Behind the employer’s back

The employer’s summary dismissal of a manager was justified, since the manager had entered into a contract with one of the employer’s business partners without the employer’s approval.

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Employees are subject to a duty of loyalty to their employer. For example, this duty means that the employees must not harm their employer’s interests by, for instance, taking up secondary employment. In this case, the court had to decide whether or not a manager had breached her duty of loyalty, including the possible consequences.

The case concerned a manager who, based on her qualifications, held a key position at the employer. The manager performed central roles, as required by the law, and she had detailed knowledge of strategic matters at the employer as well.

At some point, the employer was contacted by a business partner that wanted to make use of the manager’s qualifications. The employer wished to further consider the inquiry but also presented it to the manager, because if she was not interested in working for the business partner the employer’s reply to the inquiry would be self-evident.

After that, the manager contacted the business partner – without an agreement with the employer – even though it was still being discussed internally at the employer whether a collaboration should be established. Irrespective of the fact that the issue was undecided at the employer, the manager informed the business partner that the employer agreed to the manager making her qualifications available to them.

The manager then signed a contract with the business partner stating that the manager, in her own name, could perform work for the business partner. She did not inform the employer of this contract.

Being unaware of the conclusion of the contract, the employer was still considering the business partner’s inquiry. In the end, the employer declined the collaboration proposal. The employer did not become aware of the fact that the manager had already started working for the business partner until the day after it declined the collaboration proposal. At that point, the employer dismissed the manager summarily.

Disregard of the duty of loyalty
The manager argued that the summary dismissal was unjustified because, among other things, the reason for the summary dismissal was not of a nature justifying summary dismissal. The manager stated that she had entered into the contract at the employer’s request and that the employer had not objected. The manager also referred to the fact that the business partner was not a competitor to the employer.

Based on the parties’ statements, the court took into account that the manager had not informed the employer of her dialogue with the business partner. Nor could the manager rightfully have had the impression that she had been given approval by the employer to enter into a contract in her own name. On the contrary, the manager had to have known that it required the employer’s approval if she were to enter into a contract with the business partner. Since the manager nevertheless entered into the contract, and subsequently kept it hidden, the court found the summary dismissal justified.

Norrbom Vinding notes

  • that a situation where an employee contacts the employer’s business partners etc. in their own name will often constitute a breach of the duty of loyalty, and this may justify summary dismissal; and
  • that the case also shows the difficult considerations regarding evidence that employers have to make before making a choice of disciplinary action – especially in situations where the course of events can only be proven through statements from witnesses.

Norrbom Vinding represented the employer in the proceedings.

The content of the above is not, and should not be a substitute for legal advice.

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