The High Court has ruled against an employee who refused to serve his notice period after being hired by a rival firm.
The landmark case was brought by derivatives trader Sunrise Brokers after Michael Rodgers walked out on the firm in March 2014 after accepting a post with a competing firm based in the US.
Rodgers was subject to notice and post-termination restrictions and later submitted his written notice on 16 April, ignoring the fact he was subject to a fixed term contract to 22 September 2014, followed by a 12 months' notice period.
Sunrise agreed to reduce his notice to six months followed by a further six month restrictive covenant which, as per his contract, banned him from working for a competitor. However, this was to no avail.
Following Rodgers' failure to attend work, Sunrise ceased to pay his salary.
The company instructed London-based employment law experts, Twenty Twenty Law to seek an injunction which would hold Rodgers to a period of notice and bind him to his restrictive covenants.
Rodgers accepted that Sunrise had done nothing that would have entitled him to resign. His contract did contain a garden leave clause, this was only to be exercised at the employer's discretion and not simply on his demand.
Sunrise's argument, presented in court by Michael Duggan QC, stated that a period of notice and restrictions that applied after the employment ended were in place for a good reason and should therefore be honoured. If the employee returned to work, the company agreed that he would be paid as usual, but he would not be paid if he failed to turn up.
Ultimately the High Court agreed that Rodgers was still employed by Sunrise and therefore bound by his notice period. It asserted he had no right to force the conversion of his notice period into garden leave. It deemed Sunrise's decision to cease paying his salary did not amount to a breach of contract.
David Greenhalgh at Twenty Twenty said in a statement: 'This is an important victory for UK employers and for common sense; employees who simply don't turn up for work having given notice in these circumstances should not get paid. It is not for the employee to demand to be put on garden leave as this is a power reserved to the employer.'
He added: 'Businesses are entitled to protect themselves from attack by competitors who try to poach their staff and clients. What this case highlights is the importance of having proper foundations in place to defend attacks from competitions, in the form of well-drafted employment contracts documentation.'
With wealth management firms on a major recruitment push, the ruling could have implications for the profession.
A nine-point writ, seen by Wealth Manager, alleges that Brewin’s former employees breached their contracts and conspired with Charles Stanley to cause losses to Brewin’s business ‘by unlawful means’.
Charles Stanley has denied the claims and said it will ‘vigorously resist’ them.