Victoria Symons leads the corporate team at boutique law firm Brecher.
Downton Abbey - ambiguities can be lucrative (for lawyers)
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M&A Weekly Update: when is there a duty of good faith between contracting parties; prospectuses: acceptable languages; and more
9 April 2014
Well, it’s all hotting up now isn’t it? Bates’s return may have made Anna’s day, but it ruined poor Thomas’s (sorry, Mr Barrow’s).
Overlooking Thomas’s misdemeanour with Jimmy for now, Lord Grantham seems certain to want Bates back as his valet, but how will he go about this? Is he entitled to demote Mr Barrow back to plain old Thomas?
Employee terms are, in essence, merely contracts and therefore the usual contract rules apply, so that any changes will require the consent of both parties. It is unlikely Thomas will accept any changes easily, although in practice is takes a brave employee indeed to withstand the pressures of an employer determined to make a change, however ‘wrong’ that may be.
My advice to Lord Grantham, and indeed to numerous clients in a similar situation, would be to stop and think: what does Thomas’s existing contract say? Sounds easy, and in a perfect world it would be, assuming a nice neat written contract had been signed and tucked away for prosperity. But you’d be amazed how rare that is. More often than not, there is no contract, or if there is it was never signed, or if it was signed things have since ‘moved on’. You need to keep in mind the basics: contract terms can be established in three ways, either:
· express, being agreed explicitly between the parties either in writing or orally; or
· implied, being incorporated through custom and practice (or ‘course of dealing’ as us lawyers say); or
· incorporated, being imposed by statute (eg the Equality Act 2010).
Just to add to the complexity, not all terms will form part of the contract. Some will be expressly stated as non-binding (usually the best bits like Christmas bonuses) and some will be policies or guidance as to how the contract itself is performed (eg polish silver on Monday, plump cushions on Tuesday…). Although these non binding provisions do not strictly require Thomas’s consent to change, employers need to tread carefully as alterations can have the effect of eroding the trust and confidence of staff and in extreme cases can amount to discrimination.
When Lord Grantham has identified what Thomas’s terms are, the next step is to work out what changes are required. Assuming he is retained at all, what is Thomas’s new role to be and how does this differ from his existing position? It may be that Lord Grantham can avoid having to obtain specific consent if the existing terms of employment are sufficiently broad to encompass these changes, or if the contract permits him as employer to make these changes. Before he seizes this opportunity, however, he should be reminded that any ambiguity in the drafting will be construed against him as employer and that any clause giving him unilateral power to amend terms will be interpreted narrowly.
If fundamental changes are required and there are no ‘get outs’ to assist, Lord Grantham will need either:
· to obtain Thomas’s express consent to the changes (this can be in writing or oral); or
· to impose the changes in any event and hope that Thomas’s continued conduct will be sufficient to establish his implied agreement to the new terms; or
· to terminate Thomas’s existing contract and (assuming they still want him) offer him continued employment on new terms.
Sounds easy? Well it is, except of course that if you attempt to impose changes and the employee does not agree, you could face a claim for constructive dismissal. Oh, and if you terminate and offer new terms of employment, you could face a claim for wrongful dismissal (if insufficient notice is given) or unfair dismissal (if the change is not for a sound business reason). On the upside, each would lead to more legal issues to be resolved…