SINGAPORE ACADEMY OF LAW ANNUAL LECTURE 2001 FROM SERVANT TO EMPLOYEE: A STUDY OF THE COMMON LAW IN ACTION

• Date: 01 December 2001
• Citation: (2001) 13 SAcLJ 253
• Published date: 01 December 2001
• Author: LORD BINGHAM OF CORNHILL

Much is said and written about the common law, its strengths and weaknesses. To some it is the invisible hand, the mysterious foundation of

“A land of settled government,

A land of just and old renown,

Where freedom slowly broadens down

From precedent to precedent.”1

To others of a more Benthamite persuasion, it is a disorderly rag-bag of particular instances, an incoherent array of rules supported by no better rationale than that this is what was decided last time. It is easy and often tempting to advance such propositions in a very general way. In this lecture I attempt to examine the dynamics of the common law in a very particular way. For purposes of my laboratory experiment I take one limited field, the contract of employment, and within that limited field one specific term, what is now called the implied term of trust and confidence.2

I lake as my starting point the summary of the law given in the first edition of Halsbury’s Laws of England, published in 1911. The section bore the heading, old-fashioned as it now seems, “Master and Servant”. It ran to something over 200 pages, of which nearly half were devoted to the rights and duties of the parties under the Employers’ Liability Act 1880 and the Workmen’s Compensation Act 1906. (Not much space, regrettably, was given to one recognisable product of Gladstonian paternalism, the Payment of Wages in Public Houses Prohibition Act 1883).

The duties of the servant to the master were said to be twofold. During his employment he must obey the master’s lawful orders, serve him faithfully, take proper care of his master’s property entrusted to his charge and exercise reasonable care and skill in the discharge of his duties.3

After the employment is ended, he must act with good faith towards his master, and thus must not use information gained during his employment to the disadvantage of the master or act in breach of the trust and confidence formerly placed in him.4 These duties, simply defined, would still be regarded as the core obligations of an employee today.

The master is said to owe four duties to his servant. At first blush this appears rather generous to the servant, but on examination all these duties except the last prove to be somewhat hollow. The first duty relates to the physical wellbeing of the servant. But the master is not bound to provide medical attendance or medicine even for a domestic servant.5 The master’s second duty relates to the safety of the servant, but the servant’s rights are modest:

“Apart from special contract or statute, therefore, he cannot call upon his master, merely upon the ground of their relation of master and servant, to compensate him for any injury which he may sustain in the course of performing his duties, whether in consequence of the dangerous character of the work upon which he is engaged, or of the breakdown of machinery, or of the negligence or default of his fellow servants or strangers. The master does not warrant the safety of the servant’s employment; he undertakes only that he will take all reasonable precautions to protect him against accidents.”6

The master’s third duty relates to the character of the servant. But he is under no duty either to give the servant a written testimonial as to character on leaving his employment or to answer enquiries of persons wishing to employ the servant,7 and if he gives a reference which is false and defamatory the servant has no remedy unless he can prove express malice.8

The master’s fourth duty, in this instance one of value, is to indemnify or reimburse the servant against all liabilities and in respect of all expenses incurred by the servant in the reasonable performance of his duties.9

Two further points, of some significance for the future development of the law, may be noted in this 1911 summary. It is stated that the court will not decree specific performance of a contract of service at the suit of the master or the servant, partly on the ground that the contract is based upon mutual confidence.10 It seems likely that this rule owed much to the

domestic context which would have been very familiar to judges and practitioners in the eighteenth and nineteenth centuries. A high degree of personal contact would have been contemplated between the master and the higher servants attending upon him — cook, butler, groom, coachman, gardener, housekeeper and so on. It was no doubt felt to be futile and impracticable to attempt to compel by law the continuance of a personal relationship which has irretrievably broken down, as it is where irreconcilable differences arise between husband and wife.

