WorkRep Free Advice For Workers:- The duty of fidelity and fiduciary obligations are separate and not imposed on employees; fidelity does not extend to reporting one's own or fellow employees' misconduct - Lonmar Global Risks Limited v West and Others [2010] EWHC 2878 (QB)


The duty of fidelity and fiduciary obligations must remain separate and are in any case not imposed on employees; fidelity does not extend to reporting one's own or fellow employees' misconduct Lonmar Global Risks Limited v West and Others [2010] EWHC 2878 (QB)
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14/08/10 The following is a stub for the main article which is in preparation and should normally be posted within the next few days. Thank you for your patience. 07/12/2010 Fidelity does not extend to reporting one's own or fellow employees' misconduct The duty of fidelity and fiduciary obligations are separate and not imposed on employees Mere knowledge of a breach did not prove the tort of inducement to breach the contract. Restrictive covenants covering restraint of trade do not protect from competition, are normally unenforceable unless reasonably necessary to protect legitimate business interests such as confidential information (burden of proof resting on the employer). Fiduciary duties being onerous, courts are wary of imposing them In this case a Lloyd’s insurance broker Global Risks sued former employees and a rival company Tyser for breach of contract, breach of fiduciary duty, for inducing breaches of contract and conspiracy for having allegedly solicited its clients and other employees to transfer to Tyser. The claimant company believed that the defendants were under a fiduciary duty to inform on other employees' intentions to quit the company, and that the duty obligated them to attempt to dissuade employees from breaching their contracts. The employees were summarily dismissed on the basis that their conduct had amounted to a repudiatory breach of the employment contract. The defendants argued that restrictive covenants' non-solicitation restrictions no longer apply where an employee has been subject to unfair dismissal,and in any case that the post-termination restrictions were unreasonably wide and therefore unenforceable (In the insurance industry however, contractual post-termination non-solicitation and non-dealing clauses are normal). The Court quoted Office Angels Ltd v Rainer-Thomas [1991] IRLR 214 (paragraphs 21-25) in that restrictive covenants covering restraint of trade cannot be used by an employer as a protection from competition and are normally unenforceable, but they are valid when they are reasonably necessary to protect legitimate business interests such as confidential information or client connections with the burden of proving the necessity resting on the employer. Lord Wilberforce in Stenhouse Limited v Phillips [1974] AC 391 said, “The employers’ claim for protection must be based upon the identification of some advantage or asset inherent in the business which can properly be regarded as, in a general sense, his property, and which it would be unjust to allow the employee to appropriate for his own purposes, even though he, the employee, may have contributed to its creation.” It is therefore reasonable for an employer to protect client contacts even when introduced by an employee such as was the case here with Mr West and Mr Niel Mee. Implied and fiduciary duties are different with fidelity being implied into contract, and fiduciary obligation (obliging a person to pursue the employer's interests rather than his own) being imposed as a equity in a relationship. Trustees and directors have fiduciary duties imposed because of the relationship being such that one party is obliged to act for the benefit of another (Nottingham University v Fishel [2000] ICR 1462,PMC Holdings Limited v Smith,Helmet Integrated Systems Limited v Tunnard [2006] EWCA Civ 1735 ). From a number of cases it has emerged that the employment relationship is not a fiduciary one. An employee is regulated by his contract and although fiduciary duties can arise out of the employment relationship itself these would arise under specific conditions of contractual obligations that the employee has undertaken. The obligations would be limited by the scope of the contract. As an employment relationship is not fiduciary the employee is after Bell v Lever Brothers [1932] AC 161, not obliged to report his own misconduct to his employer. The decision in Sybron v Rochem [1983] ICR 801 protects an employee from needing to report the misconduct of others, and Tunnard even allows him to prepare his future in competition with his employer, with Tither Barn v Hubbard (EAT/532/89 even protecting him when offering a colleague a job in his planned company. In ABK Limited v Foxwell [2002] EWHC 9 Ferris J said that,“the importation of fiduciary duties into an essentially commercial relationship is something which may occasionally be done, [but] a great deal of caution needs to be exercised in doing it” and after Tunnard and Attorney General v Blake [1998]fiduciary duties being onerous courts are wary of imposing them. The Court of Appeal warned against superimposing fiduciary duties on common law duties in Norberg v Wynrib (1992). Fishel warned against equating the employee's duty of good faith and loyalty with a fiduciary obligation. In any case breach of a fiduciary obligation doesn't necessarily add much to a claim that employee breached express terms of the employment contract or the implied contractual duty of fidelity. The wrongdoing of an employee such as theft is what causes the employer loss rather the failure to report it. Failure to report conduct that although short of wrongdoing is detrimental to the employer can be a breach of a fiduciary duty, but the employer was wrong to claim that Kynixa Limited v Hynes [2008] EWHC 1495 (QB) at [283] implies a broad duty on an employee to disclose that fellow employees are being recruited by a competitor. MR JUSTICE HICKINBOTTOM said, "Kynixa was particularly fact specific: and the comments at paragraph 283 appear to be obiter, as the relevant defendant had positively misled the employer about the intentions of her and her fellow employees (rather than merely non-disclose) which might give rise to a fiduciary obligation on a different basis. To the extent that the comments suggest such an implied duty, I would not be minded to follow them. Such a proposition runs contrary to Fishel (Nottingham University v Fishel [2000] ICR 1462) and other well-established authority. In my respectful judgment, it falls foul of the warning in Fishel by eliding the duty of fidelity and fiduciary obligations." ".. the better legal analysis for an employee having any obligation of reporting or persuasion is by way of fiduciary duties, as indicated in Fishel as approved in Tunnard" (Helmet Integrated Systems Limited v Tunnard [2006] EWCA Civ 1735; [2007] FSR 16). "duties of disclosure as alleged by Global Risks in these proceedings do not arise simply out of the employee/employer relationship: there must be an additional element that gives rise to the duty, by way of imposition or implication". The judge ruled out Global Risks claim for damages after business was lost because of the employees' wrongdoing. This was appropriate for the tort claims of conspiracy and for inducement of breach of contract but not for breach of contract, any quantum being found by identifying specific clients and identifying and then proving the business lost in relation to the breach. Mr Niel Mee was not a statutory but executive director, not a senior manager but rather an unsupervised salesman and therefore not exposed to fiduciary obligations. Mee was not found to have deliberately misled Global Risks. On the facts it was found that although senior executives in Tyser were aware of the duty of fidelity that Mr West and Mr Niel Mee owed to Global Risks and that they were possibly acting in breach of their obligations, the mere knowledge of the breach did not prove the tort of inducement to breach the contract, that although silence may possibly indicate encouragement to breach a contract, there was here no intention to interfere with contractual arrangements of the employer. Moreover there was no evidence of any damages to the employer that is necessary in proving the tort of inducing a breach of contract. The conspiracy claim was rejected on the facts and the absence of proof of loss.

