It is an unspoken truth that an employee can be at the same time an employer's biggest asset and greatest potential threat. This is particularly true when faced with an employee resignation and an
It is an unspoken truth that an employee can be at the same time an employer's biggest asset and greatest potential threat. This is particularly true when faced with an employee resignation and an orchestrated team move. An illustration of this was provided in the recent case of Thomson Ecology Ltd and another v APEM Ltd and others.
Mr Hall was the operations manager for Unicomarine, a marine biology laboratory. In 2003 he was given a basic document providing him with one month's notice and no post-termination restrictions. In 2011 he was provided with a written job description. The responsibilities listed included a requirement to report to Unicomarine on a fortnightly basis, to develop good client relationships and present Unicomarine in a positive light to staff.
On 27 November 2012 Mr Hall resigned to join APEM, which was a competitor of Unicomarine. After he was initially informed that he would be paid in lieu of his notice entitlement, the decision was taken instead to put him on garden leave. Subsequently, a further 17 biologists also joined APEM. In the absence of any post-termination restrictions, Unicomarine brought claims against Mr Hall for breach of the implied duty of fidelity. Unicomarine also asserted that Mr Hall owed a fiduciary duty of loyalty based on his seniority. The evidence in Court included various admissions from Mr Hall, including of a meeting he had arranged at his house with APEM and some of his colleagues in December 2012 when he was on garden leave.
All employees owe an implied duty of fidelity towards their employer and this duty continues to apply when an employee is on garden leave. When assessing the extent of this duty a Court will look at an employee's contractual obligations. For Mr Hall, this included the 2003 terms and more importantly the 2011 job description. Taking this into account, the Court gave Summary Judgment that Mr Hall was in breach of the duty of fidelity for two main reasons: (1) he failed to report the competitive threat presented by APEM; and (2) he colluded with APEM to actively recruit Unicomarine employees. The Court did not determine whether he also owed a fiduciary duty.
A key finding by the Court was that Mr Hall had been put on garden leave during his notice period and not dismissed sooner. This defeated Mr Hall's attempt to argue that his contract (and by extension his duty of fidelity) had ended in November 2012 when he was initially told that he would be paid in lieu of notice.
This case provides a useful reminder of how implied terms can be used to protect an employer's business, especially where employees are engaged in competitive activity during their employment and, in this case, when they go on garden leave. However, while Unicomarine may have obtained Summary Judgment against Mr Hall, if Mr Hall had just waited until his month's notice had expired before approaching his former colleagues there would have been no remedy.
Without Mr Hall's admissions and the evidence of his written job description, it is also less certain that the Court would have found against him at this stage. It is not explained in the Judgment whether Unicomarine had an express contractual right to put Mr Hall on garden leave, but where there is no such right this might also be a useful weapon for someone like Mr Hall when seeking to argue that the duty of fidelity has come to an end early.
To reduce the risk of expensive and inconvenient litigation, employers should therefore ensure that appropriate express contractual protections are put in place for key employees to cover the periods both during and after their employment has ended, and that reliance is not placed solely on the duty of fidelity.
Mr Hall was the operations manager for Unicomarine, a marine biology laboratory. In 2003 he was given a basic document providing him with one month's notice and no post-termination restrictions. In 2011 he was provided with a written job description. The responsibilities listed included a requirement to report to Unicomarine on a fortnightly basis, to develop good client relationships and present Unicomarine in a positive light to staff.
On 27 November 2012 Mr Hall resigned to join APEM, which was a competitor of Unicomarine. After he was initially informed that he would be paid in lieu of his notice entitlement, the decision was taken instead to put him on garden leave. Subsequently, a further 17 biologists also joined APEM. In the absence of any post-termination restrictions, Unicomarine brought claims against Mr Hall for breach of the implied duty of fidelity. Unicomarine also asserted that Mr Hall owed a fiduciary duty of loyalty based on his seniority. The evidence in Court included various admissions from Mr Hall, including of a meeting he had arranged at his house with APEM and some of his colleagues in December 2012 when he was on garden leave.
All employees owe an implied duty of fidelity towards their employer and this duty continues to apply when an employee is on garden leave. When assessing the extent of this duty a Court will look at an employee's contractual obligations. For Mr Hall, this included the 2003 terms and more importantly the 2011 job description. Taking this into account, the Court gave Summary Judgment that Mr Hall was in breach of the duty of fidelity for two main reasons: (1) he failed to report the competitive threat presented by APEM; and (2) he colluded with APEM to actively recruit Unicomarine employees. The Court did not determine whether he also owed a fiduciary duty.
A key finding by the Court was that Mr Hall had been put on garden leave during his notice period and not dismissed sooner. This defeated Mr Hall's attempt to argue that his contract (and by extension his duty of fidelity) had ended in November 2012 when he was initially told that he would be paid in lieu of notice.
This case provides a useful reminder of how implied terms can be used to protect an employer's business, especially where employees are engaged in competitive activity during their employment and, in this case, when they go on garden leave. However, while Unicomarine may have obtained Summary Judgment against Mr Hall, if Mr Hall had just waited until his month's notice had expired before approaching his former colleagues there would have been no remedy.
Without Mr Hall's admissions and the evidence of his written job description, it is also less certain that the Court would have found against him at this stage. It is not explained in the Judgment whether Unicomarine had an express contractual right to put Mr Hall on garden leave, but where there is no such right this might also be a useful weapon for someone like Mr Hall when seeking to argue that the duty of fidelity has come to an end early.
To reduce the risk of expensive and inconvenient litigation, employers should therefore ensure that appropriate express contractual protections are put in place for key employees to cover the periods both during and after their employment has ended, and that reliance is not placed solely on the duty of fidelity.