In Tullett Prebon plc v BGC Brokers LP the Court of Appeal considered the High Court’s construction of issues relating to repudiatory breach and constructive dismissal and upheld its findings.
A number of city brokers working for Tullett Prebon were poached by BGC using the means of forward contracts. Such contracts are legally binding and provide that an employee will commence work on a certain date. A large financial inducement is usually offered, with part payable up front, the other part payable when the employee starts employment.
It was clear from the facts before the High Court that the Tullet brokers had been plotting the move to BGC for some time, aided by the ex-Tullet in house lawyer and another ex-Tullet broker now at BGC. Several meetings had been held in expensive restaurants, incriminating emails found and an unusually high number of blackberries and other devices ‘lost’ together with the information contained in them. Three of the Tullet brokers (the Tullett Three) were persuaded by Tullett to change their minds and opted to remain with Tullett. Tullett successfully applied for an injunction restraining the remaining Tullett brokers from breaching their contractual obligations (including stopping them from starting work with BGC). The High Court found that there had been a conspiracy by BGC and the Tullett brokers, the main purpose of which was to facilitate a sham ‘constructive dismissal’ scenario enabling the brokers to walk out and commence employment with BGC with no restrictions. The High Court also found that the Tullett Three had been entitled to breach their forward contracts with BGC since BGC had itself been in breach of the implied duty of trust and confidence by conducting the unlawful conspiracy.
BGC appealed against the decision to reject the brokers’ constructive dismissal claims and, further, that the judge had been wrong to find that the Tullett Three were entitled to breach their forward contracts on the basis of BGC’s prior breach.
The Court of Appeal held that it was appropriate to take into account Tullett’s intention in persuading the Tullett Three to stay. Its intention was key to the question of whether it had shown an intention to abandon the contract. On the contrary, Tullett was trying to persuade its employees to stay in employment.
Considering the forward contract with BGC, the Court of Appeal held that such a contract was capable of containing an implied duty of trust and confidence even though employment had not yet started. The conduct of a prospective employer could constitute a repudiatory breach entitling an employee not to start employment with that employer. On the facts, the High Court judge had been entitled to find that BGC had breached trust and confidence by being involved in the conspiracy to induce the Tullett employees to breach their contracts.