Employment Appeal Tribunal Rules in Favour of Claimant in Breach of Contract Case
Claimant awarded three months' notice pay after the EAT found Loesche Energy Systems Ltd breached contract terms.
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Tribunal Overturns Initial Decision, Finding Contractual Breach
The Employment Appeal Tribunal (EAT) has ruled in favour of a claimant, Mr Sita Rama Swamy Kankanalapalli, in a significant breach of contract case against Loesche Energy Systems Limited. The initial Employment Tribunal had dismissed Mr Kankanalapalli's claim, but the EAT found that the respondent had failed to consider crucial aspects of the claimant's submissions regarding the contractual offer. Specifically, the EAT determined that the conditions within the offer letter were conditions subsequent, not precedent, and that the respondent did not possess an unrestricted right to withdraw from the agreement.
The case centred on a job offer made to Mr Kankanalapalli for the position of project manager, with a proposed start date of 1 November 2022. The offer was made subject to satisfactory references and a right to work check. However, the respondent later rescinded the offer before the start date. The initial tribunal concluded that as the conditions had not been met, no binding contract existed. Alternatively, if a contract did exist, the tribunal suggested minimal notice was required.
The EAT, led by Judge Susan Walker KC, disagreed with the initial tribunal's approach. It found that the employment tribunal erred by not properly considering the claimant's arguments that the contractual conditions were subsequent. Furthermore, the EAT held that the tribunal took into account matters not known to both parties at the time the contract was formed when assessing an implied term regarding notice.
Three Months' Notice Awarded
In its decision, the EAT concluded that reasonable notice in this specific case would have been three months, and a term to that effect should be implied into the contract. Consequently, the respondent was found to be in breach of contract for terminating the agreement without providing this reasonable notice. The EAT decided to determine the matter itself, rather than remitting it back to the Employment Tribunal. The tribunal found that the conditions, including satisfactory references and right to work checks, should be interpreted as conditions subsequent. It was noted that the probationary period, also a condition, was clearly a subsequent condition as it could only occur after the contract's commencement.
The EAT also addressed the respondent's reliance on the contract of another employee to argue for minimal notice. Judge Walker KC stated that evidence of an employer's usual practice does not equate to custom and practice in the industry and that the circumstances of the other employee's contract were not directly comparable to Mr Kankanalapalli's situation.
While the claimant was not awarded relocation expenses or holiday pay, as he had not commenced employment, the successful claim for breach of contract resulted in an order for the respondent to pay the claimant three months' notice pay. The EAT found that the contractual term concerning notice had not been discussed or agreed upon at the time the contract was entered into, necessitating the implication of a term for reasonable notice.
Read the entire judgment here: Mr Sita Rama Swamy Kankanalapalli V Loesche Energy Systems Ltd EAT 49
