Business Law Assessment

Business Law Assessment

Question 1

There exists a contract in restraint of trade between Globe Tickets Ltd and Juliet. The courts defined a contract in restraint of trade to be an arrangement whereby the employer agrees with the employee or any other party to restrict their future liberty in carrying out the trade with other parties which are not a party to that contract.[1] The essence of such an arrangement is to ensure that first the employer is cushioned from business competition from his former employers; and secondly that the salient trade secrets and confidential information of the business are kept a secret in a manner that does not harm the employer’s business. Juliet explicitly flouted the restraint of trade clause barring her not to represent sportsmen nor sell tickets relating to opera and classical music or theatre within two years after ceasing to be employed by Globe. In as much as this seems straightforward, Globe Tickets Ltd. is advised that courts have a structured approach to solving such disputes.

There are no hard and fast rules while interpreting clauses on restraint of trade. Courts tend not to enforce a restraint of trade clause which is made by an employer merely to protect the employer from competition. There must be some cogent legitimate proprietary or business interest which must be protected by the employer. The nature of the interest in question determines the preferable length and geographical extent of the restraint of trade provision. Courts are also alive to the fact that a prolonged restraint means that the employee remains without income for a while. If the Company goes ahead and sues Juliet, the most likely approach of the Court would be as explained below.

The first question that has to be asked would be whether the restraint is reasonable. In the case of Nordenfelt v Maxim Nordenfelt Guns &Ammunition Co Ltd[2], McNaghten LJ, held that contracts in restraint of trade are generally in contravention of public policy to the extent that they bar any sought of competition against the employer. An exception to this conception, however, is that if the restraint is limited in scope and serves a legitimate purpose, then it can be enforceable. The onus of proving that the clause was reasonable squarely lies on Globe Tickets Ltd.  Secondly, the court will determine the legitimacy of the purpose of inserting that clause in the contract. In the case of Littlewoods Organization Ltd v Harris,[3]It was asserted that at this point, the employer cannot rely on the general perception of trade secrets. There has to be a concise elucidation of the trade secrets that are being protected and what the employer would lose if they are not protected.

In the case at hand, given the fact that the employee decided to sabotage her former company by soliciting business for the new employer using the previous’ contacts, there is a legitimate interest that has to be protected by the law. Also, the nature and scope of restraint are not extrapolated to frustrate the employee technically. Therefore, Globe Tickets Ltd. are likely to succeed in their claim against Juliet.

Question 2

From a Labour Law perspective, for purposes of determining who an employee is, there are a number of tests that are employed. The very first test in this respect is the control test. Under the control test, if the master controls the actions of the servant or the employee, then an employment relationship subsists. This position was taken in the case of Yewens v Noakes.[4] Regarding Frank’s working conditions, in as much as his attendance at the place of work is not so much regulated, the employer superintends all the other aspects of work. From this perspective, he can easily be regarded as an employee.

Secondly, there is the integration test. Under this test, Courts consider whether the person or his or her role forms part of the organization. If what the servant does form the core business of the organization, then he or she can be considered as an employee. In Express & Echo Publications Ltd. v Tanton,[5] It was pronounced that under a Contract of service, an employed person is part of the business, and he carries out work which is an integral part of the business. On the other hand, in a contract for service, even though work is done for the firm, it is not fundamental to the operation of the business. Considering the case at hand, the role of guarding and inspecting areas at night is so central to the firm in the sense that the security company cannot be in operation without the services of people in Frank’s position. This approach was reaffirmed in Stevenson Jordan and Harrison v Mc Donald & Evans.[6]

There is also the substitution test under which, if the servant is allowed by the employer to take leave or to abscond duty and another worker can substitute his position, then he cannot be deemed to be an employee. In the case at hand, it appears that there was no obligation for Frank to appear at work and that he could easily be replaced. Finally, there is the business test. Also known as the economic reality test, the business test is concerned with whether or not the worker is in the business on their account. In Ready Mixed Concrete v Ministry of Pensions and National Insurance [1968] 2QB497, the court considered a number of factors associated with a contract of service and concluded that the independence with which the plaintiff operated would not render him an employee. Looking at all these tests, it would be plausible to conclude that Frank was an employee of the theatre.

