Restrictive covenants and unfair dismissal
Forshaw and others v Archcraft Ltd [2005] IRLR 600


The three claimants worked for a manufacturer of window products that employed 13 highly skilled people whose training lasted for up to two years. After two senior employees, one of whom was related to all three claimants, left the company to set up a rival business, the employers feared, with some justification, that the claimants would leave to join the new business.


The employers decided to ask the claimants to 'commit' themselves by signing a new contract of employment, containing a restraint of trade clause imposing a nationwide ban on their working in a competing business for a period of 12 months following termination of their employment. The claimants refused to do so and were dismissed.


A tribunal found that, although the proposed restraint was 'doubtless wider than necessary', the claimants' refusal to sign the contracts was 'some other substantial reason' for their dismissals and that, in the circumstances, those dismissals for that reason were fair. The Employment Appeal Tribunal (EAT) allowed the claimants' appeals.


An employer cannot assert as a potentially fair reason for dismissal the fact that an employee refused to sign up to unreasonable terms of employment. Even though the claimants made no counter-proposals as to restraint terms that might be reasonable, there was no obligation on them to do so. It was the employers who wanted to impose the restraint and it was for them to come up with reasonable terms.


This seems clearly to be a correct interpretation of the law. It also underlines the dangers of drafting restrictive covenants that are over-ambitious in their scope. Nevertheless, a fair dismissal for refusal to agree to a reasonable variation in contract terms remains possible (see RS Components Ltd v Irwin (1973) IRLR 239, which is referred to in the judgment).





Disability discrimination

Dunham v Ashford Windows [2005] IRLR 608


In this case, a question arose as to whether a fork-lift truck driver was protected by the Disability Discrimination Act 1995. He asserted that he had 'severe reading and writing difficulties'. The employers contended that, although he might have learning difficulties, he did not have a clinically well-recognised mental illness or a specific mental impairment.


A tribunal received an expert report from a consultant educational psychologist, which showed that the driver had 'generalised learning difficulties causing a cognitive or mental impairment'. However, the tribunal held that the claimant had not established a specific mental impairment or clinical condition. The tribunal directed itself in accordance with the decision of the EAT in Morgan v Staffordshire University (2002) IRLR 190, which suggested that where there is a mental impairment that neither results from nor consists of a mental illness, it would 'require substantial and very specific medical evidence to support its existence'. The tribunal noted that the expert psychologist was not a medical practitioner and it said that there was no 'specific medical evidence... to identify what, if any, mental impairment the claimant suffered from'.


The EAT allowed an appeal and substituted a decision that the claimant had a mental impairment for the purposes of the 1995 Act. There was a clear distinction between a mental impairment consisting of learning difficulties or a mental handicap, and mental illness.


There is no requirement to establish a clinically well-recognised illness in a case that is not based on mental illness at all. If a claimant who bases his case on learning difficulties and seeks to establish a mental impairment had to prove mental illness, then claimants with what may be very serious disabilities, which have serious effects on their functioning generally or in a specific area of function, would be excluded from the scope of the Act.


A tribunal hearing a mental impairment case based on learning difficulties should look for expert evidence of an identified condition. The EAT acknowledged: 'It is unlikely to be sufficient for a claimant to put his case only on the basis that he had difficulties at school or is "not very bright". Tribunals are likely to look for expert evidence as to the nature and degree of the impairment from which a claimant claims to suffer... and for evidence of a particular condition from which the claimant suffers.'


The employment tribunal confused an identified condition that is generalised - in other words, has widespread effect &150; with evidence that is not of any identified condition at all. The tribunal was also wrong to rely on the fact that the claimant's expert was a psychologist and not a medical practitioner.


In a case of learning difficulties, there is no reason why the essential evidence that established the nature of the claimant's condition should not be provided by a suitably qualified psychologist. In this case, the psychologist's unchallenged report demonstrated that he had very substantial experience in the relevant field.


By Martin Edwards, Mace & Jones, Liverpool and Manchester