UNLAWFUL DEDUCTION FROM WAGES
CONTRACT OF EMPLOYMENT – Implied term/variation/construction of term
The Claimant was given a small shareholding in her employer as a condition of its sale to the Respondent and sold the shares to them under a Share Purchase Agreement. Part of the consideration for the shares were deferred earn-out shares and loan notes. By reason of that agreement, other agreements and the Articles of Association a Bad Leaver forfeited their loan notes and their shares were re-acquired. An employee who voluntarily resigned was defined in the relevant documentation as a Bad Leaver. The Claimant resigned and was treated as a Bad Leaver. The Employment Tribunal did not err in holding that the Bad Leaver provisions were not unconscionable or a penalty. The criteria for setting aside an agreement as unconscionable explained in Alec Lobb (Garages) Ltd v Total Oil (GB) Ltd [1983] 1 WLR 87 and Brian Strydom v Vendside Ltd [2009] EWHC 2130 were not satisfied. The ET did not err in holding that the Bad Leaver provisions were not a penalty as they were not imposed on breach of contract by the Claimant. Cavendish Square Holdings BV v Makdessi [2016] AC 1172 considered. The ET did not err in holding that the Bad Leaver provisions were not a deduction from wages within the meaning of the Employment Rights Act 1996 as the claim was excluded by section 27(2)(e). The Claimant was not permitted to pursue an argument that the Bad Leaver provisions were a restraint of trade. This point had not been taken in the ET and it would have required additional findings of fact. The Blackpool Fylde and Wyre Society for the Blind v Begg UKEAT/0035/05 and Rance v Secretary of State for Health [2007] IRLR 665 applied.
Citations:
[2019] UKEAT 0100 – 18 – 2802
Links:
Jurisdiction:
England and Wales
Employment
Updated: 04 May 2022; Ref: scu.634368