Abroad Agency Appeals (ET) Closed_Procedure Compensation Constuctive_Dismissal Contract Costs Discrimination Age Discrimination Disability Discrimination Race Discrimination Religious Discrimination Sex Discrimination Sexual Orientation Discrimination Discipline Dispute_Resolution Employer_Liability Employment Status Equal Pay Harassment and Bullying At Work Tribunal Hearing Holidays and Holiday Pay Employer Negotiations Part-Time Pay Pensions Employment Tribunal Procedure Restricted_Reporting_Orders Sanctions Sickness Tribunal Settlement and Compromise Agreements Time_Limits Tupe Unfair and Wrongful Dismissal Union Victimisation Whistleblowing

Some recent employment cases:-
2010
Employers don't need to justify age discriminatory behaviour in terms of "legitimate social policy objectives" - Seldon v. Clarkson Wright & Jakes [2010] Court of Appeal A2/2009/0149
Those seeking to profit out of the discrimination legislation will face costs - Berry v. Recruitment Revolution [2010] UKEAT 0190_10_0610
Court of Appeal re-interprets clause of BA contract to avoid 'disastrous' consequences for the firm (the employees must work harder and more stressful shifts) - Malone & Ors v British Airways Plc [2010] EWCA Civ 1225
EAT questions 'cost plus' approach to justification in discrimination - Woodcock v Cumbria Primary Care Trust [2010] UKEAT 0489_09_1211
Workers whose employment contract was made with a company that did not actually employ them are still entitled to TUPE protections upon transfer. The "Transferor" is the company in the group that they actually worked for - Albron Catering BV v FNV Bondgenoten C-242/09
Being incorrectly summarily dismissed for misconduct still amounted to a fair but wrongful dismissal - Weston Recovery Services v Fisher [2010] UKEAT 0062_10_0710
Not unfair dismissal despite having occurred during the protected consultation period contrary to s. 188 TULRCA s.188(8) - Hammonds LLP & Ors v Mwitta [2010] UKEAT 0026_10_0110
The Court of Appeal refers the timing of worker consultation under TUPE to the ECJ - United States of America v Nolan [2010] EWCA Civ 1223
A redundancy consultation means explaining the scoring to the employee and seriously considering his comments - Pinewood Repro Ltd v. Page [2010] UKEAT 0028_10_1310
The effective date of termination is not necessarily when a letter is received, but when it can reasonably be expected to have been read - Gisda Cyf v Barratt [2010] UKSC 41
For unfair dismissal length of service purposes, working under a different contract did not break continuity of employment - Hussain v Acorn Independent College Ltd [2010] UKEAT 0199_10_0809
The previous employer will be liable for victimsing his worker through a reference to a prospective employer - Bullimore v Pothecary Witham Weld Solicitors & Anor [2010] UKEAT 0189_10_2109
An employer's allegations must be spelled out. Euphemistic speech is not acceptable when disciplining or dismissing workers. - Celebi v Scolarest Compass Group UK & Ireland Ltd [2010] UKEAT 0032_10_2807
Table listing the changes to UK discrimination legislation being introduced by the Equality Act 2010
ET is allowed flexibility in deciding whether the burden of proof has shifted - Canadian Imperial Bank of Commerce v. A Beck [2010] UKEAT 0141_10_2408
The employer's ability to pay is irrelevant - Tao Herbs & Acupuncture Ltd v Jin [2010] UKEAT
An absolute contractual right of substitution undermines the possibility of worker status - Community Dental Centres Ltd v. Sultan- Darmon [2010] UKEAT 0532_09_1208
Pension loss: "simplified" and "substantial" compensatory approaches - Sibbit v The Governors of St Cuthbert's Catholic Primary School [2010] UKEAT 0070/10/ZT
TUPE: Failure to consult doesn't give an individual the right to claim unfair dismissal - Nationwide Building Society v. Benn & Ors [2010] UKEAT 0273_09_2707
Limits on Redundancy Payments affecting older workers are not Age Discrimination - Kraft Foods UK Ltd v. Hastie [2010] UKEAT 0024_10_0607
Employees must be informed of changes to collective agreement terms - Worrall v Wilmott Dixon Partnership [2010] EAT UKEAT/0521/09/DM