Finally, this 1911 summary states the effect, as then understood, of the House of Lords’ then recent decision in Addis v Gramophone Co Ltd.11 Dealing with the right to damages of a servant wrongfully dismissed it is said:

“Since, however, his claim is founded upon breach of a contract, the damages to which he is entitled cannot be increased by reason of the manner in which he was dismissed, whether in respect of his wounded feelings or of the prejudicial effect upon his chances of finding other employment.”12

It has been suggested that the character of a country’s contract law is in large part determined by the kind of case which reaches the higher courts.13 In England and Wales, commercial and shipping cases have tended to predominate. Thus tough, clear rules have been laid down, in the belief that what businessmen value is certainty above all. So if a charterer under a standard clause in time charters is an hour late paying the hire due, whether through inadvertence, miscalculation or mishap, the owner can withdraw the vessel.14 In other countries, where personal and consumer contracts have fashioned the law, it has (so the argument runs) a less rigorous and more flexible approach. Be this as it may, the English employment contract as shaped by the common law was a product of hard-nosed contractual law-making. The servant owed full-blown duties of fidelity both during his employment and after. The master owed rather limited duties to the servant. And if the master wanted to get rid of the servant, for reasons good or bad, he was able to do so on giving the notice required by the contract or paying wages (or damages) instead. As late as 1971 it was possible for Lord Reid, a great and enlightened judge, to stale, quite accurately

“At common law a master is not bound to hear his servant before he dismisses him. He can act unreasonably or capriciously if he so

chooses but the dismissal is valid. The servant has no remedy unless the dismissal is in breach of contract and then the servant’s only remedy is damages for breach of contract.”15

But times were changing. The hard-nosed rules of the common law were no longer accepted as giving adequate protection to a relationship which is for many employees, next to marriage, the closest, longest-lasting and most enduring relationship of their lives. So Parliament stepped in to remedy the perceived inadequacies of the common law. First, in 1965, it provided extra-contractual financial compensation for employees made redundant because the employer was ceasing to carry on the business for which the employee was employed or because the need for employees to do the sort of work done by the employee was diminishing.16 Then, as a quid pro quo to mollify labour unions bitterly opposed to other of its provisions, the Industrial Relations Act 1971 provided a remedy for an employee who had been unfairly dismissed, a remedy dependent on showing not that the employer had broken any contract but that the dismissal was unfair, which was defined to mean that the employer had no substantial reason for dismissing the employee from the position which he held.17 When the 1971 Act was repealed on a change of government in 1974 the unfair dismissal provisions were re-enacted, and statutory recognition was given to the common law concept of constructive dismissal: an employee was to be treated as dismissed by his employer if the employee terminated the contract in circumstances such that he was entitled to terminate it without notice because of the employer’s conduct.18 These unfair dismissal and constructive notice provisions have helped to transform the relationship between employer and employee — no longer master and servant.

The judges were not oblivious to the changing climate in employment law. In Hill v Parsons & Co Ltd19 in 1971, an interim injunction was granted to keep a contract of employment alive until trial — it was held that confidence had not broken down between the parties20— and Sachs LJ said:

“… it seems appropriate to repeat that in matters of practice and discretion it is essential for the courts to take account of any important change in that climate of general opinion which is so hard

to define but yet so plainly manifests itself from generation to generation. In that behalf account must, inter alia, be taken of the trend of the views of the legislature expressed on behalf of the community in its enactments and also of the trend of judicial decisions.

Over the last two decades there has been a marked trend towards shielding the employee, where practicable, from undue hardships he may suffer at the hands of those who may have power over his livelihood — employers and trade unions. So far has this now progressed and such is the security granted to an employee under the Industrial Relations Act 1971 that some have suggested that he may now be said to acquire something akin to a property in his employment. It surely is then for the courts to review and where appropriate to modify, if that becomes necessary, their rules of practice in relation to the exercise of a discretion such as we have today to consider — so that its practice conforms to the realities of the day.”21

In 1974 Edmund Davies LJ spoke in a similarly enlightened vein.22 The case arose when an employer, by making unjustified...