Want to talk to an expert employment law solicitor?

You'll receive a callback from a specialist within an hour

The recent case of Imam-Sadeque v Bluebay Asset Management (Services) Ltd [2012] EWHC 3511 (QB) is both a welcome case for employers and a warning-shot across the bows of potentially problematic employees.

The facts of Imam-Sadeque v Bluebay Asset Management (Services) Ltd

The Defendant in this case, Bluebay Asset Management (Services) Ltd (“Bluebay”), was founded in 2001. It is – and was – an asset management company and was sold to the Royal Bank of Canada in 2010 in a deal that valued the company at £963 million. The Claimant in this case (Mr Imam-Sadeque) commenced employment with Bluebay in 2004 and by 2010 had been promoted to the position of “Head of Sales in the UK, Middle East and Australia”. In this role his gross annual salary was £100,000 but discretionary bonuses and share options increased the value of his remuneration to approximately £1.7 million.

In June 2011 Mr Imam-Sadeque decided to terminate his contract of employment with Bluebay and move to a fledgling competitor, Goldbridge Capital Partners LLP (“Goldbridge”). He therefore gave notice of termination (the notice period being 6 months) in June 2011 with the intention of starting at Goldbridge in January 2012 – unbeknownst to Bluebay. However, colleagues of Mr Imam-Sadeque’s submitted complaints relating to his behaviour in July 2011 and he was therefore placed on gardening leave in August 2011 until the termination of his contract of employment (as his employers were contractually entitled to do). He signed a compromise agreement in July 2011 as to this effect – the terms of which stated that he would be treated as a “Good Leaver” (and therefore entitled to share options worth £1.7 million that would vest between January and March 2012). This compromise agreement included a warranty to the effect that he was entitled to receive such consideration provided that at the time of the signing of the agreement he was not in repudiatory breach of his contract of employment and that he did not have future employment already “lined up”.

After his gardening leave period finished on 30 December 2011 it was made clear to Bluebay that Mr Imam-Sadeque had commenced working in early 2012 for Goldbridge. Further, an employee of Bluebay’s (a Mr Nixon) had also moved to Goldbridge – a move (Bluebay suspected) that was instigated by a meeting between Mr Nixon and Mr Imam-Sadeque in July 2011. Bluebay therefore withheld payment of the share options as they believed a repudiatory breach of contract had occurred and Mr Imam-Sadeque issued a claim for breach of contract in the High Court in October 2012. Mr Imam-Sadeque (in his claim) contended that he was not in repudiatory breach of contract and that he was therefore entitled to receive his share options under the terms of the August 2011 compromise agreement. Bluebay, on the other hand, alleged that there had been a breach of the implied term of fidelity and a breach of the implied term of mutual trust and confidence by Mr Imam-Sadeque which constituted a repudiatory breach of contract on his part (and thus entitling them not to comply with the terms of the contract). Further, it was alleged that Mr Imam-Sadeque had breached express terms of his contract of employment relating to acting in the best interests of Bluebay at all times and to not be directly or indirectly engaged in any other business which may conflict with Bluebay’s interests.

The law relating to breach of contract (in particular the implied duty of fidelity)

Bluebay alleged that Mr Imam-Sadeque had breached the implied duty of fidelity through a number of actions on his part, including participating in setting up Goldbridge and enticing Mr Nixon to leave his employment with Bluebay. We’ll have a look in this section at what the implied duty of fidelity is and how it can possibly constitute a repudiatory breach of the contract of employment

The duty of fidelity

The implied duty of fidelity is one that all employees owe to their employer where both parties to the contract must have regard to the interests of the other but not subjugate their own interests. It is distinguished a fiduciary duty, which is more focussed. Essentially it means that the employee must act in a loyal manner towards their employee, without completely undermining their own interests by doing so.

Repudiatory breach of the contract of employment

If there has been a breach of a contract the offended party has the option (if it is a breach of a condition of the contract i.e. fundamental to the contract itself) of pursuing the offending party for damages and/or terminating the contract. If the breach is not fundamental to the contract (and therefore a breach of a warranty) then it will generally not entitle the offended party to terminate the contract.

When, then, is a breach “fundamental”? The following test was endorsed by the Court of Appeal in Tullett Prebon Plc v BGC Brokers LP [2011]:

[Whether] “from the perspective of a reasonable person in the position of the innocent party, the contract breaker has clearly shown an intention to abandon and altogether refuse to perform the contract.”

So, if Mr Imam-Sadeque had clearly shown an intention to abandon and altogether refuse to perform the contract through his actions then this would be deemed to be a fundamental breach of the contract of employment entitling Bluebay to terminate.

The High Court’s decision in Imam-Sadeque v Bluebay Asset Management (Services) Ltd

The High Court found that Mr Imam-Sadeque was in repudiatory breach of contract by his actions in June to August 2011. He was found to be in breach of the implied terms of mutual trust and confidence and fidelity and was also found to be in breach of the express terms stated above. Bluebay was therefore entitled to not pay the share options owed under the contract of employment to Mr Imam-Sadeque.

