The judgement in the high-profile case of RDF Media Group v Clements held that an employee who is in breach of the implied term of mutual trust and confidence cannot rely on their employer's subsequent breach to claim constructive dismissal and avoid restrictive covenants.
In December 2005 RDF Media Group bought the business of IWC Media Limited and Mr Clements, one of the major shareholders of IWC personally received around £2million for the sale of his shares, in return for which he entered into a number of restrictive covenants with RDF, including a prohibition on working with a competitor of RDF for a period of three years following the completion of the sale, (reduced to two years following the completion date if he was unlawfully dismissed by RDF). He also entered into a service agreement with RDF, terminable on six months' notice and which contained a further restriction of competitive activity after termination of his employment.
Sixteen months into the agreement, Mr Clements resigned to take up a position with the Scottish Media Group (SMG), a main competitor of RDF. He sought a reduction in his notice period to commence this new role. However, RDF refused and stated that it intended to place him on garden leave for his notice period and to hold him to the restrictions set out in the sale agreement. In the media briefing that followed Mr Clements' resignation, RDF made comments about Mr Clements, some of which were published in the press. Mr Clements claimed that by making these remarks, which he alleged were "poisonous", untrue and highly damaging to his reputation, RDF had breached its implied term of trust and confidence. As a result he had been constructively dismissed and RDF could no longer enforce his restrictive covenants.
Whilst the fact that a public statement is true may be a good defence to a claim of defamation, it will not necessarily be a good defence to a claim by the employee that the employer has, in making the statement, caused serious damage to the employment relationship. On the facts, the Court found that the statements that RDF had made to the press constituted a serious attack on Mr Clements' character and amounted to a breach of the implied term of trust and confidence.
On further examination of the facts, however, the court found that several days before the comments were made to the media, Mr Clements had himself acted in repudiatory breach of his contract of employment by asking his former secretary to hack into the company's email system to find out what the directors had said about him to each other. In these circumstances, as his breach preceded that of RDF, he could not rely on RDF's breach to claim that he had been constructively dismissed. A subsequent letter from RDF had terminated his contract lawfully and his restrictive covenants were therefore enforceable.
Impact on Employers
- The case indicates that an employer will not normally be liable for constructive dismissal if the employee has already acted in breach of the implied term of trust and confidence, even if the company is not yet aware of the employee's breach.
- The Board of Directors of a company is entitled to discuss an employee in negative terms without breaching the term of trust and confidence. Representations between individuals on the Board are merely equivalent to the Company thinking aloud to itself and an employer is not prohibited from thinking negative or unworthy thoughts about an employee. Generally, however, it is wise for employers not to make public negative discussions and statements concerning an employee or director, as engaging in a campaign of vilification in the press even on a non-attributed basis will amount to a breach of contract.