A television producer who forgot about a three-year golden handcuffs deal caused a breakdown in the employer employee relationship before the employer did, the High Court has ruled. The producer must wait the three years before working for a rival.
Alan Clements is the husband of BBC presenter Kirsty Wark and a founder of IWC, which was sold to independent TV production giant RDF in 2005 for £10–14 million. His £2 million portion of the deal was dependent on a three-year non-compete clause that expires in December 2008.
He resigned after just 16 months to go to work for rival company SMG, telling RDF that he wanted to negotiate a reduction in his six-month notice period.
RDF said that it would hold him to the restrictive covenant which imposed a three-year non-compete condition on him. Clements claimed in court that he had not forgotten about that clause, but IWC managing director Sue Oriel said that that was not her recollection.
"She telephoned to tell [Clements] that the non-compete Service Agreement ran until December 2008 and that the restrictions in his service agreement ran for six months from termination of his employment, not from his resignation," said the ruling of Bernard Livesey QC, sitting as a deputy judge of the High Court. "She says he replied 'Oh' and after a long pause added that he thought he should get some legal advice. Clements disputes this; but I accept Ms Oriel's account."
Clements tried to argue in the case that behaviour by RDF and its employees constituted a breach of the trust and confidence implied by any employment contract. These included an email from the chief executive of RDF to fellow directors in which he called Clements "a bit dim" for not having read the share purchase agreement.
Oriel also gave a briefing to the Sunday Herald newspaper about him which the journalist described as the most vitriolic he had ever received and formed the basis of an article in that paper. Articles also appeared in other newspapers.
"Some of the matters [covered in articles] were by the terms of the SPA confidential as between himself and the claimants and others were untrue and potentially highly damaging to his reputation within the industry," said his claim.
Employment contracts have an implied obligation of mutual trust and confidence. It demands that employer and employee refrain from behaving in a manner likely to destroy or seriously damage the relationship of confidence and trust between them.
Clements said that RDF's actions breached his contract in that way. The judge agreed, but had to rule on whether Clements had already broken that trust.
The judge found that by passing confidential information to potential new employer SMG, by collaborating with them on a strategy for managing the process of making the news of his leaving public and by saying that he would try to take programmes with him from IWC to SMG, he had broken his relationship of trust and confidence with RDF.
"Working contrary to the interests of RDF in this way constituted acts of disloyalty on Mr Clements' part which amounted to a breach by him of the mutual obligation and/or the duty of loyalty and fidelity," wrote Livesey. "Had [RDF chief executive] Mr Frank known about it I am sure that he would have reacted by dismissing him on the spot."
The judge said, then, that RDF's dismissal without notice of Clements on 3rd May was legitimate, and that the restrictions on his working for other employers should remain in place for three years, until December 2008.