Duty of fidelity

Item Software (UK) Ltd v Fassihi & others (2003) IRLR 769

The High Court ruled that a sales and marketing director of a software supplier was in breach of his duty as a director and as an employee to act in good faith in the best interests of the company when he sought to divert its main contract to his new company and continued to encourage his employers to take an unyielding stance in negotiations with the client for a new agreement.

He was also in breach of his duty as an employee in failing to disclose to his employer his own misconduct in seeking to secure their main contract for himself.

His claim for wrongful dismissal could not succeed.

Although his employers were not aware of his earlier misconduct when they dismissed him on other grounds, they were entitled to rely on that misconduct as justification for the dismissal, irrespective of whether the other grounds justified it: Boston Deep Sea Fishing & Ice Co Ltd v Ansell (1888) 39 Ch 339.

Tribunal procedure

HM Prison Service v Dolby (2003) IRLR 694

The EAT has stated that an employment tribunal has four options where a case is regarded as one which has no reasonable prospects of success.

It may:

- Strike out the application if it is convinced that this is proper remedy in the particular case;

- Order an amendment to be made to the pleadings under rule 15 of the Employment Tribunal rules of procedure;

- Order a deposit to be made under rule 7;

- Decide at the end of the case that the application was misconceived and that the applicant should pay costs.

The tribunal must adopt a two-stage approach: firstly, to decide whether the application is misconceived and, secondly, to decide whether as a matter of discretion to order the application to be struck out, amended or, if there is an application, that a pre-hearing deposit be given.

Kopel v Safeway Stores Plc (2003) IRLR 753

An employee resigned from her job and brought complaints of unfair constructive dismissal and sex discrimination.

She also alleged that her employers had infringed the prohibitions against torture and slavery in the European Convention on Human Rights.

A tribunal rejected all her claims, describing those alleging infringement of her human rights as 'frankly ludicrous'.

The employers disclosed a letter sent by their solicitors to the employee headed 'without prejudice save as to costs' in which an offer of 5,700 in full and final settlement was made.

That offer had been rejected.

The tribunal decided that the human rights claims were seriously misconceived and that the refusal of the offer was unreasonable conduct of the proceedings.

The tribunal accepted that the employers had reasonably incurred costs of 18,000 in defending the proceedings and ordered the employee to pay 5,000 towards those costs.

In reaching its decision on costs, the tribunal held that the ruling in Calderbank v Calderbank (1975) 3 All ER 333, as extended in the High Court, applies to employment tribunal proceedings.

The EAT upheld the costs order, but emphasised that the Calderbank principle does not apply to tribunal proceedings.

Nevertheless, an offer of the Calderbank type is one of the factors which a tribunal can take into account in deciding whether to make a costs order.

But failure by an applicant to achieve an award in excess of a rejected offer should not by itself lead to an order for costs.

Before the rejection of the offer becomes relevant to the exercise of the tribunal's discretion under rule 14 of the Employment Tribunal rules of procedure, the tribunal must first consider that the rejection of the offer was unreasonable.

By Martin Edwards, Mace & Jones, Liverpool