case roundup

This week’s case roundup

Care needed when reducing awards
Johnson v Scottish & Newcastle plc, EAT, 2002, All ER (D) 49

Johnson was dismissed after admitting making excessive personal telephone
calls whilst at work.

Her subsequent unfair dismissal claim was successful because the tribunal
held Scottish & Newcastle had not carried out a reasonable investigation.

Compensation was assessed but the tribunal then applied two deductions. The
first was a Polkey deduction of 95 per cent (Polkey v AE Dayton Services Ltd
1987) on the basis that even if a full investigation had been carried out,
there was a 95 per cent certainty that Johnson would be dismissed. The second
deduction of 90per cent was to reflect Johnson’s contributory conduct leading
to the dismissal. Johnson appealed.

The appeal was allowed. The tribunal was under a duty to make an award that
was just and equitable in the circumstances but had failed to have any regard
at all to the cumulative effect of the deductions when applying the 90 per cent
contributory fault deduction to the sum remaining following the Polkey

Moreover, the tribunal had failed to provide sufficient reasoning to support
the Polkey deduction. The question of remedies was remitted to a different

Failure to act in best interests of employer
Ward Evans Financial Services Ltd v Fox & another, CA, 2002, IRLR 120

Fox and Phillips worked as financial advisers and their employment contracts
were supplemented by a Trust and Confidence Agreement. This provided that while
employed they would not, without prior written permission, hold any material
interest in any competing company and would not, before or after the
termination date, disclose or seek to induce the disclosure of or use of
confidential business information.

October 1998, without informing their employers, Fox and Phillips set up a
new company, Fidelius Ltd which started trading in January 1999.

During his employment Fox had built up a good working relationship with Certis
Limited which subsequently transferred its business to Fidelius.

Ward Evans brought an unsuccessful claim for damages for breach of contract.

The High Court held setting up Fidelius did not breach the Agreement because
it did not cover the formation of a new company which was dormant until after
the employment ended.

Moreover, there was no use of confidential information to induce Certis.
Rather, Certis had made a genuine approach to transfer its business. Ward Evans

The Court of Appeal held that the formation of Fidelius, albeit dormant
initially, constituted a breach of the agreement because it was set up during
Fox and Phillips’ employment and had impacted on their ability to act in the
best interests of Ward Evans at all times.

However, the Court of Appeal upheld the decision that there had been no
inducement. The case was remitted to determine the loss suffered by Ward Evans
flowing from the breach of the agreement.

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