In a very recent Decision of the Employment Court (24/07/2015), the issue came up whether or not laid-off meat workers who were waiting for work at the commencement of the new meat-processing season were employees under the Employment Relations Act. The Court held that they were as the definition of “employee” included “a person intending to work”. Consequently industrial action, whether it be by way of a strike or lockout included a “prospective employee” or “someone who proposes or wishes to work”.
Employment Court Rules on Forfeiture Clauses on Resignation
Many employment agreements contain a provision that if the employee gives notice of termination and that notice is insufficient, then an amount of final pay is forfeited. It is usually equal to the notice period not worked. A Miss Livingstone had such a clause which provided for a six week notice period and she decided to give only two weeks notice. When the employer complained, it made no difference to her unilaterally decided departure date, and consequently the employer deducted four weeks pay being the difference between the two weeks actual notice and the six weeks contractual notice. The Employment Court held that such a forfeiture clause was unenforceable as the clause bore no real relationship to actual additional costs incurred by the employer, and was in reality a penalty provision which was intended to encourage Miss Livingstone to provide the proper six weeks notice. The employer could not provide any evidence of any actual financial losses to the business as a result of Miss Livingstone’s breach of her employment agreement. A penalty however was awarded against her as she still had breached her employment agreement.
Such contractual clauses need to be reconsidered and, probably in most cases now, redrafted. There must be a correlation between a business’ actual and reasonable losses incurred as a result of lack of proper notice and the final pay.