In the English case of Duchy Farm Kennels Limited v. Graham William Steels,[4] the High Court was faced with an important issue that has never been the subject of an appeal judgment before: will the breach of confidentiality by a former employee release the former employer from its obligations to pay payments under a settlement agreement? This behavior can occur if you want to make installment payments. In the United Kingdom, the term "settlement agreement" refers to what used to be called the "compromise agreement". However, both are exactly the same. In Jersey and Guernsey, such agreements are still called compromise agreements. But there is a relevant decision in this area – a 2016 Royal Court of Guernsey decision (which should also be convincing in Jersey) – in which the employer refused to pay the settlement after signing a compromise agreement on the grounds that it claimed the employee had committed serious misconduct of which he was unaware at the time of the employer`s signature. Because of the facts of the case, the employer lost that case because it was found that the contested acts did not constitute serious misconduct. To clarify this issue, the Royal Court of Justice asked: "Is the employee guilty of conduct so serious that it constitutes a disdainful breach of the employment contract that entitles the employer to terminate the contract summarily?" and decided, on the basis of the facts, that the conduct was not sufficiently serious to constitute a disdainful breach. In addition, the tribunal found that the employer, although under the previous directive, was aware of the alleged misconduct well before the dismissal. As a result, the employer was unable to withhold payment. The relevant device here is a guarantee – employers often try to protect their position from any misconduct discovered retrospectively by asking for a guarantee in the compromise or settlement agreement stating that severance pay is conditional on the fact that there are no circumstances of which the person is aware that would give the employer the right to terminate their employment relationship without notice. Breach of such coverage may entitle the employer to reimburse severance pay on the basis that the employee`s insurance was false. In practice, this decision confirms the importance of carefully formulating compromise agreements.

Employers should not assume that a confidentiality clause drafted in general terms will release them from their payment obligations if an employee has breached them. Solutions may include drafting a confidentiality clause as an express condition of the contract; Any breach of a condition should allow the employer to stop payments. Alternatively, employers may be advised to include a clause that provides for the reimbursement of payments in the event of a breach of confidentiality by an employee. At the time of the termination and in order to give Mr. Easterbrook the opportunity to benefit from McDonald`s severance pay plan, the termination was found to be "without cause" (i.e., through no fault of Mr. Easterbrook). The value of the seeding agreement would be over $40 million (£35 million). When an employee leaves on agreed terms, a compromise agreement is used to ensure that the employee waives certain rights – and in this agreement, contractual means are available to both parties to protect their interests. The same type of clause may be found in any settlement agreement relating to a capital participation or other long-term incentive plan.

The Chiverton Court v Sahara City Co Ltd[7] considered a complaint of unfair dismissal. Despite a strained employment relationship with numerous differences of opinion between the parties, dismissal was cited as the sole ground for dismissal. The employee had received a dismissal letter stating that the employment relationship would be terminated ten days later due to a decline in turnover. The address of the website you are using is not linked to any of the pages of Sorry for the inconvenience. [4] Duchy Farm Kennels Limited v. Graham William Steels [2020] EWHC 1208 (QB). In Glenn Aaron v. Ct Plus Jersey Limited,[5] the court considered whether an employer who actually knew that an employee could not meet a condition of the contract of employment could rely on an employee`s subsequent breach of that condition to refuse wages. The relevant condition required the employee to have adequate qualifications to work as a bus driver in Jersey.

This decision can have far-reaching consequences that go beyond the scope of driving qualifications. It remains to be seen whether the employer`s knowledge of an employee`s inability to meet the conditions of another context, e.B. the inability to conduct background checks prior to the commencement of employment prevents an employer from attempting to invoke such a clause against an employee at a later stage. There are a number of areas here where specialized employment law advice can prevent costly and reputational issues on the trail – hiring employment lawyers to draft a close relationship policy, conduct investigations, and assist with exit negotiations and settlement terms can mitigate the damage, as well as reduce management time and disruption. Aside from the fact that this dispute is taking place in the U.S. and affecting one of the most recognizable brands in the world, there are fundamental issues here that concern employers, boards of directors, and HR teams in general – and especially those who deal with well-paid people in companies that are sensitive to their reputation and privacy. So it`s worth noting that instead of sweeping this under the rug, McDonald`s chooses to make a very public attempt to recoup its ex-CEO`s payment – which may indicate its belief that this attitude cannot damage its reputation or even benefit from it. [1] David Slater v.

Consolidated Minerals Limited [2019] TRE 194. The legal battle over whether McDonald`s can recover the multimillion-dollar settlement and hand it over to its former CEO will be just as much about the wording of the severance pay documents and who knew what and when they know it, as well as Mr. Easterbrook`s behavior – which brings us to the big learning point. In the case of Ms. Tracy Walker (Fallaize) v. Alderney Air Services Limited[6], the Guernsey Labour Court (the Tribunal) considered an action disguised as unfair dismissal of a former worker who had returned to work for five weeks after an injury at work before resigning and bringing an action eight months later. The General Court wished to examine whether there had been a fundamental breach and, even if that were the case, was the action prevented by a delay in the dispute? The starting point of the decision was that the Jersey Legal Privilege Act is based on English law. The court was influenced by authorities claiming that legal privilege applied only to counsel for counsel, including a Supreme Court decision that refused to grant privilege to tax advisors.[2] A decision of the Employment Appeal Tribunal was reviewed in which it was found both undesirable and unnecessary to extend legal advice to recruitment consultants[3].

McDonald`s is now trying to recover the severance pay by saying that if they had known about these other relationships, the board would not have accepted the terms of the settlement and the termination would not have been "without cause." Mr. Easterbrook counters that McDonald`s is a sufficiently large and demanding employer, that it is inconceivable that he was not aware of these other intimate relationships. Relationship policies must be carefully thought out and designed to ensure that they are justified and cover what the employer is trying to accomplish. The purpose of these guidelines is generally to prevent real or obvious conflicts of interest. For example, to prevent someone from making a significant share or bonus bonus to someone they are in a relationship with. Failure to prevent this could be very embarrassing for regulated employers. In January 2020, an anonymous report to McDonald`s led to a new, more vigorous investigation into Mr. Easterbrook`s conduct. McDonald`s says this led to the discovery that it had sex with several other employees in 2018 and 2019. In addition, following the second sexual encounter with one of these individuals, McDonald`s alleges that Mr. Easterbrook allowed that person to have a discretionary allocation of hundreds of thousands of dollars of restricted share units. McDonald`s accuses Mr Easterbrook of lying, hiding evidence and cheating on the grounds that (a) Mr Easterbrook Easterbrook had deleted many intimate photos and videos from his phone, and (b) when asked about other sexual relations with employees during the initial investigation, he lied to the investigator.

[6] Tracy Walker (Fallaize) v. Alderney Air Services Limited, ED021/19. In practice, this decision confirms how important it is for employers to maintain and respect a fair dismissal process when considering dismissals. However, the focus will not be solely on the employer`s behaviour. Workers facing termination proceedings should be aware that the court can use its discretion to reduce an arbitration award to an employee if it is fair and equitable. Labour disputes like this rarely go to the courts of the Channel Islands, so there is no significant case law. The Jersey Labour Court (the Court) sought to consider an interesting issue in David Slater v. Consolidated Minerals[1] in relation to the discovery: Are recruitment consultants protected by legal privilege because of their status as unqualified legal advisors? In an action for protection against constructive dismissal, the court considered whether the communication between the former employee and the hired personnel consultants should be disclosed by the date of dismissal […].