Law Society’s Trainee Solicitor Contracts

 

By

 

Shirley Lewald-Jezierska

MSc (Psych), Postgraduate Diploma in Legal Practice,

PGDip (SocSc), PGCPSE, LLB (Hons)

 

 

 

Trainee solicitor contracts (“TSCs”)are ‘apprenticeship’ contracts, which gives broader rights to trainees than other employees  (see Edmonds v Lawson & Anor [2000] EWCA Civ 69 in which pupil barrister contracts are differentiated from trainee solicitor contracts and The Parish of St. Pancras, Middlesex v The Parish of Clapham [1860] 2El & El 742 at 749 referred to therein where an articled clerk of an attorney was held to be an apprentice; Oliver v JP Malnick and Company [1983] IRLR 456 where it was assumed without argument that a solicitor’s articled clerk was an apprentice;  and Uche v Sumal Creasey & Co. Solicitors ET Case No. 1902130/2002 where the Tribunal found that TSCs were ‘the same type of contract as an apprenticeship’).  However, TSCs are different to most apprenticeship contracts in terms of ‘termination’ because unlike most apprenticeship contracts, TSCs cannot be unilaterally terminated by either party except under Clause 22 relating to exam results. 

 

TSCs can only be terminated by (a) mutual consent by both parties signing the Solicitor Regulation Authority (“SRA”) TC3 form; or (b) by a SRA Adjudicator with or without application by either party after interviewing both parties; or (c) under Clause 22 of the contract; or (d) by ‘frustration’; or (e) on expiry of the contract.    Unless termination occurs in one of these ways, a ‘termination’ of the contract would not have occurred.  A ‘repudiation’ or ‘renunciation’ by one party and acceptance of same by the other will not terminate the contract.  This is because the acceptance of the ‘repudiation’ or ‘renunciation’ has to be by the SRA Adjudicator also who will then terminate the contract.   Note: since the SRA has power under Clause 20 (b)(i) of TSCs to terminate TSCs with or without application by either party it may be that the SRA is also a ‘party’ to the contract and liable to the other parties for any breach of the contract by the SRA.

 

A trainee solicitor cannot claim for wrongful or unfair dismissal (unless the termination relates to Clause 22) because:

 

(i)          a ‘dismissal’ as defined under s.95 of the Employment Rights Act 1996 (“the Act”) cannot occur because neither party can unilaterally terminate the contract; and

 

(ii)        dismissal for any of the ‘fair’ reasons as defined under s.98 of the Act cannot occur under the terms of the contract.  TSCs have express termination clauses which do not include any of the ‘fair’ reasons as defined in the Act and cannot be implied in the contract because termination clauses in  the contract are governed by (i) Statutory Regulations 1990 made under Section 2 of the Solicitors Act 1974; and (ii) at Common Law by laws relating to apprenticeship contracts. 

 

A claim for wrongful or unfair dismissal implies that the employer or employee can unilaterally terminate the contract lawfully or unlawfully and fairly or unfairly when in the case of TSCs they cannot (except under Clause 22 of the contract).  Since unilateral termination of the ‘contract’ cannot occur (except under Clause 22 of the contract) and for a ‘dismissal’ as defined under s.95 of the Act to occur, the ‘contract’ has to be terminated – which termination of the ‘contract’ must be ‘technical’ (Hogg v Dover College [1990] ICR 39 [EAT], it follows that a ‘dismissal’ cannot occur.  A breakdown in relationship between the parties, for example, does not constitute a termination of the ‘contract’.  Any alleged ‘dismissal’ from the training contract (prior to expiry of the contract) would in fact be a ‘suspension’, which suspension would be unlawful because there is no provision within the contract for suspension by either party.

 

Termination of the contract other than by mutual consent, frustration, expiry or under Clause 22 of the contract only occurs when the SRA Adjudicator terminates it and for this reason a dismissal as defined under s.95 of the Act cannot occur –

a contract cannot ‘cease to exist’ and ‘exist’ at the same time!

 

When termination is effected by a SRA Adjudicator, this would also not give rise to a claim for wrongful or unfair dismissal under the Act because termination would not have been effected by the ‘employer’ or ‘employee’ (as required under s.95 of the Act) but rather by a third party (the SRA) which is not provided for in the Act.  In the case of a termination of TSCs by the SRA upon application by the employer or employee, it is possible that a Tribunal may decide that despite the termination having been effected by the SRA it being at the application of the employer or employee as the case may be, a dismissal as defined in the Act has occurred, but the defendant in the case would no doubt dispute this to avoid liability as technically the contract was terminated by the SRA and it may be a matter that the Court of Appeal would have to decide upon.

