Employee Resignation in Breach of Contract

In Sunrise Brokers LLP v Michael Rodgers [2014] EWHC 2633, the High Court considered what options an employer has when faced with an employee trying to resign without giving proper notice.

Mr Rodgers worked as a broker for Sunrise Brokers LLP (Sunrise).  He was subject to a 12-month notice period and enforceable post-termination non-compete restrictions.  In March 2014, he accepted an offer of employment from a competitor and purported to resign without notice, in breach of contract.  Sunrise refused to accept Mr Rodgers' resignation and asked him to return to work.  He refused and Sunrise stopped paying his salary.  The High Court held that (i) Sunrise was entitled to refuse to accept the purported resignation and keep the contract alive because it had a good reason to do so (namely preventing Mr Rodgers from competing); and (ii) Mr Rodgers was not entitled to be paid during his notice period because of his refusal to work (i.e. "no work, no pay").  It also clarified that he was not on garden leave because this could only be done at Sunrise's option, which it had not done.  Finally, the Court granted Sunrise an injunction preventing Mr Rodgers from working for a competitor for 10 months from the date of his last client contact.

This decision is encouraging for employers and is a very helpful example of carefully considered tactics being used by an employer to protect itself from an employee walking away in breach of contract.  Employers facing this scenario are advised not to take any rash action and to seek legal advice as soon as possible.

Topics:  Breach of Contract, Employer Liability Issues, Hiring & Firing, Non-Compete Agreements, UK

Published In: General Business Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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