Willow Oak Developments Ltd (trading as Windsor Recruitment) v Silverwood: [2006] EWCA Civ 660

CA: Buxton, Neuberger LJJ and Sir Martin Nourse: 25 May 2006

As a means of protection against loss of its employees to competitors, the claimants' employer required the employees to enter into widely drawn covenants restricting their business activities after their employment ended. The claimants refused and were dismissed. Upholding complaints of unfair dismissal, the employment tribunal held that the covenants were so unreasonable that the refusal was not a "reason of a kind such as to justify the dismissal" for the purposes of section 98(1)(b) of the Employment Rights Act 1996, nor, alternatively, could the claimants' dismissals be regarded as fair under section 98(4), since there had been a lack of consultation, no proper opportunity for the employees to understand the covenants and no warning that a failure to agree might result in dismissal. The Employment Appeal Tribunal dismissed the employer's appeal, holding that, although the employer's reason for dismissal fell within section 98(1)(b), the claimants' dismissals were unfair under section 98(4).

The employer appealed.

The Court of Appeal held:
Although an employee's refusal to accept covenants proposed by the employer for the protection of his legitimate interests could be a reason "of a kind" such as to justify dismissal under section 98(1) of the Employment Rights Act 1996, the claimants' employer did not in all the circumstances, in particular in giving no warning that failure to agree the new terms might result in dismissal, act reasonably, as required by section 98(4), in treating that reason as a sufficient reason for dismissing the claimants and, therefore, the dismissals were unfair.

The appeal was dismissed.

Appearances: Helen Mountfield (Gaby Hardwicke, Eastbourne) for the employer; David N Jones (Chadwick Lawrence, Huddersfield) for the claimants.