Breaching the Employment Contract by Conduct Contrary to Obligations

By Chris Hartigan and Marilyn Pittard

An employee's conduct in soliciting the employer's clients to give him work exclusively was a basis for the employer to end the contract before its fixed term expired.

Initially the County Court awarded damages to the ex-employee for wrongful termination. However the employer, a financial planning company appealed saying the employee had breached the contract.

The contract allowed for termination n the case of certain events, including the employee's of a term or "misconduct bringing the employee or the company into serious disrepute". The Court of Appeal held that the employee's conduct had repudiated the terms of the contract.

The decision is interesting in that the terms of the contract were very clearly stated in the written contract and repeated in a letter to the employee. The employer was held to be entitled to require the employee to faithfully serve the employer's interests and not forward the employees own interests. If there had been any doubt about these terms then termination would have been unlikely to succeed and the employer may have been liable for damages. An interesting case as we face stripped back terms and awards, and with it an increased emphasis on implied and written contracts and policies.

(LexisNexis Butterworths Employment Law Bulletin; vol 12, no 1 March 2006)