Our specialist employment lawyers’ thoughts on Imam-Sadeque v Bluebay Asset Management (Services) Ltd

This is an interesting and useful case to both employers and employees, laying down the fundamental rules relating to the terms of the contract of employment and how and when the contract of employment may be breached by actions on the part of the employee.

logo_website

About

Redmans Employment Team deal with employment matters for both employers and employees, including drafting employment contracts and policies, advising employers and employees on compromise agreements, handling day-to-day HR issues, advising on restructures, and handling Employment Tribunal cases for both employers and employees Call 020 3397 3603 to speak to one of the members of our employment team or email us on enquiries@redmans.co.uk. Redmans have offices in Richmond, Chiswick, Hammersmith, Fulham, Kingston, Wimbledon, Ealing, Kings Cross and Marylebone (meetings strictly by appointment only).

Want to talk to an expert employment law solicitor?

You'll receive a callback from a specialist within an hour

Share →

Our awards

Request a callback

    Your first name (required)

    Your last name (required)

    Your email (required)

    Your telephone number (required)

    Brief details of your enquiry

    Testimonials

    4.80 Average

    292 Reviews

    Anonymous

    Exceeded my expectations. Very professional and proactive. I highly recommend them.

    Posted 1 week ago

    Anonymous

    The service provided to me by Redmans Solicitors was excellent and I would have no hesitation in recommending Chris. While I cannot get into the detail of the matter, it was very emotionally difficult for me and Chris was sensitive throughout and was clear that his motivation was arriving at a solution that helped me while I am unwell - and less about his own fee. His emotional intelligence was coupled with a very sharp and quick understanding of the complex facts of the matter and the legal arguments and he quickly formed a strong case working with me the whole way. Chris was particularly patient with me at what I found a stressful time, and I want to thank him personally for everything he did.

    Posted 1 week ago

    Anonymous

    A lovely, friendly and professional service. They advised me through my employment change. They where very responsive, keeping me updated and explaining everything in layman’s terms. No hidden charges. I would highly recommend them.

    Posted 2 weeks ago

    Philip H

    I was advised well and had a good experience using Redmans Solicitors.

    Posted 2 weeks ago

    Line v

    Good service and very helpful, informative

    Posted 2 weeks ago

    Katarzyna Z

    Very prompt replies, good rates and competent staff.

    Posted 2 weeks ago

    Sudhir S

    Professional in approach and give good advice all the time during my settlement agreement with the Company. Fee wise slightly expensive compare to the initial estimates.

    Posted 2 weeks ago

    Aaron H

    Very grateful to Mel who was brilliant kept me informed and was really helpful when I needed her

    Posted 2 weeks ago

    Alexia P

    The team at Redmans we're always professional and helpful throughout my case. The team were open to listening to me, understanding my situation and being clear about what they can support with.

    Posted 2 weeks ago

    Emma L

    So glad I chose Redmans to assist with my emplyment issue. From start to finish I received excellent service. Mel Chin had calm, methodical approach and she got me a far better result than I could have done on my own. Would not hesitate recommend far and wide.

    Posted 3 weeks ago

    Sam T

    I was extremely impressed with the support and advice that I received. The solicitors I worked with acted very quickly and were clear in their communications at every stage.

    Posted 3 weeks ago

    Anonymous

    I cannot thank Caroline enough for her empathetic help, advice and guidance in what was at times a very stressful situation. Always professional and available to answer any queries I had, I highly recommend Caroline and all the team at Redmans.

    Posted 3 weeks ago

    Robert M

    Chris Hadrill provided me with very efficient turn around of an employment offer from a US-based company. Chris reviewed the contract, identified key issues and offered sound/pragmatic advice and suggestions for improvement which I could then bring in non-legalese to my prospective employer. Employer accepted all the important changes Chris suggested and I accepted the job!! Very satisfied with the service.

    Posted 3 weeks ago

    Karen R

    Prompt, helpful and excellent service. Very professional and super quick. Very reasonable price for London. Definitely recommend and would use again.

    Posted 3 weeks ago

    Anonymous

    Excellent service from Redmans, I would not hesitate to recommend this firm of solicitors. Thank you very much to the team, and especially Chris and Mel!

    Posted 1 month ago

    Siriana B

    Thorough, efficient, and always available to answer my queries. It was a pleasure to deal with.Thanks

    Posted 1 month ago

    Anonymous

    Excellent speedy service

    Posted 1 month ago

    Robert

    Excellent service, very professional. would definitely use again.

    Posted 1 month ago

    Mary B

    I was very happy with the work Chris did for me. I believe with his help I secured a more favourable outcome both financially and in terms of clauses contained in the legal agreement I ultimately signed. I had utmost trust and confidence in the advice Chris provided throughout. Chris kept me informed at every stage and I found him very efficient at bringing matters to a conclusion without unnecessary delay.

    Posted 1 month ago

    Mark M

    I found Redmans very easy to work with. Mel was very responsive, her advice led to an improved settlement. . Recommended.!

    Posted 1 month ago

    Anonymous

    Fantastic service. I would recommend Redmans to anyone who needed a Solicitor. The communication was second to none and consistent clear guidance was given.

    Posted 1 month ago