Hill v. C.A. Parsons Ltd.

Hill v. C.A. Parsons Ltd.

[1972] Ch. 305, CA

Before this case it had been widely thought that equitable remedies were not available to enforce employment contracts, the general position being stated stated by Lord Reid in Ridge v. Baldwin [1964] A.C. 40 (at p. 65): '... there cannot be specific performance of a contract of service, and the master can terminate the contract with his servant at any time and for any reason or for none'. Hill v. Parsons created an exception, but the facts were highly unusual, and the casewas not thought to be capable of wide application. Later cases have extended it, but there can be little doubt that the general rule is still as stated in Ridge v. Baldwin.

Facts, decision, limits of case, limited to facts

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Facts of Hill v Parsons

The employer was pressured against his will to dismiss the employee, by a union (DATA) attempting to impose a closed shop, and purported to dismiss the employee on one months' notice (whereas he was held to be entitled to six months under his contract of employment).

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Decision

The employee obtained an interim injunction (whose effect was identical to a decree of specific performance), restraining the employer from dismissing him without the proper notice. The main effect of the remedy was simply to continue the employment relationship until the Industrial Relations Act 1971 came into force a few weeks later (on 28 Feb 72), s. 5 of which protected employees by providing that a dismissal for non-membership of a trade union would be an unfair dismissal. The Court of Appeal held (Stamp L.J. dissenting) that there is no rule of law against enforcing employment contracts using the remedy of specific performance (or injunction). It is a question of practice, and there are a number of exceptions to the general rule. Lord Denning MR noted that damages were not an adequate remedy in the case.

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Limits of decision

Hill v. Parsons appeared to create only the narrowest of exceptions to the general rule (see also Sanders v. Ernest A. Neale), Lord Denning M.R. commenting (at p. 316):

"If ever there was a case where an injunction should be granted against the employers, this is the case. It is quite plain that the employers have done wrong. I know that the employers have been under pressure from a powerful trade union. That may explain their conduct, but it does not excuse it. They have purported to terminate Mr Hill's employment by notice which is too short by far. They seek to take advantage of their own wrong by asserting that his services were terminated by their own 'say-so' at the date selected by them - to the grave prejudice of Mr Hill. They cannot be allowed to break the law in this way. It is, to my mind, a clear case for an injunction."

Three factors that were considered relevant by the majority in Hill v. Parsons were that:

1. the employer retained confidence in the employee.

2. the dismissal was being brought about by third party pressure,

3. the employee was not seeking actually to return to work, and

4. the only effect of the remedy was to give the employee protection (here a statutory provision which was about to come into force) to which he might reasonably have felt entitled.

Later cases suggest that the test is one of workability, which implies the need for either 1. or 3. It is also necessary to show (as indeed for any contractual claim for an equitable remedy) that damages would have been inadequate.

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Case virtually limited to its facts

Stamp L.J., dissenting in Hill v. Parsons, was not prepared to create an exception to the general principle (that equitable remedies are not available to enforce employment contracts), even on these unusual facts. The case was treated as exceptional, and virtually limited to its own facts in later decisions, Megarry J. commenting, for example, in Chappell v. Times Newspapers Ltd. [1975] I.C.R. 145 (at p. 159):

There were three main grounds for [the decision in Hill v. Parsons]. First, there was still complete confidence between employer and employee; the defendant did not want to terminate the plaintiff's employment but had been coerced by the union. Second, the Industrial Relations Act 1971 was expected to come into force shortly: it had been passed but the relevant parts had not been brought into operation. As soon as the Act was in force, one probable result would be that the closed shop would no longer be enforceable and the plaintiff would be free to remain a member of the union of his choice. He would also obtain the rights conferred by the Act to compensation for unfair dismissal if he was then dismissed. Third, in the circumstances of the case damages would not be an adequate remedy.

Megarry J's view was upheld when the case went to the CA.

By the middle of the 1970s, therefore, it was beginning to look as though Hill v. Parsons would never be followed (see also Sanders v. Ernest A. Neale), but to the surprise of a number of commentators, Warner J applied it in Irani v. Southampton and South West Hampshire Health Authority [1985] I.R.L.R. 203. Irani did not, of itself, extend the principle of the earlier case by very much, but later cases have done so, to a greater extent.

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These notes were last updated on 09 Nov 97.

Mail Paul Todd : SLAPNT@cf.ac.uk