Contractual terms

Case 10: The facts

Mr Smith was appointed managing director of a firm in St Helens, on the condition that he relocate within nine months. The time limit was extended twice – but when he still had not moved more than 18 months after starting the job, he was given a further six-month extension and a specific date by which he had to move. However, he was dismissed without warning a few days before the deadline because he had not done so.

The dismissal was automatically unfair because the employer had not followed any procedures; a tribunal found it was also unfair substantively because there was not a fair reason to dismiss. The employer said Smith’s compensation should have been reduced, as it would have dismissed him fairly at a later date.

The ruling

The EAT said the compensation could only be reduced if Smith’s failure to relocate was a sufficiently serious breach of contract for the employer to be able to dismiss him. To establish this, the tribunal should have asked whether it was an essential part of the contract that he relocate within a certain period. It had not done so, so the case was sent to a new tribunal for re-hearing.

Flamco Ltd v Smith UKEAT/0019/07