 

However, after the TSC has been terminated, if the other employment contract provided for under Clause 9 of the training contract is then terminated, termination of that contract can give rise to a claim for wrongful or unfair dismissal because that contract is an ordinary contract of service (but which can only be terminated after the training contract is terminated).

 

However, other claims under the Act can be pursued in an Employment Tribunal in respect of TSCs because TSCs are also employment contracts (s.230(2) ERA 1996;  J Lymbury t/a John Lymbury & Co. v J McCrery [1998] UKEAT 217/98); Oliver v JP Malnick and Company [1983] IRLR 456 where the two ‘contracts’/dual capacity of a trainee solicitor’s employment was confirmed.    

 

Note: The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 do not apply to TSCs (s.20 of the Regulations) because TSCs are apprenticeship contracts.

 

There is no prejudice caused to trainees by their inability to claim for wrongful and/or unfair dismissal and to the contrary the restriction on the employer’s ability to terminate the contract is a huge advantage to the trainee because:

 

(i)         it prevents reckless termination particularly given that training contracts are hard to come by;

 

(ii)        trainees have the right to claim for breach of contract in the County or High Court for any breach relating to the contract e.g. failure by the employer to provide proper training; and

 

(iii)       in the case of an inappropriate termination of the contract by the SRA Adjudicator the trainee has the right of appeal to the Master of the Rolls under s.32 of The Training Regulations 1990.

 

TSCs are for a specific purpose, that of receiving training, and expire when training as contracted for is completed.  They are therefore ‘apprenticeship fixed-term contracts with flexible ending dates, ending when training is completed’ (Law Society guidelines on ‘Employment Issues During the Training Contract’).

 

Under Clause 9 of TSCs there is provision for additional terms of employment to be entered into but if there is any conflict between those terms and the terms of the TSCs, the terms of the TSCs prevail.

 

 A trainee therefore has two contracts of employment (a) the TSC (which is both a training and employment contract (Lymbury t/a John Lymbury & Co. v J McCrery [1998]); and (b) the contract containing additional terms (Clause 9 of the TSC and Oliver v Malnick and Company [1983]), which is normally the accepted letter of offer.

 

The contract containing additional terms cannot be terminated until the TSC is terminated because employment is governed by the TSC.   An employer therefore cannot ‘dismiss’ a trainee, except under clause 22, because he cannot unilaterally terminate the TSC which governs the employment.

 

In Wallace v CA Roofing Services Ltd (QBD) [1996] I.R.L. 435 it was held that the contract of apprenticeship remained a distinct entity known to the common law, its first purpose is training, execution of work for the employer is secondary; the contract is for a fixed term and can ordinarily be terminated only if the employer’s business ceased as a going concern or changed so fundamentally that the apprentice could no longer be taught the trade for which he was engaged (North East Coast Ship Repairers Ltd v Secretary of State for Employment [1978] I.C.R. 755); the contract cannot be terminated at will; an apprentice cannot be dismissed on grounds of personal unsuitability nor on grounds of redundancy (Batty v Monks (1863) 12 L.T. 832 considered); misconduct sufficient to justify the termination of a contract of service is not sufficient to justify the termination of an apprenticeship (Newell v Gillingham Corporation [1941] 1 AER 552 per Atkin J) the misconduct must be gross enough to repudiate the apprenticeship (Edmonds v Lawson QC and others [2000] IRLR 18); the employer cannot terminate the contract on grounds of illness of the apprentice unless the illness is so severe as to prevent the apprentice from learning the trade he is employed to learn.  An apprentice cannot be lawfully dismissed except within the terms of the contract (Whitely v Marton Electrical Limited [2003] ICR 495). 

 

A contract of apprenticeship secures ‘three’ things for the apprentice (Dunk v George Waller & Sons Ltd. CA 1970 April 28):

 

(i)         A money payment during the period of apprenticeship

(ii)        Training that will allow the apprentice to acquire skills which will be of value for the rest of his life

(iii)       Status

 

Therefore, if an employer terminates the contract in breach the apprentice would be entitled to compensation for:

 

(i)         wages until the expiry of the contract

(ii)        loss of training

(iii)       loss of status/future prospects

 

Even if these losses are difficult to assess or prove, some compensation for these losses must be made (Flett v Matheson [2006] EWCA Civ 53).

