more serious legal implications – infringing the right to free speech which is protected under the Constitution.
Perhaps Amazon needs to go back to the drawing board …
A link to an article on the BBC News App can be found below:
It has just been announced that the well known UK construction company Balfour Beatty has just had a contract terminated by one of its clients.
The client in question is MI6 or the UK Special Intelligence Service, the equivalent of the CIA and the employer of Britain’s best known (but fictional) spy – James Bond. The Service is based at Vauxhall Cross on the River Thames.
Termination of contract can be a pretty dry area, but mix it in with the world of secret intelligence services and you have a story that will be of interest to a potentially large audience.
Who cares?
The company’s shareholders will almost certainly care about this and a large part of the public will be keenly interested to know the facts behind this development.
What went wrong?
Balfour Beatty had been contracted to refurbish the HQ of MI6. In order to carry out the job, the company had in its possession floor plans of the building. Somehow these plans went missing – although they were later recovered – but too late the damage had been done.
Mindful of the mind boggling ramifications of this huge security breach, the UK Foreign Office, which has overall responsibility for the work of MI6, promptly removed Balfour Beatty from further involvement in the middle of the refurbishment project.
A link to the story as reported in The Financial Times can be found below:
I would assume that the Foreign Office is on pretty safe legal ground when it made the decision to terminate Balfour Beatty’s contract. The loss of highly confidential documents by the company could represent nothing less than a material breach of contract. This arises in situations where one of the parties acts in such a way that it completely undermines the contract. The breach, in other words, is so serious because it goes to the very roots of the contract.
The victim of the breach can then potentially use the remedy of rescission i.e. terminate the agreement. The remedy of damages is also available to the victim.
Rescission is actually a much more common remedy than you otherwise might think. In terms of both the Sale of Goods Act 1979 and the Consumer Rights Act 2015, a buyer may choose to terminate a contract of sale in situations where the trader supplies goods that fail to comply with, for example, the implied duty of satisfactory quality.
In employment contracts, an employer is entitled to dismiss an employee in circumstances where the individual commits an act of gross misconduct (theft, violence, gross negligence or failure to follow lawful orders). The Employment Rights Act 1996 recognises that there will be situations where the employer is entitled to terminate the contract of employment and there will be nothing unfair or wrongful about the dismissal (presuming, of course, that proper disciplinary procedures have been followed).
In the well known Scottish employment law decision of Macariv Celtic Football & Athletic Club [1999] IRLR 787 SC, a football manager had his contract terminated quite legally by his employer owing to the fact that he had repeatedly failed to follow lawful and reasonable orders. This failure by the employee to honour the terms of his contract was nothing less than a material breach of the agreement.
Conversely, an employee may choose to regard the employment contract as terminated in situations where the employer has breached the implied duty of trust and good faith. This could occur where the employee was subjected to bullying and harassment by colleagues and the employer (being aware of this) does nothing meaningful or concrete to deal with this. In the face of the employer’s indifference (or collusion), the employee could regard him/herself as constructively dismissed.
Particularly serious for the employer could be situations where the bullying or harassment are motivated by hostility towards an individual’s protected characteristic in terms of the Equality Act 2010 e.g. age, disability, gender reassignment, race, religion or belief, sex, sexual orientation.
Back to Balfour Beatty: it looks as the company has no one to blame for this mess, but themselves. MI6 or the Foreign Office obviously felt that the loss of sensitive (Top Secret?) documents was such a serious development that there was no choice to terminate the contract with immediate effect.
Seán Crossan's Scots Law 