The High Court held that a group of brokers who resigned from their employment with a view to joining a rival company had not been constructively dismissed. The rival company had encouraged the brokers to leave and was unconcerned as to whether the brokers had genuine reasons for doing so.

The High Court decided that the rival company had induced the brokers to breach their contracts and conspired to injure the employer using unlawful means. Further, three of the 13 employees who had signed forward contracts with the rival employer were entitled to renege on those contracts, because the firm’s recruitment technique had destroyed trust and confidence before the employment relationship had started.

The court ordered the brokers to repay the loyalty and retention bonuses that they had received from their employer. The contractual clauses requiring the bonuses to be repaid were neither penalty clauses nor in restraint of trade.

The injunction granted by the High Court in April 2010, which prevented the rival firm from recruiting further employees from the employer, would only continue for a further 14 days. The court decided that the exposure of the rival firm’s conduct would curb any future unlawful recruitment.

The court refused, however, to enforce the brokers’ restrictive covenants and garden leave provisions by way of an injunction for a period in excess of 12 months. This meant that the brokers were free to start work with the rival firm only a short time after judgment was given.

This case provides important clarification on a number of contractual and legal issues which are typical in team move situations. Interestingly, attempts by employees to fabricate constructive unfair dismissal claims in these type of cases will be approached by the courts with a degree of scepticism. Further, the courts are prepared to grant effective injunctive relief in situations of unlawful poaching of employees. This case also highlights that where a prospective employer commits a repudiatory breach of the obligation of trust and confidence, a prospective employee can rely on that breach as justification to terminate their forward contract, whether or not that is in fact the reason for withdrawing from that contract.

Tullett Prebon Plc & Ors v BGC Brokers LP & Ors [2011] EWCA Civ 131