An employer can not plead its own irrationality in seeking to amend a compromise agreement - Gibb v Maidstone & Tunbridge Wells NHS Trust [2010] EWCA Civ 678
Time limits may be extended following wrong information from an employer (but not an adviser) - Northamptonshire County Council v Entwhistle [2010] UKEAT/0540/09/ZT
Even after the Unite decision unions must continue to careful with TULRCA compliance - British Airways Plc v Unite the Union [2010] EWCA Civ 669
A disability discrimination claim under the DDA must be for actual not perceived disability - Aitken v. The Commissioner of Police of The Metropolis [2010] UKEAT 0226_09_2106
A GP's opinion on depression is valid in an employment tribunal - J v DLA Piper UK LLP [2010] UKEAT 0263_09_1506
University and College Union (UCU)backs antisemite who incited violence against jews
Retirement and re-employment is a reasonable adjustment - Chief Constable of South Yorkshire Police v. Jelic [2010] UKEAT 0491_09_2904
Histadrut condemns violence, describes extent of cooperation with palestinian trade union Palestinian General Federation of Trade Unions (PGFTU)
Where an employer is contemplating disciplinary action the thoroughness of the investigation needs to reflect the seriousness of the consequences to a worker - Salford Royal NHS Foundation Trust v Roldan [2010] EWCA Civ 522
Damages are not limited to the term of the breached fixed term contract (but reflect the total loss caused) - Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2010] EWCA Civ 571
The disclosing of without prejudice communications - Woodward v Santander [2010] UKEAT/0250/09/ZT
Criterion for awarding uplifts under the Dispute Resolution Procedures - Lawless v Print Plus [2010] UKEAT/0333/09/JOJ
A local council is a single establishment thus allowing white collar workers to use manual workers as comparators - City of Edinburgh v Wilkinson & ors [2010] UKEATS/0002/09/BI
A compromise agreement can be valid even though the claimant does not understand it - McWilliam & Others v Glasgow City Council
When using the closed procedure for national security purposes the claimant must still be provided with the gist of the employer's case -
Home Office v Tariq [2010] EWCA Civ 462 An employer can not repair a fundamental breach of contract. It is up to the employee whether to resign and claim constructive unfair dismissal. - Buckland v Bournemouth University Higher Education Corp [2010] EWCA Civ 121
A worker can not claim constructive dismissal if he is in breach of the duty of trust and confidence - Bateman & Ors v. Asda Stores Ltd [2010] UKEAT 0221_09_1102
A worker can not claim constructive dismissal if he is in breach of the duty of trust and confidence - Aberdeen City Council v McNeill [2009] UKEAT 0037_08_1011
BA dress code forbidding the open display of faith symbols was not discriminatory - Eweida v British Airways Plc [2010] EWCA Civ 80
When deciding whether to allow an amendment the lateness of the application is only one factor to be taken into account by the employment judge - Baker v The Commissioner of Police of The Metropolis [2010] UKEAT 0201_09_0502
National courts should should strike down discriminatory legislation - Seda Kücükdeveci v Swedex GmbH & Co. KG [2010] ECJCase C-555/07
Judges restrict employers' use of the illegality defence against employee unfair dismissal claims - SAN LING CHINESE MEDICINE CENTRE v LIAN WEI JI - [2010] EAT UKEAT/0370/09/ZT
There is a right to legal representation at a disciplinary which might result in the loss of the right to practise a profession - G, R (on the application of) v X School & Ors [2010] EWCA Civ 1
Cabin crew spending 5% of their time in the UK were considered to have worked partly at an establishment in Great Britain. - BA v Mak EAT [2010] UKEAT/0055/09/SM
The 'genuine occupational requirement' rule may apply to a maximum age for employment - Wolf v Stadt Frankfurt am Main [2010] Case C-229/08 ECJ
Different dress codes do not necessarily amount to sex discrimination - Dansie v. The Commissioner of Police for The Metropolis [2009] UKEAT
Certain conditions must exist for the obligation to carry out a risk assessment for a pregnant worker to arise - ONeill v. Buckinghamshire County Council [2010] UKEAT