Question 3

The Equality Act 2010 is a protectionist instrument which was enacted to curb discrimination and differential or preferential treatment in many spheres of human life. The Act stipulates that a person may not be discriminated against on grounds of sex, gender, race, religion or disability. This provision also applies when it comes to matters of employment. In the case at hand, Ranjat was denied a job because all the requirements of the job did not augur well with his religion and race and this occurred despite his justification of alternate approaches. This in many instances would readily amount to discrimination on the two grounds, but a closer look calls for more details.

The requirement of not wearing beards in the factory and that of putting on a safety helmet, are technically opposed to the Sikh religious faith. In addition to this, being subjected to an English test even though it was not a major requirement slightly points to racial discrimination. The provisions of the Equality Act 2010 are not absolute, however. So long as the employer can justify the reasons for actions taken, the allegations would stand no more. The justification given must point to the fact that first the stipulation is an occupational requirement. Secondly, there has to be a good reason or legitimate purpose of applying the requirement. It must also be proportional to invoke the requirement. That means that the rule must be the best way possible of achieving the goals of the employee. Finally, the employer must have reasonable grounds to believe that one does not meet the requirements.

Looking at this case, it is evident that the employer had a justification for every requirement imposed on interviewees, especially Ranjat. In the factory, it is of primary interest that hygiene is maintained and since Ranjat did not give an alternative of maintaining hygiene with his beard on, this cannot be construed as discrimination. Also, the safety of employees must be guaranteed by the management and as such the Company cannot be faulted for requiring that employees wear helmets. Finally, communication is essential in that setting, and English test was in order if it was aimed at establishing the communication skills of the interviewee.

 Question 4

The case of Fred and Yogesh reveals a number of malpractices by employers, especially when managing their employees. This dispute presents two major issues; the first one being unfair dismissal. The manner in which Fred and Yogesh were dismissed from work is unprocedural, and it disregards the provisions of the Employment Act. The two employees were first dismissed before being given a chance to explain themselves or to appeal. At Common Law, an employer is at liberty to dismiss the employee even without giving reasons. This was evidenced in the case of Ridge v Baldwin.[7] However, the employer has an obligation to give sufficient reasons for the dismissal. Fred and Yogesh were not subjected to a fair administrative action because they were not given a chance to say their side of the story before being dismissed.

The second issue presented by this case is that of differential or preferential treatment at the place of work. While two employees were dismissed even without explaining themselves, Anila’s job was still intact. She was not even investigated at all even though they had been working together for over two years. Therefore, the two employees who were prosecuted may also institute proceedings on grounds of discrimination from their employer.[8] Fred may not have any real claim because he was ultimately convicted. Yogesh, however, has the avenue of filing civil suits for false incarceration and subsequently sue the employer for discrimination at the place of work.


Basson, A. C., & Strydom, E. M. L. ‘Restraint of trade; Essential Labour Law’ 4th edn Oxford,   Oxford University Press, 2005

Collins, H.. Employment law. Oxford, Oxford University Press, 2010.

Hardy, S. T. Labour law in Great Britain. Alphen Aan dens Rijn, The Netherlands:           Kluwer            Law International, 2011.

Smith, I. T., Wood, J. C., & Baker, A.. Smith & Wood’s Employment Law. Oxford, UK:    Oxford             University Press, 2003.

[1] Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269 at page 317

[2][1894] AC 535 at 565

[3](1977) 1 WLR 1472 at 1485

[4] (1881) 6 QBD 530

[5] [1999] IRLR 367

[6] [1952] 1 TLR 101

[7] [1964]A.C 40

[8] Hardy, S. T. Labour law in Great Britain. (Alphen aan den Rijn, The Netherlands: Kluwer                 Law International, 2011), 76.