The employee fidelity conundrum

A question arose recently regarding a conflict of interest between a company and a former manager of sales and marketing, in a highly competitive industrial field.

The manager was not fired. He resigned after 12 years with the company and gave as his reason for leaving, a medical issue he maintained was confidential.

People’s medical conditions are generally entitled to confidentiality once the company is satisfied the condition has been certified by a registered medical practitioner.

Under his terms and conditions, he was entitled to a cash benefit on resignation for medical grounds. He had, in fact, applied for several instances of sick leave over the previous two years before resigning, during which time his reason given to colleagues implied that he had gone abroad for medical intervention.

As one of the most senior employees in the company, these leave periods were granted without question. He was given his medical benefit on resignation as a matter of course and left the company.

Two months after he left, he set up his own business consultancy firm.

After his departure, however, several messages sent to the company by e-mail were directed to the new manager, sales and marketing by title only, which, stating dates of meetings and agreements, revealed that his absences and claims for medical consideration had, in fact, been to source procurement contracts for products sold by his then-employer.

There was no evidence that he had ever had, or had not had the mysterious medical condition he claimed justified his absences, or retirement benefit.

The certifying doctor whose bona fides were never checked by the personnel department was apparently a relative and now resident in another country.

One of the misaddressed e-mails also disclosed that he had approached his previous company’s customers offering his services as a sales development consultant, providing contracts to supply the same product, but at a cheaper price than they had been supplied hitherto.

It is common knowledge that the practice of soliciting your company’s customers either during the time you are still employed or immediately afterwards, to be your client or customer in competition with your former employer, is regarded as unethical and even immoral.

When confronted, he shrugged and asked if there were any laws against it, and who was going to stop him?

While an employee prevaricating about his reason for wanting to take sick leave to travel for medical tests and then evidence is found during that period, that he was either working for a competitor or “on the side” for himself, can justifiably lead to a loss of confidence, the core of the matter will be whether this justifies dismissal for loss of confidence, due to breach of the employee's common law duties of fidelity and fiduciary responsibility, particularly, in the latter case, if it is a senior employee.

There can be an understandable loss of confidence on the part of the employer.

He was lied to, which, by itself in common law causes a loss of trust and may, if he were still employed, and not in a managerial position, lead to disciplinary action or even termination.

In this instance, dismissal was not an option. He had already retired.

The question now arises of what could happen in this instance when the betrayal comes from a manager who resigned?

Most executive employment contracts include a common-law term, expressed or implied, that a senior employee will not go into business in competition with his employer for a period (I think it is three years, but check with your attorney. Some contracts vary) after resigning or retiring.

In the English courts, all employees owe their employer a duty of fidelity regardless of their seniority.

This duty is an implied term in every employment contract. It does not have to be written but often is. It requires the employee to serve their employer with good faith and fidelity.

In practice, this encompasses a duty not to compete with the employer’s business, and not to solicit or entice customers and employees from the employer.

A couple of recent cases that illustrate how employers can rely on the duty of fidelity to prevent departing employees from damaging their business, have gone through the civil courts there. You can find them online.

The duty of fidelity requires an employee to have regard to the employer’s interests.

The duty of fidelity alone can also give the employer sufficient protection to avert a threat from unlawful competition.

Is this sufficient in Trinidad and Tobago to allow a legal remedy in the instance of a case such as reported above?

Since business is slowly trying to return to some semblance of normalcy, several employers have discovered that skilled employees who have left their employ in 2020 or 2021, are now setting up in competition against them, using contacts and knowledge gained pre-pandemic, in some cases while they were not actually terminated, but on no-pay lay-off, pending a return to contracts being renewed.

Given the length of time it takes to get anything into any court in TT, it may not be worth the legal expense of following-up, but the optional remedy of “naming and shaming” may or may not suggest to people thinking of breaching their duty of fidelity, to try mediation as an alternative.

It would not constitute a breach of fidelity if the former employer knows about it in advance of his/her employee leaving, and agrees to allow it, subject to restrictions against actively taking business away from the previous employer, or agreeing to actual geographic restrictions.