Smith v Reliance Water Controls Ltd.

Julian Smith, the appellant, worked for Reliance Water Controls Limited, the respondent, from September 1996 until he was summarily dismissed on 15 January 1999. He was a sales representative. The respondent is a wholesale supplier of plumbing and bathroom products. Until January 1998 the appellant was employed under a contract of employment. There is no dispute about this, although there appears to have been no written record.

The appellant’s relationship with the respondent ended on 15 January 1999 when Mr Roche wrote to him saying: “I am obliged to terminate your services for gross misconduct and breach of contract, with immediate effect.” However, Judge Cavell found there was no ground for summary dismissal and that he was entitled to damages. The judge did, however, find that despite the written agreement purporting to change the appellant’s status to self-employed from January 1998, he had remained throughout an employee of the respondent under a contract of service.

The judge did not in his judgment spell out the terms of the new agreement, that operated from January 1998, although he plainly had the new agreement in mind. The agreement began by setting out the territory in which the appellant was to act as an agent on behalf of the respondent. Then it set out the appellant’s sales targets for the first six months of 1998 and defined the meaning of sales. There followed the obligations of the appellant. These were:

To settle all expenses incurred in the promotion of (the respondent’s) products to merchants, contractors, consultants and specifiers in the territory, unless (the respondent) agrees in writing to pick up a specific cost.

Not to represent any manufacturer whose products compete directly with (the respondent).