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Termination of 20-Year Employment Agency Contract Leads to Court

Commercial contracts often endure harmoniously for many years, but their very longevity can make termination even more acrimonious. That was certainly so in the case of an employment agency that provided staff to a retailer for more than 20 years prior to its replacement following a tendering process.

The agency had provided its services under a poorly drafted contract, replete with grammatical and syntactical errors. That served to fuel the dispute, which focused on the transfer of more than 160 of the agency’s staff to the rival that replaced it, under the terms of the Transfer of Undertakings (Protection of Employment) Regulations 2006. Those employees continued to work in the retailer’s shops.

After the agency launched proceedings against the retailer, the High Court found that, on a true interpretation of the contract, the former was entitled to receive transfer or introduction fees in respect of the transferred workers. The retailer’s counter-claim that it had been overcharged by the agency was rejected and it was also ordered to pay more than £68,000 in satisfaction of the agency’s outstanding invoices. Although the exact amount of the agency’s award has yet to be calculated, it valued its claim at more than £550,000, before interest.