Landsker Child Care Ltd operates five children’s care homes in Wales. Mr Khan and his colleague, Mr Hemming were both care home managers. They had been employed by Landsker for several years, until they were dismissed in 2010 for gross misconduct, on the basis of a breach of trust and confidence. The breach occurred when Mr Khan and Mr Hemming developed a detailed business plan for a business which would compete with Landsker, making use of knowledge and expertise acquired in the course of their employment when they did so.

The Employment Appeal Tribunal found that the original tribunal had not given adequate consideration to the question of whether the information used in the business plan was confidential to Landsker, or whether it was simply the kind of general information that a person with Mr Khan’s and Mr Hemming’s experience would be expected to have accumulated over their years with Landsker. The matter was therefore remitted to the same tribunal so that this point could be considered.

This case is a reminder to employers that it is not in itself gross misconduct for an employee to make preparations for a future business which is to be conducted after his employment ends. The question that the employer must ask is whether this amounts to a fundamental breach of the terms of the contract. It is to be expected that an employee may, in the course of his employment, have acquired additional skills and knowledge of the trade in which he has been employed. That additional skill and knowledge belongs to the employee. Therefore, using this will only amount to a fundamental breach of contract where the employee has abused his position, for example, by compiling customer lists for use after his employment has ceased.

When faced with such a situation, employers should ensure that this point is considered by the disciplinary panel and that any finding that a duty of confidence has been breached is supported by reference to the misuse or disclosure of particular pieces of confidential information, rather than the general skills and knowledge that have been accrued by the employee over the years.