Archive for June 10th, 2011

Following a dispute about Keiron Fallon’s decision to switch horses for the Epsom Derby last weekend, the Court of Appeal considered a racehorse owner’s appeal against the refusal to grant him an injunction in order to prevent Fallon riding a favourite from another stable. The Court of Appeal was not impressed by what it referred to as Fallon’s “cynical disregard of a contract'” that he recently signed to prevent him doing that very thing.

The earlier decision in the High Court to allow the race to go ahead rather than issue an injunction was overruled and the owner Mr Araci was successful. In the final analysis, neither horse won on the day… but that may have been different if the injunction had not been granted! Isn’t this the whole point of restrictive covenants?

Argument before the Court of Appeal centred on whether or not it would be “oppressive to the defendant or cause him particular hardship” if the injunction were granted.  The High Court, in its discretion, had found in favour of Kieron Fallon and had also found that damages would be an adequate remedy. The Court of Appeal did not agreen and decided that it would be a complex matter to settle the damages if Fallon were allowed to ride a competitor’s horse and that where there is a clear breach of a covenant which is designed to prevent a person from doing something he or she has promised not to do, there must be special circumstances such as restraint of trade contrary to public policy, before the court will exercise its discretion to refuse an injunction.

The Court of Appeal decision seems completely logical and may leave some commentators wondering how it could ever have been decided otherwise. It is worth noting that the legal costs are likely to be considerable in these cases and although employers often incorporate restrictive covenants in their employment contracts as a ‘cover-all’ they may not be worth the paper they are written on if the terms are unclear, the employee has casually or unwillingly agreed to be bound by the terms and the effect of the restriction would in practice cause the employee hardship.

For those reasons it is good practice to make such covenants as specific as possible to the individual and the circumstances concerned, as was the case here, and to review them regularly to ensure they remain relevant. General statements, casually dished out to all and sundry are less easily enforced.

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The Transnational Information and Consultation of Employees (Amendment) Regulations 2010 are in force from 5th June 2011 and 1st October 2011.

The original EC Works Council Directive of 1994 required Member States to introduce laws requiring large scale  transnational employers  (1000 workers and over) to inform and consult with workers on a wide range of matters. In the UK this has been achieved by the Transnational Information and Consultation of Employees Regulations 1999, SI 1999/3323 . Another version, Directive 2009/38/EC was passed on 6th May 2009 which requires changes to be made to the 1999 regulations by 5th June 2011.  These changes are now being implemented.

The Regulations:

  •     introduce new obligations on central management on the way that information and consultation should take place in EWCs;
  •     define more clearly what constitutes a transnational issue which EWCs are entitled to consider;
  •     require that EWCs are adapted following significant structural changes to the company to ensure that all employees are represented (the ‘adaptation clause’);
  •     create a new right for members of EWCs and Special Negotiating Bodies to receive necessary training;
  •     create an obligation for the central management to provide the EWC with the means required to fulfil its duties
  •     provide for a link to be established between consultations at national level on issues where national employee representation bodies are entitled to be consulted and related consultations with the EWC where issues related to transnational matters;
  •     increase the maximum penalty from £75,000 to £100,000 that can be awarded for a breach of  the Regulations
  •     establish the Central Arbitration Committee (CAC) as the tribunal to hear the majority of complaints brought in Great Britain.

The full Regulations can be found at the goverment website.

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