 

In the case of TSCs, since TSCs cannot be unilaterally terminated (except under clause 22), any alleged ‘dismissal’ by the employer other than under Clause 22 would, as stated above, in reality be a ‘suspension’ until the contract is terminated by the SRA Adjudicator and since there is no provision for suspension within the contract, the trainee could be entitled to:

 

(i)         wages under the contract during the period of suspension (Four Seasons Healthcare Limited v Maughan EAT [2004]);

(ii)        other benefits entitled to under the training contract during the period of suspension;

(iii)       compensation for loss of training during the period of suspension; and

(iv)       damage to or loss of status/future prospects caused by the suspension (e.g. delay in qualifying as a solicitor)

 

Any non-payment of ‘wages’ as provided for in the Act during suspension can be claimed under s.13 of the Act.

 

If an Employment Tribunal hears a case for wrongful or unfair dismissal of a trainee  under a TSC which is registered with the Law Society/SRA (which has not been terminated under Clause 22) and decides that a ‘dismissal’ occurred, the decision will be coram non judice (‘without jurisdiction’)/ultra vires and hence ‘void’ because (i) a ‘dismissal’/termination of the contract as defined under s.95 of the Act would not have occurred for the reasons mentioned above (Captek v Lincolnshire County Council [2000] IRLR 590); and (ii) the Tribunal in deciding that ‘dismissal’ occurred would be implying termination clauses into the contract i.e. that employers or employees can terminate TSCs (which they cannot) which the Tribunal has no authority to do because (a) termination terms of TSCs are governed by Statutory Regulations 1990 made under the Solicitors Act 1974 and are not within the jurisdiction of the Tribunal; and (b) a Tribunal cannot imply termination clauses into apprenticeship/ fixed-term contracts which have specified termination clauses because they are governed by Common Law which prohibits this.  (Note:  a Tribunal cannot validly argue that the claimant processed claims for wrongful or unfair dismissal and is therefore bound by the decisions or that the claimant did so at his/her own risk because a claimant cannot confer powers on a Tribunal that a Tribunal does not have).

 

In Uche v Sumal Creasey & Co. Solicitors (Leicester ET Case No. 1902130/2002) and in Montgomery v Express Solicitors (Manchester ET - reported in the Law Gazette on 22 January 2008), for example, the Employment Tribunals acted unlawfully in deciding that a ‘dismissal’ occurred when in fact ‘suspension’ occurred because termination of the TSCs occurred only when the Law Society terminated the contracts, which termination had not occurred at the time of the claims.  As stated above, a contract cannot ‘cease to exist’ and ‘exist’ simultaneously.  Since the contracts had not been terminated at the time of the claim, the Tribunals in hearing those cases acted ‘without jurisdiction’ because they can only hear breach of contract claims after termination has occurred (Captek v Lincolnshire County Council [2000] IRLR 590).   

 

Note:  ultra vires/without-jurisdiction decisions are ‘void’ from the ‘beginning’ and do not have to be declared void by a Court because although a void decision may ‘appear’ good in law it is not good in law i.e.  such a decision  is ‘void’, not ‘voidable’  (Lord Denning in Firman v Ellis [1978] 3 WLR 1) although it may be necessary to have it declared void by a Court for the purpose of convenience because, as Lord Denning mentions in his book ‘The Discipline of Law’, Lord Radcliffe once said: ‘It bears no brand of invalidity on its forehead’.

 

Although damages for breach of TSCs can be considerable, employers may not be insured for breach of contract claims and may not be financially viable to satisfy such claims, so the possibility of obtaining an injunction against suspension should be considered (see Mezey v South West London & St. George’s Mental Health NHS Trust [2007] EWHC 62).  Trainees should also seek legal advice before agreeing to mutually terminate the contract because any such agreement may adversely affect rights to breach of contract claims.

 

Trainees should also be aware that although the SRA can terminate TSCs with or without application by either party under clause 20(b)(i), it can only do so for good reason because TSCs are apprenticeship contracts which bind the parties for the duration of the contract and cannot be readily terminated (per Common Law on apprenticeship contracts).

 

Note:  although claims for wrongful and/or unfair dismissal of the underlying employment contract (allowed for under clause 9 of TSCs) can be made in the Employment Tribunal if terminated (which termination can only occur after the TSC is terminated), a claim for wrongful dismissal should be made in the Tribunal only if the claim is for less or the maximum amount that the Tribunal is authorised to award (currently £25,000).  If the claim is for a higher amount the claim must be made in the higher courts (Fraser v HMLAD Ltd. [EWCA] Civ 738) because the claim is ‘indivisible’ and if heard in the Tribunal the claimant will lose the right to claim for further sums in the higher court.

 

 

ã Shirley Lewald-Jezierska, Updated 2 November 2009

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