The Employment Appeal Tribunal has upheld "bad leaver" provisions in a share sale agreement which required an employee to transfer her shares to the employer (for the lower of the acquisition cost or fair value) in the event that she voluntarily resigned.

The EAT agreed with the Employment Tribunal that the Tribunal had jurisdiction to hear the employee's breach of contract claim on the basis that the share sale agreement was a "contract connected with employment". However, the EAT also agreed that the bad leaver provisions were neither unconscionable nor constituted an unenforceable penalty, (relying in respect of the latter on the leading judgment of the Supreme Court in Cavendish Square Holdings BV v. Makdessi). They did not give rise to an unlawful deduction from wages on the basis that consideration for the shares was not a payment made to the employee in her capacity as a "worker".

The EAT's judgment is unsurprising based on established case law and on the clear wording of the share sale agreement upon which the employee had taken independent legal advice. The EAT refused to consider the merits of the employee's further argument that the bad leaver provisions constituted a restraint of trade on the basis that this had not been argued before the Tribunal.

Nosworthy v Instinctif Partners Ltd, Employment Appeal Tribunal