2009
An employment tribunal may decide if a compromise decision is unenforcable - Industrious Ltd v Horizon Recruitment Ltd & Anor [2009] UKEAT
Registrar claiming right to refuse to officiate at civil weddings loses religious discrimination case - Ladele v London Borough of Islington [2009] EWCA Civ 1357
A philosophical belief based on science is protected by the Employment Equality (Religion or Belief) Regulations 2003 - Grainger Plc v Nicholson [2009] UKEAT/0219/09/ZT
Christian counsellor who would not help same sex couples was not discriminated against - McFarlane v Relate Avon Ltd [2009] UKEAT 0106_09_3011
Under TUPE the obligation to inform always applies, even when no measures are contemplated relating to the transfer - Cable Realisations Ltd v GMB Northern [2009] UKEAT
The Court of Appeal rules on Harassment and 'Oppressive and Unacceptable' behaviour
Veakins v Kier Islington Ltd [2009] EWCA Civ 1288
For s4A(3) of the DDA to apply the employer must have known (or ought to have known) that the employee was disabled and that the disability would affect him in the manner described in section 4A(1) - DWP v Alam [2009] UKEAT 0242_09_0911
A discrimination case may not proceed on the mere possibility that evidence might emerge during cross examination - ABN Amro Management Services v Hogben [2009] UKEAT 0266_09_0111
In cases of discriminatory dismissal tribunals may reduce compensation if the worker would in any event have been dismissed - Chagger v Abbey National Plc & Anor [2009] EWCA Civ 1202
If you have a problem at work over harassment, disability, sex, age, race discrimination or bullying or are seeking compensation or reinstatement for unfair or constructive dismissal then contact workrep for an evaluation of your case. We can also advise you on equal pay, TUPE or employment status. Often an employee will come to us over a breach of contract by their employer or for issues concerning whistleblowing. If your employer has made you redundant you might in fact have been unfairly dismissed or wrongfully dismissed. If you have any other employment issues don't hesitate to contact WorkRep.
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The duty of fidelity and fiduciary obligations must remain separate and are in any case not imposed on employees; fidelity does not extend to reporting one's own or fellow employees' misconduct

Lonmar Global Risks Limited v West and Others [2010] EWHC 2878 (QB)

www.workrep.co.uk

Helping You About Links Contact Site Info HOME

14/08/10 The following is a stub for the main article which is in preparation and should normally be posted within the next few days. Thank you for your patience.