The Ogier Guernsey employment law team, headed by Advocate Simon Davies, scored another impressive victory recently in an employment tribunal case emanating from the sale of CI Traders Limited, ("CI Traders").
Mr Jones was an employee of Comprop prior to the transfer on 3 August 2007. Shortly after the transfer he filed an application with the employment tribunal in Guernsey, alleging that he had been unfairly dismissed. A hearing took place on 5 and 6 February 2008 and last week the Employment Tribunal issued its decision refusing Mr Jones' application.
Mr Jones had worked for Comprop since August 2001 and was its Chief Executive, responsible for investment and development work. Although his employment contract was with Comprop, as is so often the case in a group structure Comprop was assisted in many respects by its parent company, CI Traders, e.g. in relation to payroll services and human resources. Mr Jones' contract required any variations to be agreed and signed in writing in order to be effective. CI Traders made an attempt to standardise the terms and conditions of senior staff across its various subsidiaries in 2005, including those applying to Mr Jones, but these new terms were never finalised.
CI Traders received various takeover approaches and by December 2006 discussion with Sandpiper Bidco were well advanced. Mr Jones was brought into the discussions at that time and was from then on a principal architect of the takeover deal. Along with the other senior director of Comprop he was involved in many of the discussions with the lawyers drafting the takeover documents. In particular, he was involved in the discussions about what should happen to the staff of the various group businesses.
Looking after its staff was a major concern for the CI Traders' board. Unlike the UK, Guernsey has no legislation to protect staff in a transfer of undertakings situation. A clause was written into the takeover documents whereby the purchaser agreed to take on all existing staff members who wanted to transfer their employment over to the purchaser. This transfer (or 'novation') would be on terms which were substantially no less favourable than the employee's existing terms of employment. If an employee did not wish to transfer over to the new employer, they would remain employed by their existing employer but be made redundant in accordance with proper procedures. During the redundancy period such employees would be seconded to the purchaser.
On 25 July Mr Jones received a letter telling him about his bonus entitlement and noting CI Traders' assumption that he would be transferring over to the new employer when the takeover bid went through. This letter was to form an important role in the circumstances of the claim, as Mr Jones initially claimed that it constituted a dismissal letter.
The takeover bid required shareholder approval which was obtained on 30 July. On that date Mr Jones penned a letter to his PA, noting that the deal was scheduled to go through on 3 August. In his capacity as Chief Executive of Comprop he then informed her that he was being asked to transfer to the new employer along with other Comprop employees and that if he did not transfer over her job would not exist.
The takeover bid went through on 3 August. On 8 August Mr Jones sought legal advice regarding the proposed transfer. On 10 August he handed the letter dated 30 July to his PA, cleared out his belongings and went on holiday. Up until that date (10 August) Mr Jones continued working for Comprop, coming into work and liaising with other members of staff. It was not until the following weekend that Mr Jones told anyone that he was not transferring over into the purchaser's employment, leading ultimately to the claim for unfair dismissal filed on 30 August 2007.
In the claim form Mr Jones alleged that the letter of 25 July 2007 was a dismissal letter. He also claimed that his employer had changed from Comprop to CI Traders when CI Traders attempted to standardise the contracts in 2005 because he had indicated his acceptance to the new terms (which would have been more favourable to him in many respects). Mr Jones also made out several alternative cases. He claimed that if he hadn't been dismissed by the 25 July letter then there had been a constructive unfair dismissal as of 3 August, when the takeover went through. In this regard he argued that a proper redundancy procedure should have been invoked at a much earlier point in time.
The tribunal disagreed on all counts. It decided that Mr Jones had resigned in breach of contract on 10 August 2007. It concluded that Mr Jones was still in the employment of Comprop as at the date of his resignation. In this regard, the lack of an agreed and signed written variation of the original contract was fatal.
In concluding its judgment, the tribunal noted that this was not a case of unfair dismissal in any form but rather that Mr Jones had resigned from his employment without notice in breach of his contract.
This was a complex case which involved consideration of a number of areas of employment law, including issues as diverse as novation, constructive dismissal, unfair dismissal and redundancy.
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