Monday 10 December 2007

Mutual Trust and Confidence

Last week the QBD handed down the high-profile decision, RDF Media Group v Clements. Quite apart from the media interest due to the personalities involved, from a legal perspective it dealt in some detail with the implied term of mutual trust and confidence (arising in the context of a restrictive covenant dispute).

The judgment contains one of the clearest explanations of the term of trust and confidence that I have ever seen - see paras. 100-106.

Further, it is authority for the following propositions:-

  • a Board of Directors is entitled to discuss an employee in a negative manner without breaching the term of trust and confidence, as it is merely the brain of the company 'thinking aloud' and the obligation of trust and confidence does not go so far as to control thoughts (para 113)
  • engaging in a campaign of vilification against your employee in the press, even on a non-attributed basis, will amount to a prima facie breach of trust and confidence - but there may be a rebuttal if the employee has, himself, first acted in breach of trust and confidence (paras. 118-120)
  • there may be reasonable and proper cause to put out a press release, and even release confidential information to the press, when an employee resigns and is on garden leave
  • importantly, an employee is not entitled to accept a repudiatory breach of the trust and confidence term in circumstances where he is himself in repudiatory breach of the same term (para. 140).

This last point appears to give employers another defence in constructive dismissal claims. It seems (if this case is followed) that an employer will not normally be liable for constructive dismissal if the employee has also breached the term of trust and confidence. Get the slingshots and the mud ready... but note that permission to appeal has been granted on this point.

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