Rose v Dodd

A Law Society intervention in a sole solicitor’s practice does not itself terminate the firm’s contracts of employment. Neither suspension of the solicitor’s practising certificate nor a temporary restriction on the work available necessarily frustrates those contracts.

Where intervention dissolves a solicitors’ partnership, termination of employment is not automatic. The court must consider the circumstances of the dissolution, the employment contract and the parties’ conduct. Employment may continue for winding up, a challenge to the intervention or an intended transfer of the practice.

Employment protection on a transfer depends on whether the contract survived until the transfer. If it did, the transfer regulations apply. If an earlier dissolution terminated it, they do not.

The Law Society intervened in the sole practice of Mr Dodd and his practising certificate was suspended. Its agents told Mrs Rose, his conveyancing secretary, that she was redundant. She nevertheless continued working temporarily and was paid by Mr Dodd. The practice was subsequently transferred as a going concern to a new firm.

The employment tribunal found that the intervention had not terminated Mrs Rose’s employment and that her contract transferred to the new firm under the Transfer of Undertakings (Protection of Employment) Regulations 1981. It dismissed her claims against Mr Dodd for redundancy pay, notice pay and unpaid wages. The Employment Appeal Tribunal dismissed her appeal.

The central question was whether intervention itself terminated her contract by operation of law and was therefore deemed a dismissal under section 136(5) of the Employment Rights Act 1996. The court also addressed the distinct position of employees of an intervened solicitors’ partnership.

1. Appeal dismissed. The employment tribunal made no error of law in finding that Mrs Rose remained employed until the practice was transferred. The Law Society’s intervention was not an event which terminated her contract by operation of law or constituted a deemed dismissal under section 136(5) of the Employment Rights Act 1996.
2. The Solicitors Act 1974 does not provide that intervention terminates contracts of employment. Intervention protects the public by controlling practice money, mail, papers and files. It neither transfers ownership of the practice to the Law Society nor authorises it to operate or close the practice. Paragraph 16 of Schedule 1 is ancillary to the Society’s express powers. Clear words would be needed to authorise the Society to terminate a contract to which it was not a party.
3. Suspension of a sole practitioner’s practising certificate does not itself end employment. The solicitor and staff may lawfully undertake work connected with challenging the intervention, winding up the practice or arranging its transfer. A temporary interruption or restriction in an employee’s work does not necessarily frustrate the contract. Here neither party terminated the contract: Mrs Rose continued working and Mr Dodd paid her.
4. In the partnership context, intervention and suspension may make continued practice by the existing partnership unlawful and dissolve it under section 34 of the Partnership Act 1890. Dissolution does not, however, invariably terminate every employment contract. The circumstances of the dissolution, the contractual terms and the parties’ conduct must be examined. Under section 38, employment may continue for the limited purposes of winding up. It may also continue while an intervention is challenged or a transfer is arranged. Conversely, impossibility or illegality of all the employee’s work may produce frustration or a repudiatory breach.
5. The Transfer of Undertakings (Protection of Employment) Regulations 1981 apply where the employment contract survives until the undertaking is transferred and, but for the Regulations, the transfer would terminate it. They do not apply where an earlier dissolution has already terminated the contract. Mrs Rose’s contract survived the intervention and passed to the transferee firm.

1. Court of Appeal (Civil Division): dismissed Mrs Rose’s appeal and upheld the conclusion that her employment survived the intervention and transferred to the new firm: [2005] EWCA Civ 957.
2. Employment Appeal Tribunal: HHJ Serota QC dismissed the appeal on 30 November 2004, finding no error of law in the employment tribunal’s decision. The judgment gives the reference UKEAT/05/17/04/ILB but no neutral citation.
3. Employment tribunal: dismissed the claims against Mr Dodd for redundancy pay, notice pay and unpaid wages. It found that the intervention had not terminated the employment and that the contract transferred with the undertaking.