MPT Group v Peel

Background

All employees have a duty of good faith and fidelity to their employer. In MPT Group Ltd v Peel, MPT asked two departing employees what they intended to do after their employment ended. Neither admitted their plans to set up a competing business once their restrictive covenants had expired. MPT argued that, by lying to them about their future plans, the employees had breached their duty of good faith.

Decision

The judge held that while there was a general duty to answer truthfully, he declined to say that an employee is under a contractual obligation to divulge their future confidential plans. He confirmed that provided employees abide by enforceable restrictive covenants and do not misuse confidential information, employees are “free to make their own way in the world”.

Comment

The court might have reached a different conclusion if the employees were sufficiently senior to owe fiduciary duties to their employer. The decision also may have been different had the employees intended to compete whilst still employed, or when they were bound by their restrictive covenants.