Tullett Prebon plc and others v BGC Brokers LP and others 2011 AER 227

Tullett and BGC are rival inter-dealing broker firms. 13 brokers from Tulletts entered into forward contracts to join BGC but 3 subsequently withdrew from their contracts when they changed their minds. The remaining 10 resigned from their employment to join BGC and claimed they had been constructively dismissed by Tulletts: Tulletts obtained an interim injunction preventing them from joining BGC. Their claims for constructive dismissal failed.

A forward contract is an inducement by a prospective employer to a prospective employee which provides for them to start employment by a certain date in order to encourage them to leave their current employment as soon as possible. Some employees with such encouragement manufacture grounds for claiming constructive dismissal so they can be released from their employment contract promptly and without any restrictive covenants. The Court held that BGC had breached trust and confidence by engaging in unlawful conspiracy to induce the brokers to breach their contracts of employment with Tulletts by leaving early without lawful justification.

The Court also held that there could be concurrent obligations of trust and confidence between the employees and Tulletts and the employees and BGC under these forward contracts. The 3 brokers who stayed with Tulletts were not in breach of contract with BGC when they withdrew from the forward contracts as BGC was itself in repudiatory breach. Nor was Tullett in repudiatory breach of contract and confidence when it sought to persuade the workers to renege on the forward contracts as their intention was simply to preserve its relationship with these employees.

Key point: Forward contracts are lawful at least for the present but caution must be exercised in their use.