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Northern Ireland
Ranson v Customer Systems Plc [2012] EWCA Civ 841
Decision Number: Legal Body: ewca
Published on: 06/07/2012
Issues Covered:
Article Authors The main content of this article was provided by the following authors.
Background The appellant had worked for the respondent employer from 2001-2009 before resigning to set up in competition. He had been a senior employee but not a director. Before and during his notice period, the appellant had met with potential clients in the hope of securing work for his new business. He appealed against a decision that he had breached a contractual obligation of fidelity and a fiduciary duty of loyalty to his employer in his contacts with potential clients for his new business. 9The Court of Appeal held that it was necessary to distinguish between company directors and employees; employees are not subject to the fiduciary duties that apply to directors. And in any case, the starting point for determining whether the respondent employer owed fiduciary duties to the appellant was his contract of employment. There was no restrictive covenant in the appellant‟s contract preventing him carrying on such activities. He had been free to compete with his employer as soon as he resigned. Furthermore, the real complaint of the respondent employer was that the employee had failed to inform him of what he was doing. This would have involved not only telling his employer that he had dinner with potential clients, but also that he was planning on setting up in competition and he had no such duty either contractual or fiduciary.Analysis of the appellant‟s contractual obligations was also an essential starting point for determining the scope of the appellant‟s obligation of fidelity to the employer. An employee‟s obligation of loyalty is no more than an obligation loyally to carry out the job the employee agreed to do. The Court of Appeal held that an employee is not bound to inform his employer when he is doing outside work in breach of contract. That did not mean that an employee could never have an obligation to disclose his own wrongdoing, but any such obligation had to arise out of the terms of their contract.http://bit.ly/M7Xu6s

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Disclaimer The information in this article is provided as part of Legal Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article. This article is correct at 06/07/2012
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