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Disloyal team manager

November 2010 - Employment. Legal Developments by Norrbom Vinding Law Firm, member of ius laboris.

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An employee breached his duty of loyalty by discussing with some colleagues during his notice period his plans to set up a competing business.

All employees are subject to a duty of loyalty to their employer. This means that they may not engage in activities that compete with their employer’s activities. Nor may they recruit colleagues to their own competing business. This was illustrated in a case from the Danish High Court.

A team manager at a cleaning company was planning to set up in business for himself. He discussed his plans with two colleagues while he was still employed. When he resigned and was released from the duty to work, he met up with some colleagues during his notice period. They discussed positions and ownership shares in the new cleaning business based on budgets and other documents that the manager had prepared. The manager also encouraged his colleagues to resign. But the plans never came to anything.

Clean, but not nice
The employer believed the employee had breached his duty of loyalty and was therefore guilty of gross misconduct, and demanded repayment of the salary and pension paid to the employee during the notice period.

The Court agreed. The manager had acted disloyally to his employer and was thus guilty of gross misconduct. The Court held that the employee’s actions had the potential to damage the employer’s competitiveness. Accordingly, the employer was entitled to demand repayment of the salary and pension paid to the employee during the notice period.

 


Norrbom Vinding notes:

  • that when an employee sets up or is planning to set up in business for himself during the notice period, it will often conflict with the employee's duty of loyalty to the employer.

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